PENSACOLA, Fla.-One credit union believes it is well positioned to take advantage of banks' new debit fees and rewards cutbacks, having established a comprehensive rewards program that is driving CU growth.
Pen Air FCU has introduced its Premier Relationship Rewards that not only returns points for debit and credit card usage but for the depth of the relationship. Introduced in May, the program has helped the CU see increases in lending and membership as the rewards program participation itself has grown by 20% since its inception.
"We wanted to come up with something different," said Michelle James, AVP of electronic services. "You hear a lot about people pulling back on rewards, so we are going a different route. While the banks cut benefits and fee their customers, Pen Air is rewarding our membership through more rewards."
The CU began researching the program early in the year and determined that not only were rewards for using credit and debit cards important, but for using CU services too. "We felt it was time to reward members for their usage of the credit union."
To qualify as a Premier account member and begin earning points, members must have a savings account, checking, debit, and take e-statements. "That gets them into the program and we give them 500 points immediately," said James.
Members then build points through a growing number of ways: e-statements give members 25 points per month and the same for bill pay. A new loan up to $10,000 returns 500 points, loans from $10,000 to $20,000 deliver 1,000, and a loan of more than $20,000 pays 2,000 points. A new mortgage brings in 2,500, and a HELOC or line of credit 500. Visa usage returns one point for every dollar spent.
Into One Bucket
"All of the points go into one bucket for each member," emphasized James. 'We wanted to make it easy for them. We did not want members to have to go to one vendor for their credit card rewards, another place for debit, and another for the rest."
The $1.1-billion Pen Air uses CU Rewards and members turn in their points for trips, merchandise, and gift cards.
David Tuyo, EVP and CFO, said not only is the program driving lending activity, it is helping to turn around a big problem. "There is a strategic reason why we went with relationship rewards--we had anemic product penetration with our membership. So we said we needed a way to get some lift."
Tuyo explained the credit union went back to basics and thought about the problem from the "cooperative perspective. In the old traditional farmers cooperative, you brought something in and got something back. So as our members bring us their business we give them something in return. The more business they bring us the more we reward them."
The plan is to keep adding ways for members to earn points, said Tuyo. The program began with just e-statements and bill pay and has grown quickly. Debit rewards were just added and member referrals will be included soon. "With Premier we have really started moving the needle," said Tuyo. "We had 7,300 Premier members when we started in the spring, and we have added more than 1,000 in a few months. That is 20% growth, which is huge."
Not only does the program separate Pen Air from banks that are cutting back, but from other CUs, contended Tuyo. "Everything we do is about giving back to the member. They are our owners and that is our mission," he added, suggesting a number of credit unions are forgetting that basic principle. "As other credit unions become more bank like, we are becoming more credit union like."
