Want to boost member engagement? You'll need to get your members to pull out their smartphones.
That's according to the findings from a new Filene Research Institute pilot program, which found that location-based smartphone alerts and personalized messaging drive member engagement, increase brand awareness and credit/debit card penetration.
The research is the result of 10 credit unions polled by Filene over the course of a 20-month period. Participating credit unions worked with Larky, a mobile-loyalty platform, to investigate the impact of location-based rewards and discounts on credit union members.
According to Filene's Chief Impact Officer Tansley Stearns, the pilot process was largely driven by credit unions. "We wanted them to share what is working well for them and even share challenges so that collaboratively all pilot participants can drive stronger results."
Credit union ideas, she added, shaped the Larky program so that it became "stronger" throughout the course of the pilot. Stearns noted that prior to the pilot, Larky worked with a number of organizations through respective HR departments to provide additional employee benefits, but hadn't yet worked with financial institutions.
"Credit unions identified early on that the geolocation could provide an opportunity to engage members to come to branches, special events and even to finance with the credit union when they were at a car dealership," said Stearns. "They also had ideas that helped with tuning the notifications so that the geolocation was meaningful and not frustrating."
Among the findings from the pilot were that credit card penetration increased 5%, debit card interchange and penetration saw marginal increases, and community and small business relationships were enhanced.
Rebekah Monroe, marketing manager at Roseville, Mich.-based Christian Financial CU, noted that her credit union's interest in the program was initially around increasing interchange income. "In the end," she said, "we realized that Larky was so much more than that, that it actually helped us engage our business members and use this as a tool to develop relationships with potential business members."
Along with Christian Financial Credit Union, Goldenwest Credit Union and Summit Credit Union also participated in the pilot. According to Larky Co-Founder Gregg Hammerman, "Of the 10 credit unions that participated, the asset range was from $40 million to over $2 billion. We wanted to have credit unions of all sizes and ones that were located in both urban and rural areas."
Cashing In
With 10 branches and 120 employees, the $351 million Christian Financial Credit Union supports more than 40,000 members. The credit union's CEO, Patty Campbell, sits on the Filene Research Council. When she got wind of the pilot, Monroe said it was full steam ahead, especially since Larky's Ann Arbor, Mich. headquarters was in close proximity.
"We ended up really collaborating with the Larky team to shape this product into what we were looking for," said Monroe. "Along the way, Larky learned a lot about credit unions, and we learned a lot from them. We ended up naming our rewards program Community CA$H."
In an effort to broaden the CU's relationship with its business community, Larky provided an initial target list of several hundred businesses. Monroe and her team narrowed the list to a variety of businesses that fit with the CU's brand. Larky then coordinated perk programs.
"We did get new businesses to come on board over time, as members would find out about the program we would get interest and then add them to the program," said Monroe, adding that the program has a "grassroots" appeal. "Today we have 69 perks in our Community CA$H program."
While Monroe said Christian Financial's debit and credit card interchange rates have increased since the program launch, she conceded that it is difficult to attribute the spike to Larky alone. To date, 1,800 members are signed up for the program. The target goal is 3,000 members.
"Based on member feedback that we have received, we know that our members overwhelmingly feel that the program adds value to their membership," said Monroe. "We would like to see more members use the perks available to them, which is why we're constantly looking to improve, to tweak the program and add new perks along the way."
Pilot Takeaways
Not all credit unions that participated in the pilot had the same goals, explained Hammerman. While some CUs wanted to push card usage, others were looking at furthering business relationships within the community.
"One of the credit unions located in Utah used the solution to cross-sell insurance based on the location of its members," he said. "They received 15 new leads within 30 days of program launch."
When Stearns and her team embarked on the pilot program, they assumed that most credit unions would want to leverage Larky primarily as a driver for non-interest income. And while she noted that was important for some participants, it wasn't the critical driver.
"Several of the participating credit unions already had a rewards program, but there was heavy lifting in maintaining and growing merchant relationships," she said. "Knowing just how many hats credit union executives wear, it was a real treat to see this program help take one thing off their plates as Larky manages all of that effort."
