More Than a Number – The Pitfalls of Relying on Rate
It’s pop quiz time – can you spot what is wrong with the following sentence?
“Introductory Visa Platinum rate as low as 1.99% APR!*”
Did you answer “everything and nothing?” If so, give yourself two points.
Let’s say you’re crafting a marketing piece and this sentence serves as a feature of the credit card. In this context, there is absolutely nothing wrong with highlighting your great rate as a selling point of your credit card.
In contrast, if your entire piece – or worse, your campaign strategy – focuses exclusively on this point, then everything is wrong with this sentence. Here’s why:
When it comes to shaping the “what” of marketing – your message, or what you’re offering the member – remember that your credit union is more than its interest rate. Admittedly, one can see the temptation behind making an attractive rate the focal point of your marketing. In “Credit Union-Land” we’ve been told that our not-for-profit structure makes better interest rates a differentiator from the big banks. And it does. But rates come with their own sets of problems:
- A great rate can always be undercut. You may be the lowest rate in town…until your competitor decides it wants a shot. A rate-focused marketing strategy deflates as soon as the bank down the street begins offering a lower APR and marketing it all over town.
- People don’t connect with rates. We know even the smallest rate reduction can result in real, tangible savings for our members; however, the truth is that people are too busy living their lives to sit down and discover that for themselves. To them, your rate is just a number. It doesn’t have any impact or meaning unless you tell them HOW that number can improve their financial situation in the form of lower monthly payments or savings over the life of the loan.
- Rates, rates, everywhere! “0% financing with no money down!” “1.99% introductory rate for 12-months!” “Rates as low as 2.24%!” One marketing firm estimated that people living in cities are hit with roughly 5,000 advertisements each day. The human brain is incapable of actively tuning into each unique message, so some naturally fall off the radar or never even register. Nothing says that can’t be the fate of your
So what role DOES rate play in your loan marketing strategy? Rate will enhance a loan offer when combined with a strong emotional appeal that clearly illustrates the benefits of choosing your credit union to fulfill a financial need. Your marketing messaging should tell your credit union’s story and why it should matter to the consumer:
- It’s not a mortgage – it’s a first home with payments that are cheaper than rent and could free up $200 each month to put towards debt or savings.
- It’s not a car loan – it’s an upgraded ride for a lower monthly payment that allows you to put back for vacation.
- It’s not a credit card – it’s making a major purchase but paying less for it than financing through a high rate big-box store card.
People aren’t buying your mortgages, car loans, and credit cards – they’re buying a better version of their life with your credit union’s services. So go ahead! Promote your “rates as low as…” till the cows come home. But don’t make the mistake of thinking your rate will do the work for you. It’s up to YOU to bring the art of storytelling into your credit union to show members and potential members how choosing you helps them.