BROWNSTOWN, Mich.–A new sales incentive structure that involves most of the credit union—including the collections team—is being credited for driving a 26.5% increase in lending at Advantage One FCU.
Advantage One in 2015 hit a record-high with $69.7 million in its loan portfolio, an increase of $14.6 million over one year earlier.
“We always had a sales culture, and then we decided to ramp things up,” said CEO Chris Corkery.
That meant not only more incentive dollars up for grabs and new reward tiers, but also a new structure that allowed tellers and some of the backoffice staff to also be involved in sales. The changes essentially put 25 people in sales positions across its three branches.
“When were in the thick of this program last summer we generated more than 3,000 leads from our tellers. It was overwhelming,” said Corkery.
Collections Team Incentives
The CEO added that incenting the collections team worked because in speaking with late payers and reviewing credit scores they often found ways to save members money via a refi, which also freed up money so members could make their monthly payments.
Advantage One ended 2015 with total assets of $126 million, an increase of 8.4% over the previous year.
Corkery said that for the first time the credit union brought in a sales consultant to train the entire staff. He noted that when it had previously sent a few staff members to outside training, they would return “energized, this time we wanted to energize the entire organization, all at the same time.”
Corkery explained that the training focused on teaching staff how to educate members to raise their credit scores, lower their monthly payments and eliminate high interest debt. Much of the business has been refinancing, he said.
The biggest growth area was auto, with used auto loans growing 46% last year and new auto loans 40%. Unsecured loans grew by 40%, as well.
The new incentive structure led to some big increases in annual take home pay for some staff. Corkery said one of the CU’s “financial solutions partners” received more than $11,000 in incentives, a “significant” increases in her annual pay, he said.
VP of Lending Shelly McClain said that one of the changes to the sales structure has been to now pay staff an extra 3% on their incentives when they exceed their goals. Advantage One added new minimum tiers that now prevented staff from receiving any incentives until that reached an entry-level sales mark.
McClain said that lower tier collectively raised the performance level among staff, getting more people selling—and selling more.
In 2014, Advantage One recognized it would be making more loans and therefore budgeted more for incentives. In 2014 the CU paid $30,000 in incentives and last year paid out $80,000 to staff. AOCU looked at what it paid last year in incentives, and at its loan growth goals for this year, and has budgeted for a 17% increase in incentives in 2016.
“I believe in incentives as long as they are for going above and beyond,” said Corkery. “Our philosophy now is that each employee is expected to reach some type of base to keep a seat on the bus. And when you go above and beyond that you get rewarded.”
Corkery reminded that any program employing such a plan should carefully assess any money it spends on incentives, saying those dollars must show robust ROI.
Chris Corkery
“We track the profitability of our loans and our costs carefully,” said Corkery. “At the same we paid out $80,000 in incentives last year we also saw our loan yield go up 40 basis points and recognized an additional $800,000 to $900,000 in interest income.”
Top Talent
A strong incentive program not only has lifted lending at Advantage One, it is also attracting the kind of talent the credit union finds it must have in order to compete.
“We find that the banks are paying a good amount of money to their sales staff, so we have to pay as well,” explained Corkery, saying a good base salary with attractive incentives are needed. “We have attracted some really good people. We picked up some exceptional people locally from Quicken Loans.”
Corkery added that while incentives are a great motivator, what is also motiving his team every day are the new skills they have picked up that help them better spot members’ needs.
“Our staff really enjoys improving the financial lives of our members,” Corkery said.