LAKE JACKSON, Texas-Bucking a growing trend by financial institutions to add checking fees due to expected interchange cuts, TDECU is giving away $1,000 a day for a year to attract consumers to its free checking account.
The move was made to increase the credit union's share of the checking market and cross-sell, and is expected to be bolstered as other institutions eliminate free checking, according to EVP/COO Stephanie Sherrodd. "Even though banks are adding fees, it still takes a lot for people to move. We had to find a compelling way to get people to switch."
TDECU is awarding $1,000 every calendar day and bases members' chances to win on their account standing and banking activity for the day of the drawing. The CU gives members one entry for every $100 in their checking account, one entry for every debit or ATM transaction, 10 entries for every TDECU auto loan that's in good standing, one entry for every online bill pay, and 10 entries if the member is enrolled in e-statements. "All of these chances to win are recalculated every day, so members start fresh each day and can win multiple times."
Cross-Selling Strategy
Besides giving members more chances to win, all the ways to score entries back a cross-selling strategy the credit union knows is important to support free checking. A number of industry analysts have stated that if CUs intend to maintain free checking they need to use it as a cross-selling tool (
"Checking is the core relationship product from which we can introduce many other products and services," said Sherrodd. "Gaining that checking account is important to us. So that is where we wanted to make our investment this year and grow."
It is too soon to tell how the promo that began in May is faring, said Sherrodd, who explained that due to Texas sweepstakes rules there is a delay from when the campaign starts and drawings begin. "We have had only a few weeks of drawings," Sherrodd said at press time. "But I can tell you we have noticed more checking accounts coming in and members love the giveaway. We also are seeing a significant lift in e-statements, a primary goal for the offer."
Increase in Debit Activity
Sherrodd said TDECU has seen an increase in debit transactions, too, but wants to let some time go by and evaluate whether the spike is due to the campaign or just a seasonal trend.
TDECU opted for the giveaway because it not only attracts new checking accounts and members, but rewards existing members. It also separates the offer from cash incentives some banks-like Chase-are moving now to get consumers to bring over checking business. "This approach has a lower checking account acquisition cost than a cash offer, we determined. And it is less expensive than a number of other options we considered."
As far as prize costs, TDECU plans to pay out at least $365,000 since it expects to run the offer for a minimum of one year. That amount of time is needed to make an impact in the market, Sherrodd said.
"We have committed to evaluate this for at least a year, but it may go longer based on program results," Sherrodd stated. "You need at least 12 months to build momentum and have the marketplace become aware of it. We would like to have a long-term, multi-year commitment to this, but like any new program we have to first evaluate what the impact is."
Sherrodd would not share what TDECU is spending on the advertising, but said the campaign is extensive. "We are using mass media and have a number of TV commercials and billboards and direct mail. This is all over our lobbies and we post a picture of each winner on our website. We are saturating the market with this."
TDECU's membership checking penetration is 60%, and no pricing changes were made to its free, no-minimum-balance checking account for the offer. The checking account offers free online and mobile banking, bill pay smartphone apps, and e-statements. The account paid .25% APY at press time.
