BY LORRIE WOHLFEIL
Is your credit union stuck in the rut of showcasing only its best-performing products? If so, you could be undermining your earnings potential. Marketing all products and helping your entire membership is the key to CU profit. Learn how to work smarter not harder.
Most credit unions today are quite effective at marketing to their membership. Whether it’s updating the home page on their website or sending out mailers, one thing is for certain: Their members know they have incredibly low rates on their auto loans. You may be asking yourself, “What’s wrong with advertising the product that performs the best for us?” Nothing is wrong if you are happy serving a very small percentage of your membership and if your board of directors and management team are happy with where your earnings are.
At Lending Solutions Consulting Inc. (LSCI), we audit a sampling of credit unions’ loans, rates and financials. The message we hear is universal: “How can we earn more money?” Credit unions are working hard and are understanding they are in the loan business. LSCI has taught this to credit unions for years. Our philosophy is simple: “Everything follows loans.” The problem with this mentality, however, is that not all loans are created equal. Marketing efforts need to be placed on all products and on helping all our membership.
The majority of credit unions are promoting auto rates with a spread over investments of less than 50 basis points. It is near impossible to maintain profitability and a strong capital if the majority of your growth is coming from the following:
1. “A+” and “A” auto loans
2. Indirect auto loans where you chased the rate down to no profitability to “win the deal”
3. Heavy real estate loans
Let’s look at the following credit union that falls into the scenario
“More Work for Less Money” Credit Union