TUKWILA, Wash. -
Six months later, BECU's "Member Advantage" and "Early Saver" programs have been cited by two representatives from Callahan and Associates, CEO Chip Filson and Marketing Manager Mary Royston, as a driver of organic growth other CUs should follow to break the pattern of stagnant membership growth. For checking and savings accounts, BECU pays 7.25% on the first $500. The standard rates (1.75% for savings, 0.5% for checking) apply to amounts over $500. The accounts than pay a blended rate.
Tom Berquist, BECU's vice president of marketing, said the germination of the programs began simply enough-the credit union had money to give back to the membership, and it wanted to do something meaningful.
"The idea came from a situation where we wanted to make a change on our basic share account," he recalled. "If rates are moving up, we traditionally raise our rates by 25 or perhaps 50 basis points. Usually, most folks wouldn't even notice such a change, since they have small balances."
BECU's management team had read the stories about the negative savings rate in America, Berquist continued. He said the product group had an idea: offer an incentive to start saving. The result was a "reverse tier," which pays a "significant rate" on the first $500 in a checking or savings account.
"People won't get rich off these rates, but it is trying to make a point," he said. "When they get to $500, they could take money out and buy a CD. There is some encouragement to save money. We are hoping to put a message in the marketplace. We are paying 7.25%, with an annual percentage yield of about 7.5%, which will encourage savings."
The Members Advantage program requires use of e-statements (which are free), and either direct deposit or bill pay. Berquist said this rule fits with BECU's delivery strategy, which encourages the use of remote transactions as much as possible.
The Early Saver program is designed for kids under 18, Berquist said. A key reason other credit unions should consider this strategy: credit unions need to make bigger strides into the youth market, Filson related.
The program pays 7.25%, with a 7.5% yield, but does not have the electronic requirements the Members Advantage account has.
"We are trying to get the message to kids; and they can see a noticeable difference. My 8-year-old is thrilled he can see his savings account earning a couple dollars instead of a few cents. "We are trying to support good, sound savings behavior with an account that backs that up. They can actually see their money grow," he added.
Filson praised BECU for delivering better value. He said CUs must broadcast the fact they do not have shareholders to please, and therefore can offer deals that truly are in the best interests of members.
In addition, Filson said BECU "turned the pricing upside down" on the Member Advantage and Early Saver accounts. Berquist agreed. "The decision on pricing went back to the way we give back to members. We wanted to reverse the tier to benefit people who did not have $10,000 or $100,000 already. We had an amount of money to give back, and it was about the same cost to pay 7.25% on the first $500, as opposed to giving 25 basis points across the board, as we had in prior years. It was a creative way to give back, and an incentive to save."
When the Member Advantage program was implemented in October 2006, approximately 50,000 members qualified immediately because they already had e-statements and direct deposit, said Berquist. Since then, BECU has been promoting it in newsletters and targeted direct mail-the latter letting existing members know when they are one service away from qualifying. Radio spots began airing recently promoting Member Advantage as another reason to join the CU.
Print ads targeting parents of young children promote the Early Saver accounts.
So far, Berquist said, reaction has been very positive. "We are seeing an increase in new members, and we are hearing members calling in to say 'this is great.' From a credit union standpoint, and from a brand standpoint, the biggest challenge is letting people know it is not a gimmick. It is not a teaser rate-we have committed to making sure this rate always is exceptionally high. We will maintain the spread between the regular share rate and the advantage rate. It fits the credit union philosophy: not giving the best rate only to the people who already have the money."
