With the average consumer carrying four different credit cards and a debit card, how do you get your card to become “top of wallet”? That’s a question every credit union should be asking, especially at a time when the need to boost income has never been greater and the techniques of competitor card issuers never more predatory.
An effective card program offers immediate opportunities to increase income, along with the downstream benefits of attracting and retaining members. A number of strategies– some very easy to implement–can help make your card the preferred choice of members and turn your portfolio from underperformer to overachiever.
1. Dive In
So your management reports reveal that your portfolio has increased from 10,000 to 12,000 cardholders. That’s great! Or is it? How many transactions per month do they average? Are they carrying balances or paying in full? What other credit union services do they use? Are there demographic segments that are underutilizing your card products? Unless you know the answers to questions like these (and many more), you really don’t know how well your portfolio is performing. Do a “deep dive” into your portfolio, using profitability and other analytical tools to arm yourself with knowledge you can turn into action.
2. Reward Them
In a Javelin Strategy & Research study, 69% of consumers said rewards are a key factor in choosing which of their cards to use. Add a card rewards program–or improve the program you offer–and your members are likely to reach for your card more often. The traditional points-per-dollar-spent program isn’t the only game in town; newer options like rewards linked to shopping discounts or a debit card that earns cash back may differentiate your offer from competitors.
If the cost of a rewards program is keeping you from jumping in, it’s time to reconsider. Emerging options like merchant-funded programs can increase the value of the offer–driving up usage and interchange fees–or even offset your actual reward costs. In some cases, the merchant will provide incentives to the rewards provider, which in turn provides incentives to the member to use the card more often. For example, your members might earn higher points incentives per dollar of spend at a major merchant retailer participating in a merchant incentive-based rewards program, vs. the traditional one or two points for each dollar of consumer spend…driving up usage with the retailer. Or another merchant might cover the cost of the reward redemption, reducing your costs in the process.
3. Go Commercial
If the commercial market is an important part of your growth strategy, you’re probably linking your business checking and loan accounts with a credit or debit card. That’s a smart approach–as long as it’s the right card. Often, credit unions offer their standard consumer cards to business members. Here’s why that’s a mistake: Interchange income on a signature-based consumer debit card averages 1.38% vs. 2.10% for a signature-based business debit card. A simple change–offering a separate business debit card–can net you an average of 0.72% in higher interchange fees, while also setting the stage to add perks that business members value in a card, like easy-to-use expense-tracking tools and rewards incentives.
4. Encourage Action
Using promotions to market your card is a great way to build volume, but is your campaign effective? Simply boosting awareness isn’t enough. Add a call to action with a specific, closed-end timeframe; for instance, use the card six times in the next 30 days and you’ll earn double points. Link the call to action to something that your members value. If you’re not sure what that is, go back to step one and analyze your cardholder base to gain insights on what they perceive as valuable, based on their past behaviors.
5. Leverage Channels
When promoting your card products, use every service channel available to cross-sell effectively, but not intrusively. Internet banking and e-mail are great, low-cost channels for encouraging card use.
Even your ATMs can market your card, as new options allow you to add marketing messages to the welcome screen, please wait screen or transaction screen. Use the real estate to encourage use of your card over another (but remember to build in a compelling call to action).
6. Personalize It
Just like the mad scientist in the Capital One commercials, consumers crave personalization–on their license plates, cell phone displays and credit and debit cards. Enabling members to add a photo to their cards is easy for you, appreciated by them, and may be the impetus they need to choose your card when reaching into their wallets.
7. Assess Risk
Once you put a card program in place, don’t “set it and forget it.” Your portfolio needs ongoing monitoring–not only to ensure profitability, but to assess and reduce risk. Use risk analysis tools to evaluate your portfolio at least twice a year, looking at the number of cases flagged by your neural network and other trends indicative of risk. Then adjust your program accordingly to reduce fraud and boost profitability.
And be sure to keep members informed of the measures you’re taking to protect their accounts and identities when using your card. Identity theft is still top of mind when choosing the card that’s top of wallet, as 83% of consumers in a Javelin study named security as an important factor in choosing which card to use.
No matter what your size, your card program can help differentiate your credit union, attract and retain members, generate revenue, and improve profitability. Give your card portfolio the proper care and feeding and you’re sure to reap the benefits.
Kendall Workman is Director of Business and Product Development for the Fiserv Credit Union Division. He can be reached at 469-287-3696 or kendall.workman
