Think Like a Realtor
By Allen, Ann Dee | |
Proquest LLC |
When marketing auto repos, borrow the tactics used to sell homes.
While there is no one formula for credit union executives to determine whether to market repossessed vehicles independently or through an outside source, there is a marketing model for going solo. Many of the strategies and techniques that real estate companies and agents use to attract homebuyers can also be applied to marketing repossessed vehicles.
When it comes to marketing "repos," the recommendations of experienced credit union executives, remarketers and auction professionals have a familiar ring to anyone who knows how real estate agents generate sales. A short list of the top marketing tips provided by these experts covers:
* location, location, location,
* timing,
* pricing,
* branding,
* online visibility,
* product quality, and
* expertise.
Used Car Lot
United Heritage CU found the perfect high-visibility location, which was also very close to the credit union and did not infringe on business-partner car dealers, says
"It's all about location," Richardson says. "Our cars were visible from the freeway and we didn't have any other dealers around us. If we had had three dealers next to us, we would not have been able to compete very well visually, and we weren't in the business to sell a large used-car inventory. Our lot was a member service."
The remarketing center included good signage with branding that associated it with the credit union even while maintaining the CUSO as a strictly separate entity for compliance reasons. "We had similar colors for the lot and the credit union marketing; people could see that the CUSO had a relationship with our credit union," Richardson explains.
Having a secure place to store vehicles was another benefit of the center, which held about 24 to 25 cars total and was filled with about 20 cars at any given time at the height of the lot's operation in 2007, Richardson adds. The credit union operated the center until
Timing is Critical
Larson and other experts stress additional critical aspects of repo marketing, namely timing and pricing. She says that putting the illusion of an unrealistically high vehicle price ahead of a strategy to sell the vehicle quickly could bring risks. "Some credit unions will hold onto vehicles and try to sell them for 100 percent loan value, and it doesn't ever happen," she warns. "They are sitting on these vehicles for months at a time, creating work for the staff and an insurance liability by having the vehicle in the parking lot. Over time, they end up losing more money."
He adds that in the case of credit unions, they are most likely factoring in time for both regulatory compliance and an opportunity for the debtor/member to make good on the loan. "Even if the state requires 10 days before you sell the vehicle, you might want to give your member 30 days," he says. "But every day the car sits there, you're losing money. It's your fiduciary responsibility to recover that money quickly."
Pricing Tips
Basic considerations in pricing include the age and condition of the vehicle, as well as weekly and monthly sales trends that show which cars are popular at listing time. Miller suggests using tools and resources to price each vehicle correctly, including the Manheim Market Report,
Perhaps most important, there is more to pricing than the price tag. "Not only are CUs going to have to advertise the price, they need to push a very attractive interest rate and finance package," Larson says.
"A package is always worth more than the item," adds
Financing on the spot, or "sign and drive" services, are another marketing plus for CUs.
"People want convenience: They don't have a lot of time and they want to deal with someone they trust," Jacobson adds.
Reaching Car Buyers
He says members are the first audience to approach about available vehicles. "Twentyfive percent are going to be buying cars in the next 18 months," Jacobson explains. "Most members are going to buy a car in the next three to four years, so the existing membership cannot be ignored."
Credit unions have the trust of their members, excel at fiduciary integrity and are known for putting members firstattributes that can be leveraged in repo marketing. With their direct access to potential customers and customer loyalty, they can use existing branding and resources to post information about vehicles on their websites, send email blasts, place printed announcements at their locations and in mailings, and practice other standard marketing techniques.
"The branding piece is very important," Miller says. "If the buyers of these cars know that you write high-quality loans on good cars, you're going to get a following."
"The credit union can put the car in their parking lot or in front of the building," Jacobson says. "They can give out buck slips to educate members that the credit union has these vehicles for sale. Even better, they can send people online."
United Heritage CU's auto lending activity and good reputation helped it immensely in attracting potential car buyers to its remarketing center. "We were differentiated from used-car dealers because we have good quality control and people assumed we would run a good operation," Richardson explains.
Credit unions also might want to consider advertising vehicles to a larger market if they want to move them quickly. When
Most credit unions rely heavily on the Internet to let people know they have used cars for sale. "Ninety percent of all people looking for a used vehicle are searching for one online," Larson says. "The same thing holds true-whether you're trying to advertise vehicles to members or the general public: Get as many eyes on that vehicle as you can."
Credit union executives should also use Facebook, Linkedln and Twitter at least twice a week "to consistently push out that they've got this inventory of vehicles for sale," Larson suggests. This includes posting photos, much like a real estate agent would do. A special Web section or page is the best practice, she adds.
A Picture, or 20, is Worth a Thousand Words
According to Larson: "Three things that are very critical when a credit union is marketing used vehicles are pictures, price and financing options so they can attract buyers. They need to have lots of pictures because people are going to want to see the condition of the vehicle. I would suggest a minimum of 20 to 30 pictures of the vehicle [after body work, detailing, basic necessary maintenance and safety repairs]. With repossessed vehicles, the more pictures the better."
Jacobson cautions that credit unions need to post high-quality photos that reflect the professionalism of the institution. "Pictures sell cars," he says. "You need a designated area to take photos that identifies the credit union. Well-written vehicle descriptions, including details, are also very important."
Of course the appearance of the vehicle, its condition, and its color and model can all help market the car. "The red convertible with a four-year warranty and low interest rate makes it easy," Jacobson says. The catch is using photos and marketing language to make any color and style more appealingby pointing out the advantages of a white car in the summer, heated seats in the winter, or an atypical vehicle as "one-of-a-kind."
Expertise Needed
From both the member's and the credit union's point of view, it is essential to learn as much as possible about the repo marketing business, the experts agree.
"You have to have staff that understand the business," Richardson says. United Heritage CU's CUSO manager had automotive experience and knew the ins and outs of the used-car business; the CUSO office manager knew how to process vehicle titles and do other dealership paperwork; and CUSO support staff knew how to work with local mechanics to prep vehicles for sale.
"You're going to have scrutiny from regulators," Richardson says. "You have to be prepared for that."
For example, according to Larson, in
CUs also need to track as many aspects of their repo operations as necessary to ensure they are in compliance and also that they are getting the results they need, Miller says.
This also builds knowledge and expertise. Some of the data to be tracked includes the date the car is repossessed; car make, model, year, color and other attributes; the costs involved in getting it ready for market; the date it is placed on the market; the initial price and price changes; numbers of potential buyer inquiries with dates of inquiries; and the sale price, date, financing and warranty.
"What processes do you have that are automated and can manage the entire process to make sure that you're moving that car to the goal?" Miller asks.
"If you're going to do it in house, I would recommend not doing it alone," he says. "Invest in it. Send staff to conferences and have them talk to their peers. They need to read the trade magazines and pay attention to trends. There is so much data out there. Track how you're doing, pay attention and lean on your peers."
Although it's not rocket science, there are many moving parts to marketing repossessed vehicles. Like real estate agents, credit unions must have all the pieces in place to market repos successfully. If they cannot professionally market these vehicles, they need to seriously consider working with an experienced auction or remarketer.
Larson sums it up in one overarching statement: "If it's a quality vehicle; if you've got a high-traffic location; if you've got a highly sophisticated marketing strategy with an active website, social media and good pictures; and if you understand prices and what's moving-and it makes sense to sell it on your own-then do it. That's a level of sophistication."
Remarketing Vendors
GrooveCar (www.groovecar.com)
LEVERAGE (www.myleverage.com)*
Manheim (www.manheim.com)
Repo Remarketing (www.reporemarketing.com)
SWBC (www.swbc.com)*
*CUES Supplier members
Resources
Read "Repossession Done Right" at cues.org/W13repossession.
Attend the
Copyright: | (c) 2014 Credit Union Executives Society |
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