The current low rate environment has proven to be a boon to institution’s loan portfolios. New mortgage refinances and equity loans/lines at the current rates are attractive to many customers. In addition, a reservoir of untapped loan potential exists at most institutions that a targeted marketing campaign can easily unlock. Equity lines already approved and opened are an important and rich source of new loan balances. Reminding members/customers of the credit available to them and how to access it provides an impetus for customers to activate their lines.
Promoting Line Usage
Targeting customers for a HELOC Activation promotion is a relatively straightforward process. A query of an institution’s customer database will yield not only existing HELOC customers, but also the balance and line of credit limits as well. Selecting customers with a certain minimum amount of line available (i.e. greater than $5,000) is recommended. Understanding the amount of money available and communicating that information simply to customers is the secret to driving line usage. An 8.5” x 11” letter mailed in a window envelope has proven to be a very effective mailing package for this offer. The available balance information is critical to the offer copy, so placing this information in an easy-to-spot place on the letter will immediately call the reader’s attention to the available amount. A great place for this available amount is in the upper right-hand corner of the letter, across from the address block.
This communication can be effective to motivate customers who have opened a line but haven’t accessed it at all to consider using their credit. It also reminds individuals who have used part of their credit line that additional funds are available. Letter copy can point out common equity uses for the loans including home improvement projects, college funding, debt consolidation, and even vacations. Message timing should consider holiday seasons, spring-time projects, and when college tuition bills are due.
Response Rates Are Impressive
HELOC Activation promotions can realize response rates of 15% or more, where a mailed customer will increase their HELOC balance. With the impressive response rates of the promotion, there are parallel increased balances as well. A Midwest client had the following mailing results in 2020:
Applying an estimated revenue spread percentage to the incremental balance generated offers a perspective on the significant ROI this promotion can generate.
HELOC activation campaigns can benefit customers looking for an easy way to finance various needs, and will also benefit institutions with additionally engaged households and higher loan balances.