Why Meriwest Made Changes To Its Relationship Pricing
Meriwest Credit Union has made changes to a relationship-pricing system that rewards members who have the deepest relationships with the CU with reduced fees, better interest rates, free products and other benefits.
Julie Kirsch, Meriwest CU's chief operating officer, said the credit union introduced the first incarnation of its Relationship Advantage program in 1996. After a decade of changes, however, Meriwest's management decided to retool the program to address the "evolution" of the credit union and its membership.
"We first created the program in 1993, and introduced it to members and staff three years later," Kirsch recalled. "We did quite a bit of modeling. We looked at usage of different channels and looked through data to set the tiers."
A lot of role playing and planning went into setting the value of the 1996 tiers, she said. The credit union was pleased the members appreciated the program, and the staff "got it."
"While it is nice to treat everyone equally, not everyone is the same," assessed Kirsch. "That was our first foray into segmenting the membership and rewarding behavior. It took us pretty far in terms of share of wallet. But 10 years later, we wanted to look at the tiers and ask if the rewards still made sense."
Work on the new overhaul began two years ago and included input from several departments within Meriwest Credit Union.
Kirsch said her role the past two years has been the "champion" of the reconfigured program. She said the time was needed to ensure the strategy that was being developed fit with what Meriwest wanted to accomplish.
"We had to make sure the reward levels are relevant. We are a completely different credit union compared to 10 years ago. We had gone from a single-sponsor credit union [Meriwest formerly was a CU for IBM employees] to a community credit union. We were geographically expanding, so we had to make sure the program meets the needs of the membership."
The 2006 version of the Relationship Advantage program was introduced to members Feb. 1 and Kirsch said Meriwest's staff had been gearing up for the launch during the fourth quarter of 2005. "We really revamped the program. I've been telling people we gave it an extreme makeover," she said. "We included some benefits from the previous program and retired others."
One new tier is known as the homeowners' advantage. As the name suggests, it rewards members who have a home loan with Meriwest. Benefits include interest rate consideration on deposit products, free bill pay, free wire transfers in and out, and free use of surcharged ATMs belonging to other financial institutions.
According to Kirsch, free remote access may influence members to select Meriwest. "If someone is considering us versus Countrywide, we want to offer more to compare than just the rate. Perhaps the rewards will be an incentive to go with us."
Combined balances lead to higher tiers, which in turn lead to "more rewarding" offers. For instance, members can earn free checks if they use Meriwest's Bill Pay. Other examples include free money orders and travelers' checks, interest rate reductions on auto loans and home equity lines of credit, money applied to closing costs, and annual fees waived for some products.
The goal is to "make people think about where their financial business is located," Kirsch said. "So much of what we do is commoditized, so people can see the advantage of having their money here. We quantify the relationship between the member and the credit union. Of course, our commitment to service does not change-regardless of the relationship level or the balance tier."
Meriwest is using several methods to get the word out to its 75,000 members. The $1.35-billion CU is distributing point-of-sale collateral, plus there are posters in its 13 branches in the greater San Francisco Bay Area plus Tucson, Ariz. In mid-February, print advertisements promoting the new program began appearing in newspapers in Meriwest's service area.
The changes to the Relationship Advantage program are nothing more than the "process of evolution," Kirsch declared. "As we evolve, we want to keep the program current and relevant to what we are trying to accomplish. We want to give people an incentive to think of Meriwest for their next financial purpose."