Plan your marketing strategy now to drive loan growth post-pandemic.
The pandemic has exposed us to many new experiences as we’ve stayed home, worked remotely and mastered the virtual get-together. One of the experiences that I have missed the most over the last year has been travel. Foreign travel, domestic travel, three-day weekend, conference travel or road trip—I miss them all. I really enjoy every aspect of travel from the planning to the trip itself and, ultimately, to the lessons learned after the trip is complete that can be applied to the next time. Since the pandemic has halted my travel plans, I have been contemplating what I’ll do post-pandemic. I’ve dreamed about all the stamps I will collect in my passport and all the postcards I will send with glowing messages of “wish you were here.”
Now, it seems, there is light at the end of the tunnel as the moratoriums on travel and other in-person experiences ease. I’m using this time to think about future travel destinations, and credit unions need to think about where they want to go, too. Now is the time to examine strategies for the future that will help grow your loan portfolios and ensure that you are marketing your products in ways that are relevant and useful to your members. Here’s a look at where to focus your marketing through three aspects of travel—the plan, the trip and the lessons learned—to ensure that you can be ready to meet your members’ needs when they are once again ready to pack their suitcases and purchase those floppy hats!
1. The Plan
I start planning the next trip on my way home. For me, the best way to get over the depressing end-of-trip blues is to turn the end into the beginning. It usually starts with someone throwing out a suggestion, such as “New Year’s in Amsterdam?” or “How about an African safari?” Just about every holiday or long weekend over the last year was marked with these discussions in my household. So far, we have three big trips planned for late 2021. Now, we’re just waiting to be cleared for takeoff.
Perhaps there is a silver lining to the pandemic. It has given us the opportunity to really step back from the day-to-day and ask key questions like: What do you really want to be known for when it comes to your loan offerings, and how do you want to message that to your members? Use this time to turn an end into a beginning. Get to work making changes to your products, services and experiences right now. Consider these two aspects of the plan to drive loan growth post-pandemic:
Define the Core Loan Products
According to a report from CUESolutions provider CUNA Mutual Group, Madison, Wisconsin, the average loan growth for CUs of all asset sizes over the last five years was 8.4% with 5% loan growth achieved in 2020 and the same 5% forecasted for 2021. Loan growth will be a struggle this year, so defining and enhancing the products that are most likely to be in high demand is an effort worth undertaking.
Start with credit cards. Consumers are using their cards more and in new ways, and they want different features. For the first time in 35 years, consumers paid down credit card debt during the third quarter of 2020. The good news is Americans are using their cards more, with one study finding that 38% of cardholders say that their credit cards are the only way they make purchases right now and that throughout the pandemic spending in the areas of everyday purchases such as groceries and self-care items increased.
In addition, 70% of Americans said they had no plans to cancel a current card, but the preference for their card features has changed. Respondents cited no annual fee, cash-back rewards and a no-interest period on purchases as the most important features. Take the time now to update your credit offerings to be more in line with what members want and how they are using their cards, so that your cards will be top-of-wallet when restrictions lessen.
Next, look at your auto loans. The pandemic has put used cars in high demand and changed how consumers buy vehicles. In 2020, the price of used cars increased 10% as demand grew with millennials moving out of urban areas to the suburbs and with use of public transit plummeting. With the increase in demand and price for used cars, how you advertise your auto loans needs to change. Members are focusing on how a car payment can fit into their monthly budgets, so take a practice from the dealer’s playbook and focus your message on payment, not price or rate.
The other big change in auto loans over the last year is that consumers have finally found a way to eliminate having to deal with an in-person dealer experience. Online auto purchases took off during 2020. There are 40 million used vehicles bought in the U.S. each year. In 2019, 1% were bought online. In 2020, there was a 36% increase in sales at digital dealerships, and Bloomberg predicts that by 2030, 50% of the used vehicle sales will be at a digital dealership. The shift to digital will mean that your indirect relationships, if you have them, and member experiences will need to change as well. Ask yourself: What aspects of your current auto lending practices will need to be altered to fit into the digital auto buying and financing environment?
Last, but certainly not least, examine your home loans. The key consideration for how to market mortgages post-pandemic is to understand that purchases will drive the market over refinancing in 2021 and that this purchase market is fast-paced and very challenging to navigate. Though mortgage rates will continue to remain historically low, rates are on the rise. The Mortgage Bankers’ Association predicts that the average 30-year fixed rate in 2021 will be between 3.3% and 3.4% APR, up from an average of 3% APR in 2020. The refinance boom that drove mortgage lending last year will wane as homeowners who could refinance have done so. Turn your marketing attention from refinancing to helping members navigate the purchase of their first or next home.
Further contributing to the complexity of the purchase market is that prices for houses across the country continue to climb and inventory remains low. Zillow’s first quarter forecast predicts annual home value growth will rise as high as 13.5% by mid-2021 and for home values to end 2021 up 10.5% from their current levels. While prices soar, inventory remains at historic lows, with newly listed homes down 24.5% over last year during the first quarter of 2021. This means a market especially fraught with the competition of bidding wars and cash winning out over financing as sellers can select the best offer from many. Your opportunity is to be your member’s guide, especially for first-time homebuyers, in ensuring they have preapprovals, understanding what makes a compelling offer in your local market and helping them to close quickly. Focus less on awareness of the mortgage products and rates, and rather on how to help them secure the contract on the home they want to buy.
Make the Investment
Just like a good pair of shoes for your travels, making the investment in marketing now will be worth it in the future. Research shows that companies that maintain or increase their marketing activities during challenging periods tend to grow faster—not only during the downturn, but beyond—while organizations that reduce marketing tend to see revenue declines both during and years after the challenge.
Begin with your external marketing efforts. Project the message of your mission and value to potential members. Purchase the appropriate lists and invest in the data that will help you grow your core products. For 2021 and beyond, auto loans are about offense. Consider launching recapture campaigns to refinance auto loans for cars that your members financed elsewhere. For mortgages, buy trigger lists to help you understand when your members are moving their mortgage or equity loan elsewhere.
Now more than ever, your message matters. Resist the urge to market on price and product features alone. Refine the message of why potential members should borrow from you by demonstrating the value you provide and underscoring the mission that drives your credit union. Focus on relevancy and connection. It’s as simple as this: No one wants a mortgage. What people want is a home. Make your message about how you’ll help them secure one.
Make the investment internally as well. Where are your opportunities to ask for your current members’ business again, and how can you refine your message to demonstrate the value on products that members may have forgotten about? Take the time to develop all those marketing tools you’ve wanted to work on for so long, including:
- onboarding for new members demonstrating the value and unique features of your core products;
- emails to follow up with members who have applied for but haven’t closed on a loan; and
- promotions to current auto loan holders nearing the average pay-off with an incentive for them to borrow from you again.
It’s essential to keep the loans you have and the only way to do that is to keep asking for the business.
2. The Trip
Confession: I am a spreadsheet traveler. I use the spreadsheet to provide a sense of structure and to ensure that I get to see everything that is of interest in the allotted time I have. But don’t worry, I am perfectly capable of getting lost in the present, too. I plan the trip yet remain flexible enough to pivot and enjoy the unexpected. The idea is to get familiar with your surroundings and concentrate on what the locals do once you are there. That’s also very true as you look at marketing your loan products during and after the pandemic.
While the worst of the pandemic is (hopefully) in the rearview mirror, understand that recovery may be slow. You may be in a hurry-up-and-wait mode for a while, but as the weather turns warmer and vaccinations increase, consumer spending and confidence will rebound. Stay relevant in your messaging and promotions while positioning yourself to help members.
For the past year and half, we’ve been focused on staying local as we invested in our individual environments. Consumers’ ability to spend has been bolstered by added savings from not traveling, dining out or taking in entertainment, resulting in a shift in spending from services to goods. And they have been buying big-ticket items, especially in housing-related categories, such as appliances and furniture.
Rising wealth from increasing home values and stock prices have also supported consumer purchases. Focus your marketing by understanding what members are spending money on to position yourself as the local option to help them buy what they want. Look for opportunities to be the financing option for your local furniture store, pool installer or she-shed builder. Don’t advertise the signature loan with rate and term. Instead, show members that you can help make the experience of sitting by the pool a reality.
3. The Lessons
A running joke in my family is how many sweatshirts, jackets, hats and blankets I own from all over the world. The lesson, which has taken me a long time to learn, is: It’s always going to be colder than I think. I now dress in layers and take a backpack so I can add and subtract as needed.
What have you learned over the last 18 months and what changes will you make for the future? The lessons of digital delivery and meaningful engagement should shape your marketing efforts for 2021 and beyond.
If you don’t have the capability to deliver digitally, now is the time to remedy that. From email, online loan and membership applications to video consultations with front line staff to virtual business development experiences, each aspect of your member experience should get refined to be done and delivered digitally. This need will not diminish as the pandemic ends. Many traditional aspects of in-person service will stay virtual or move to a hybrid model. Ensuring that you have digital capabilities in your marketing and member experience will be paramount to growth moving forward.
Many in-person options will not come back for quite some time, nor will the structure be the same. Although how you can engage with members has changed, the need to do it is still essential to maintain confidence, trust and member satisfaction. Just like with digital marketing and delivery, adapt hybrid engagement activities. Continue the option to video conference by appointment with your branch and lending staff moving forward. Allow your members to “see” who is taking care of them without having to physically come to the branch.
In your communities, create engagement opportunities in the void of canceled events. Conduct a recognition campaign on social media for the community you serve. Highlight those individuals and organizations doing good and ask your community to tell the stories of those who are making a difference. Maintaining and deepening relationships should be a key component of your marketing and member experience plans annually.
The best part about travel is letting it change you for the better. Use this part of the journey back to a new normal to examine strategies for the future that will help you grow your loan portfolio and ensure that you are marketing your products in ways that are relevant and helpful to your members. Before you know it, you’ll be penning “wish you were here” on a postcard while dreaming of your next big adventure. cues icon
Bryn C. Conway, MBA, CUDE, principal of BC Consulting LLC, is a longtime member of the credit union community and helps credit unions define their brands, develop their experiences and grow market share. Register for her CUES Elite Access Course, “From Adversity to Resilience: How to Turn Setbacks into Opportunities.”