Convenience checks boost response rates

They can help your CU mount a cost-effective direct mail campaign

Today, when credit unions say, "The check is in the mail," chances are they mean convenience checks. In the past, only high-powered marketers such as credit card issuers used these checks. Today, credit unions are discovering their potential to increase market share.

Convenience checks consist of up to three preprinted checks attached to a personalized, persuasive letter encouraging the member to cash the checks as a loan. These programs make the greatest impact when they're combined with a creative theme, tied to a season, or focus on a specif is use.

Most marketing professionals say that a successful direct mail campaign usually results in an acceptance rate of between 1% and 2%. Although that can be a pretty significant return on investment, credit unions are coming to realize that, with minimum effort and no incentives, convenience checks can help them implement a sound direct mail campaign. And these campaigns can net a much higher acceptance rate and possibly yield thousands of dollars in loans.

Traditionally, credit card companies have been the biggest purveyors of this type of marketing effort. These companies realize that convenience checks are some of the most personal, creative, and cost-effective direct mail pieces on the market today. It's not surprising that credit unions have embraced this practice.

As not-for-profit entities, credit unions have always had to rely on "guerilla" marketing tactics to compete with banks' big advertising budgets and slick marketing campaigns.

Today, the competition to gain and retain members has become even fiercer as consumers are continuously bombarded with offers from other financial institutions. Although credit unions may not be able to outspend their competition, they're often spending their money more effectively through targeted marketing campaigns that work.

Clarke American's convenience check program for credit unions is called Letterchecks(TM), and it has been successful for several reasons. The program's effectiveness is in its simplicity. It gives members a feeling of cash in hand and a reason to spend it.

These convenience check programs let your members proceed directly from the mailbox to the home improvement store to start a renovation project, or to the mall to begin Christmas shopping. They fit well with consumers who live in an age of immediate response and instant access. What members want to visit their credit union to apply for a loan when they can have an approved loan delivered straight to their door?

When members accept an offer on a Lettercheck, they're accepting a loan through the credit union. This means the credit union has successfully negotiated another way of keeping the member's business. A Lettercheck campaign anticipates the member's loan needs and meets them before members accept offers from other institutions.

Letterchecks require no special purchase of expensive graphics and are signif icantly less labor intensive than creating a marketing piece from scratch. And because there essentially checks, there not likely to end up unopened in the trashcan. Most members would think twice about throwing away anything that looked like money.

Many credit unions have implemented successful seasonal Lettercheck campaigns. Campaigns designed to tie into the Christmas gift-buying season are especially successful. One Florida credit union mailed Letterchecks for two types of loans during this time. The first was a Visa(R) loan with money borrowed against the limit of a member's credit union Visa Gold card. The second was a home equity line of credit (HELOC). Both programs were successful. In fact, the HELOC Letterchecks garnered a 15.5% acceptance rate. Taken together, these programs generated more than $640,000 in credit use-more than seven times that of most direct mail campaigns.

Sue Balihache, marketing specialist for U of C Federal Credit Union; Boulder, Colo., recently provided another example of the benefits Lettercheck programs can attain for credit unions. Balihache sponsored a targeted Lettercheck program with a theme encouraging members to make HELOC loans to pay their income taxes. The Letterchecks were mailed to 1,171 members at a total cost of $1,112. For this relatively small investment, U of C Federal received a 9.9% response rate that translated into more than $369,000 in revenue for the credit union. Home equity revenue for each dollar spent an this program totaled $332.

Letterchecks have also been effective in promoting auto loans. A $250 million asset East Coast credit union mailed 1,928 Letterchecks encouraging members to take out a preauthorized car loan. The credit union received 99 responses for an acceptance rate of 5.1%. The payoff was $1.9 million in auto loans.

The mechanics of the program are simple, and a credit union doesn't have to be a Clarke American partner to participate. All a credit union has to do is contact Clarke American and it will be assigned a Lettercheck coordinator. The coordinator will help the credit union choose from several types of Lettercheck stock depending on the season or the campaign's timeframe. Clarke American provides predesigned stock for all types of occasions including:

Back to school

Christmas

Home improvement

Fall, spring, and summer

Family vacations

Computer loans

Graduation

Bill consolidation

Tax time

New-car loans

Clarke American also offers generic designs for allpurpose campaigns, and it can match any of its printed stock to any type of creative theme a credit union wants to employ.

After the credit union selects its Lettercheck stock and type of campaign, a Clarke American representative works with the credit union to ensure printing accuracy and layout. The final product is usually ready in about four weeks and can be rushed in certain situations. Many Lettercheck users have told us their campaigns have cost them little time and effort. Furthermore, all checks include Clarke American's Enhanced Security Level(TM) features, which exceed industry standards in combating the counterfeiting and alteration of Clarke American checks.

Although Clarke American will provide a Lettercheck program to credit unions interested only in a one-time mailing, it recommends credit unions initiate a series of campaigns to be most effective. Like any good marketing initiative, better results can be achieved through higher frequency. Clarke American helps credit unions accomplish this by offering special, multicampaign discounts.

With high rates of acceptance and minimal cost and time demands, convenience checks represent a cost-ef fective, high-return marketing opportunity for credit unions. These programs give credit unions another way to market themselves in the highly competitive financial services marketplace.

JULIE FAULKNER is marketing director of Clarke American's credit union division. Contact her at 210-697-6179 or at julie_ faulkner@caradon.com

Copyright Credit Union National Association, Inc. Oct 2000
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