Blue Light Special!
The $110 million financial institution was not doing well in automobile loans. It had a 14% net loan growth in 1994 and 7% in 1995. The pattern continued into 1996, even with several promotions such as a discounted loan rate campaign. They decided they had to do something "big" to recover. So they picked up a "bright idea" and ran with it. The result was that, though the first eight months of 1996 produced only a $530,000 increase in loans, two weeks after their "bright idea" their loan portfolio was increased by $39 million!
The "bright idea"?
A six day refinancing special!
Loan officers relied only on a review of the payoff history of the applicants' previous loans, the credit reports, and (so that they didn't refinance vehicles that didn't exist) a physical inspection of the vehicle. There was no dollar limit on the loan. Interest rates had an 18% ceiling and a floor of 6.99%.
The major part of the effort was the marketing, which cost about $9,000. It included statement stuffers, cold mail flyers, banners hung in front of the financial institution branches, and radio and newspaper ads for four weeks prior to the actual six day sale.
According to tired, flushed-with-success employees, "We had to bring in extra chairs for people to sit! We stopped only to eat, and then we ate sandwiches with one hand while we were processing loan apps with the other!"
With 200 applications still to be processed, this Kentucky financial institution had closed $6.8 million worth of loans in six days.
And they're still looking ahead.
The marketing department plans to revisit those people approved for refinancing with a cross-selling effort.
But not for awhile.
They want to rest a bit first!
Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 2, 1/97
First published on 01/01/1997