GROTON, Conn.-Two credit unions that paid a year-end dividend based on members' relationships say an aggressive marketing effort should be part of the rollout.
Brian Orenstein, CEO of Charter Oak Federal Credit Union, said his credit union learned that lesson after it did not heavily promote the year-end give-back the first year it made the move, resulting in a lower number of members qualified for the payment than it had projected.
This year COFCU paid $100 to every member of its Gold Rewards relationship program who met monthly requirements, handing out $271,800 in total (see related story, CU Journal, Feb. 13). "As we all know, you have to tell people several times before they actually get the message," said Orenstein. "The first year we handed out the dividend we did some marketing, but not a lot. Last year and this year we are promoting the dividend much more."
Orenstein's belief in marketing is echoed by Larry Wilson, president of Coastal FCU in North Carolina, who believes paying a year-end dividend based on relationships is not just a move to reward profitable members, but a strategy to change behavior of unprofitable account holders. The $2-billion Coastal gave out a $1.5-million special dividend this year only to members of its "VIP Program" who actively use the credit union. "We are trying to get more members to qualify," Wilson said. "About 25% of the membership, or 47,000 members, received the bonus. We'd love to have 100,000 members get the money."
Better Training
The number of members receiving a year-end dividend from Coastal next year should increase because front-line staff are trained on the give-back program and promote it when members stop by. "Our staff is talking to members about what they need to do this year to qualify," Wilson said. "Word is getting out and some long-time members are calling and asking what they need to do to get the payout."
Orenstein said the year-end bonus is also appealing to consumers looking to switch to the credit union as a result of Bank Transfer Day publicity.
"Bank of America played right into our hands. We now can say to prospective new members that a lot of financial institutions have free checking, everyone says they have great service, but who else will give you back $100 at the end of the year."
How the giveback is structured, said Orenstein, is also part of the marketing pitch. "The total amount of money you can give back is only so large. You have to structure the reward so it is significant. If you reward 60,000 members with a small amount it's like you gave them nothing. You want to get the reward to a level where members say this is a great reward, rather than, 'What am I going to do with $5?'"
