RICHMOND, Va.-Loud card rewards messages from a seemingly endless number of financial institutions have deluged the American consumer but enhancements, product bundling and segment targeting can help credit unions stand out among the crowd.
Marti Beller, president of Affinion Loyalty Group, argued financial institutions must look to enhancements such as travel assistance or identity theft protection to differentiate themselves from the vanilla packages to which consumers are already accustomed.
"Provide them with soft benefits that have high perceived values that the members believe to be relevant," she said. "We talked to no less than 15 issuers and the buzzword that everyone is all about is 'customer engagement.'"
The evolution of rewards programs, which have gone far beyond the typical cash back or points offerings for each dollar spent on a credit or debit card, may be fertile ground for many CUs to start engaging their membership.
"There's no cookie-cutter way; there's no one solution. What you need to do as a credit union is you need to know who you want to make loyal, segment your membership base and understand their needs. Then put together loyalty propositions that appeal to the different segments," John Pembroke, Chief marketing officer of PSCU Financial Services observed. "Look for members who have a similar profile to your most profitable members and...who you want to migrate over time to become your most profitable."
Depending on rewards to cement member loyalty would be a grave mistake, however, Allegiance Best Practices Manager & Loyalty Expert Kyle LaMalfa pointed out. "Rewards programs are a way to add to your value proposition but they don't really improve your relationship," he explained. "It's a double-edged sword. On the one hand there is this honeymoon phase where people are excited about the points and excited about the rewards. But if there is a weakness in [the CU's] core offering, those points become a point of contention and then its painful to apply your new points because you have to do business with the company to get more."
"More and more credit unions and businesses in general understand that they need to focus on their core value propositions to meet the needs of customer expectations and if they want to supplement that with rewards programs, great," added Allegiance VP Corporate Marketing Chris Cottle. "That's the way it should be."
To reduce reliance on rewards, credit unions can also offer and heavily advertise product bundles as a way to attract new members or remind present ones why they should stick with them. CUs should take a cue from the rewards segmenting and chop up their membership to figure out which products to bundle and to whom those bundles should be promoted, Pembroke argued.
"Putting together a bundle with a checking account that includes features like online and mobile banking could be a way to deepen your relationship with a Generation Y member," he explained.
