Direct (Mail) Route Wins Back Loans

Gloria Green, CUNA Mutual Group
January 22, 2005

Midwest United Credit Union's auto loan recapture program targets members who have auto loans at other financial institutions—and it's driven them back in bunches.

The credit union's direct year-round mail program supplements a popular spring campaign that uses all channels—print, direct mail, and the Web—to win back auto loans. The 2004 campaign generated big-time results for Midwest United, of Blue Springs, Missouri ($139 million assets, 32,000 members). In about six weeks, the campaign brought in $5 million in auto loans.

The objective of both campaigns was to win members' auto loan business back from other financial institutions at two percentage points less than what they had been paying (with a minimum rate of 4.9% APR).

Response Rate of 3.8%

The direct mail program (created in July 2003) generated 94 loans with volume of more than $1.5 million in its first 12 months. The program started with monthly promotional mailings to more than 2,442 targeted members. The 3.8% response rate brought in an average loan balance of $16,672. A typical industry response rate for a direct mail promotion averages between 0.5% and 1.0%.

"In lieu of an indirect program, we've been successful recapturing those loans after the fact," says Jeff Chrisman, vice president of lending. The credit union works with a partner to merge comprehensive demographic data into member information files and comes up with targeted lists for each mailing. "The partnership allows us to spend less time mass marketing and more time closing loans for our members," he adds.

Staff Involved in Decisions

Involving staff in program decisions is crucial to success, says CEO Pat Yokley, who invites input from front-line staff early on. "We explain what we're going to do and then ask what kinds of problems it might present when members walk in the door," Yokley says. "When our front-line staff knows that peers have been involved in the decision-making process, it helps build buy-in tremendously."

Says Chrisman: "Give us a chance to meet or beat the member's current rate, and we'll bring that loan home." Gloria Green is the LOANLINER documents manager for CUNA Mutual Group, and publisher of Lending Resource newsletter. This article first appeared in CUNA Mutual Group’s on-line Added Dimensions and is reprinted with permission.