CHICAGO-American consumers have come to expect some sort of reward with the plastic cards they use. But credit unions should not be intimidated by those nationally advertised programs, according to two analysts, who believe credit unions actually have a leg up in one area: local rewards.
"Rewards are expected, and not just on credit cards," said Andrew Gates, director of strategic partnerships with RewardsNOW. "Deals and offers are here to stay, and they need to get more personal."
Speaking to the CO-OP THINK Conference here, Gates, along with Heidi Young, director of sales with RewardsNow, noted 63% of Americans have stated they are at least somewhat likely to switch FIs if another provided valuable, no-strings-attached offers and theirs did not.
'It Feels 'Green''
"Coming home and being local is a good feeling for people. It feels 'green' to go local; that trend is on its way up," said Gates.
RewardsNOW, which works with several hundred credit unions, has had good success establishing merchant-funded rewards programs with local merchants. It uses transactional and member data to narrow down the merchants that should be targeted and participate.
"The fun part is taking this from the national retailers and bringing it local," said Gates. "CO-OP has launched Shop Main Street. It takes a merchant-funded program and brings it to your community."
Gates said that six-in-10 consumers report they expect their financial institution to find out and offer them new and different ways to help them save money. "Offers and rewards are a part of that. PFM is a part of that. "
Young said that loyalty programs have four main components: Unified Loyalty Program; Merchant Funded Rewards; Local Merchant Program; and Deals & Discounts Program
The Unified Loyalty Program, said Young is "not just credit and debit, it's one program. It's the member's program."
With reward programs overall, Young urged credit unions to "incent your members for their entire relationship. Target profitable behaviors. Get creative. You can use it to address service issues, modify behaviors, all the things your members do."
Rewards programs, said Young, must involve things that members "care about." "Provide your members with a set of reward options that are specific and unique to your credit union. Not just awards that apply to all members, but rewards that apply to the single member."
Young said it's critical a CU take a hard look at its numbers, its targets and where it might grow. Both Gates and Young pointed out that cardholders who use rewards programs contribute 62% more revenue.
Merchant-Funded Rewards Programs
When it comes to the national merchant-funded rewards programs, in which members earn points for shopping at in-network retailers, Gates noted the wide variety of retailers as it really broadens the appeal.
"What we also found is really important are 'always on' programs. It's repeatable and reliable. Members know to look for it," said Young. "This completes the loop; it's brought to them by the credit union."
Gates and Young said the components of a successful rewards program include:
* Simple and easy to understand.
* Frequent communication.
* Offering something of value.
* Experiential. "If it's tangible or guiltless, that's experiential."
* Personalization.
* Aspirational rewards.
