Friendly staff and good member service, however, will only take you so far. To stay competitive, credit unions must offer card programs and rewards that have real meaning to their members. Even the most loyal members will jump ship if another institution delivers better rewards. This is especially true after the Great Recession, as consumers are much more value-conscious.
Research shows that a rewards program is the main reason people select a new credit card: about 30 percent of respondents stated so. According to the same ComScore study, about two-thirds indicated they would consider getting a different card if it offered rewards.
Designing a Loyalty Program: According to an Aite Group study, approximately 80 percent of all credit card spending is done with cards that carry rewards programs. Does your credit union offer a rewards program? If not, you are barely competitive. If you do have a program but aren’t managing it, or don’t really understand it, you are still way behind the curve.
Take the time to determine how member loyalty is part of your overall growth strategy. At this stage, don’t hesitate to call your Card Services for Credit Unions (CSCU) consultant. They are all very experienced with rewards programs, and can help with strategic planning and design for an effective program.
"Now is the time for credit unions to differentiate themselves," says Bill Lehman, vice president of portfolio consulting services for CSCU. "Put a rewards program in place and market it aggressively. Then determine other ways to be creative with it that add value and strengthen the member relationship."
Three key metrics measure loyalty: total number of transactions/month, total dollars spent on transactions per month, and total active accounts. An effective loyalty program will keep these numbers going up every quarter.
One of the most important rewards features is a program with non-expiring bonus points. If an expiration date is absolutely required, make it no shorter than five years. Also use a rewards program for more than its cash value--link it creatively to other products and services.
"For example, let members redeem points for a one-quarter point reduction on a car loan rate," says Chris O’Leary, vice president of sales for CSCU. "Don’t silo the program strictly to the card."