By Ray Birch
HAUPPAUGE, N.Y.–One credit union here has been able to boost auto loans by 31% among its own membership by promoting the car shopping process, and not the car loan rate.
And why that growth is so important, says GrooveCar, which conducted the study on CAP COM FCU’s success, is that the Albany, N.Y-based credit union is doing much more than making car loans, it’s deepening relationships with its members.
“That 31% figure represents stickier relationships,” said Robert O’Hara, vice president of strategic alliance at GrooveCar, which offers a car buying site to credit unions that CAP COM uses. “This is building stronger relationships with the members that count.”
Indirect lending has been driving a significant chunk of auto loans made by credit unions, as well as the related growth in membership numbers to record numbers. O’Hara acknowledged the great challenge with members added via the indirect channel, however, is their lack of engagement with the credit union outside of the loan payments.
“The GrooveCar program is all about direct growth,” said O’Hara. “The indirect volume is coming from the dealer, but on the direct side, how do you connect with your members before they get to the dealer?”
Rates Don’t Rate
O’Hara contends that credit unions typically “struggle” with their auto loan messaging, relying largely on rate advertising.
“Credit unions are telling members we have low rates, but the challenge is most consumers are not researching rates, they are researching cars, and they are doing that long before they even think about rate,” he said.
O’Hara said credit unions need a strong car shopping website that has all the research tools members need to find the vehicles they are looking for, and draws members to the credit union early in the car shopping process and keeps them there through the close of the loan.
“The average consumer will spend 14 hours over four months researching their next car purchase,” O’Hara said. “Millennials are a little bit faster. Too many credit unions are expecting members to go from 0-60 in the car-buying process. That’s not going to happen often.”
O’Hara described the member car shopping experience as a “journey” and suggested that most members are not thinking about rate simply because they see a lot of low and even 0% offers, leaving them believing they can get the financing they need when ready to buy, even if that’s at the dealer.
“Sometimes members don’t even know what a good rate really is when they see a lot of the low and 0% offers,” noted O’Hara.
Full Set of Tools
O’Hara insisted that a good car shopping site has the tools to answer all the questions members need to know when they embark on the car shopping journey.
“Some want to know what type of car to buy, some are not sure if new or used is best. Your car shopping site has to help them with all of this,” he said. “But, again, what many credit unions do is advertise a low rate and expect that to work. You connect with the car shopper first through promoting your car shopping site, and they later you sell them on your low rates.”
That’s what CAP COM did. The CU partnered with GrooveCar to launch a new car shopping site that’s branded Car Buyers Express.
Robert O'Hara, GrooveCar
“This customized branded extension of the credit union’s services allowed CAP COM FCU to take ownership of their automotive program, merging the car-buying and financing processes online,” O’Hara said. “CAP COM opened the doors to additional branding-awareness opportunities while further enhancing their mission to serve members. Branding the auto-buying platform improved recognition for the service while also placing greater value on the importance of this new service.”
Special Pricing
The CU also worked with GrooveCar to create a site that only featured vehicles from the dealerships the credit union works with. In return, the dealers offer CAP COM members special pricing.
“The credit union wanted to highlight their preferred dealer network on Car Buyers Express. Only dealers who would honor their commitments to members are featured,” said O’Hara. “CAP COM gained more leverage with these dealers since they could now offer the dealers the benefit of selling more cars without increasing their marketing budget. They could now promote their low rates to dealers, but more importantly, they could attribute increased traffic to the dealerships. CAP COM benefitted by being able to capture more leads from the car-shopping site while enhancing their relationships with the dealers in their network. This is giving the credit union more leverage with the dealerships. Before the CU really asked for the business, now they can demand it.”
Five Key Steps
Eric Budzinski, AVP of marketing at GrooveCar, said there are five key steps in the car shopping process.
“These five moments are: What car is best? Is the car right for me? Where can I see this car? Can I afford the car? And am I getting a good price?” said Budzinski. “The GrooveCar program addresses all five.”
O’Hara added that selling the car shopping site and not rate is simply more attractive to members, adding that banking can be boring since consumers see it as a commodity.
“What do you think catches a person’s eye more, say on the credit union’s social media site? Hey, check out our rates, or get a glimpse of the new 2019 Corvette? It’s all about being relevant to your members.”