5 Tips to Building a Profitable Relationship with Credit Unions

Does this sound familiar? You’ve had a great month, and open your paycheck only to find you’ve taken a chargeback hit from a local credit union: maybe your products were unwound or the customer refinanced the deal. Many F&I professionals struggle to build a successful business relationship with credit unions, or perhaps even have an adversarial relationship with them.

Yet, the size and power of this consumer segment continue to grow. Credit unions have over $1 trillion in assets, and their 98 million members in the United States represent almost half of the economically active, purchasing population. Today, credit unions hold a significant amount of market share as well, financing almost one in every four vehicles on the road today. Credit union customers are highly loyal to their financial institution, and credit unions consistently rank above banks when it comes to customer satisfaction and trust. Why does trust matter? Studies conducted show that consumers who are highly loyal to a brand are much more likely to come back for the next purchase, to spend more and to send referrals. Who can’t appreciate that? Dealerships that recognize the power of the credit union relationship and build a strategy to tap into that trust have a unique opportunity to build a long term stream of referrals and sales with this highly loyal consumer group. It takes thoughtful planning and consistent effort, but this can pay off in increased sales and profitability. There are a number of key tips and best practices to help your dealership set its strategy, culled from top performing dealerships in the affinity marketplace:

1. Identify your strong/weak relationships

In our industry, we often view the customers who buy from us as our customers. Building a strategy starts with recognizing that your customer is the credit union’s too. Credit union members often prefer to be working with their credit union than another lender, so capitalize on that. Take a look at your current book of business and the credit unions you’re already working with to identify your strong relationships, and target those you want to do more business with. Focusing on a strategic number of lending sources can enhance your lender relationships.

2. Set expectations

True business partnerships only happen on the foundation of mutual trust, and trust starts with realistic expectations. Meet with your credit union representative and lay a foundation for what your dealership expects from the lender, and what they are looking for from you. Reviewing the portfolio performance and setting realistic short term goals for production helps to establish trust.

3. Monitor ongoing performance and have regular, open dialogue

It’s important to stay on top of your contract count with each credit union, so you know where you’re at against your mutual goals. Setting regular meetings with your lender representatives to go over what was approved and what was declined helps them understand the ongoing performance of the relationship.

4. Create a process or guidelines

Another best practice we see at top performing dealerships is giving credit unions the first right of refusal on any deal for one of their customers. By giving the credit union that opportunity, whether or not they approve the deal, they often won’t remarket to that customer. Let the credit unions know about that guideline as well. It goes a long way to building a mutually beneficial relationship.

5. Track and audit your chargebacks

Top dealerships reach out to their customers on each chargeback and listen to their reasons for cancelling. When you hear from your customers, you can uncover any relationship issues with your local credit union and/or process issues within your store. Then hold your staff accountable to the processes and guidelines you’ve put in place.

Finally, remember the long term goal. While closing a big deal is exciting, it’s not about just one car at the end of the month. It’s about how much profit you retain for yourself and the store at the end of the month and the year. Every deal matters, and satisfied credit unions and customers can generate a steady stream of ongoing referrals that add up to meaningful success and profitability.

Marci Francisco is the Sr. Director of Automotive Marketing & Business Development for CUDL, by CU Direct.

Marci Francisco


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