Hoping to take advantage of a change in its charter that now allows it to market to a wider audience, a credit union mailed pre-approved auto loan offers to 20,000 prospects last month in a bid to increase membership.
“[Before Jan. 21], we were limited to people who worked for 630 employer groups in the three counties, but now we have a community charter,” said Paul Stull, director of marketing at Hudson Valley Federal Credit Union, Poughkeepsie, NY. “Anyone who lives, worships, works or attends school in the three counties can now join. [This is] very significant since there are a number of people who couldn't join before and wanted to take advantage of some of our loan products. Now they can take advantage, join the credit union and move their accounts here.”
HVFCU used Equifax to select names in New York's Dutchess, Orange and Ulster counties. Criteria included people likely to buy a new or used vehicle, income and how long someone has lived at their residence.
“The primary element of the piece is the pre-approval. The idea that you have [the loan] pretty much secured in your hand gives you a lot of power to negotiate with a dealer,” Stull said. “Any consumer feels better if they have the financing in hand when they go shopping for a car since you're negotiating from a point of strength rather than looking at a vehicle and hoping you'll be financed down the road.”
Stull's goal is a response rate in which 3 percent to 5 percent of recipients complete the loan process, though he said it's too early to judge the effort's effectiveness. The average loan amount generated is expected to be “in the $10,000 range, and maybe a little over that,” he said.
The piece used the image of a pair of eyes on the envelope. Under the image was a small yellow square and the question: “Got your sights set on a new car?”
“[The original concept] had a girl looking at a rear-view mirror, but then we cut down the image from that since we wanted to save space on the envelope and just put the essential message on [the envelope] of the eyes,” said marketing assistant Connie Wolfe, who designed the mailer.
Large type on the other side of the letter informs recipients that, “Your loan is approved & waiting.” The upper-right corner of the letter features an image of an SUV and a list of benefits, including pre-approval of up to $20,000, terms up to 84 months and a 6.2 percent annual interest rate when payments are automatically deducted from an HVFCU savings account — 0.25 percent better than the standard rate.
Stull is not concerned with the zero-percent financing offers in the market.
“A very low percentage of buyers can qualify for them,” he said. “They are generally with terms of no more than 36 months, which for some people is not within their budget since that involves a higher payment.”
To encourage quick action, the pre-approved status expires Aug. 22. Recipients can reply via a postage-paid business reply envelope, fax or phone as well as walk into one of the credit union's seven branches.
The campaign's total per-piece expense was placed at 83 cents.
