Credit unions boost rewards programs
Credit unions aiming to boost income, move their debit and credit cards to the top of members’ wallets, enhance cross-selling and build relationships with small businesses in their communities may want to consider how their rewards program can support those efforts.
A rewards program with flexible design options can be tailored to offer incentives to members to use their cards more frequently, especially with participating local merchants, and to sign on for other products and services, from auto loans to e-statements.
The strategies employed by these financial cooperatives, which partner with Buzz Points, demonstrate a few examples:
• UMassFive College Federal Credit Union, Hadley, Mass., offers cardholders a half-point per dollar spent on any debit transaction, but a full point per dollar shopping at local participating merchants. The $448 million CU also sponsors regular “Pot-O-Points” promotions offering additional points for increasing debit card usage. The credit union’s monthly interchange income increased from $79,410 in September 2014 to $98,333 in May 2016.
• INOVA Federal Credit Union, Elkhart, Ind., has signed on 37 local merchants in the rewards program and parlayed those business connections into participation in Elkhart’s Gateway Mile, an alliance that supports the downtown business district. The $318 million credit union promotes reward points for members who shop, dine and entertain themselves at local participating businesses.
• Fort Community Credit Union, Fort Atkinson, Wis., launched a 48-hour campaign in July 2014 offering 2,000 points to members who applied and were accepted for an auto loan. Members received an email a week in advance, a second email as the promotion started and a final message with just 18 hours left. The $230 million CU’s campaign produced 63 new or refinanced auto loans totaling $1.13 million and generating $23,500 in new interest revenue.
Members can redeem their rewards points for travel and merchandise discounts, cash back, local merchant gift cards and charitable donations to local causes. Local rewards can be designed to offer greater value than other options, notes Buzz Points CEO Dwayne Spradlin.
According to a financial impact study by Forrester and commissioned by Buzz Points, the average community financial institution realizes a 139 percent return on investment in the program. Cardholders enrolled in the program average 52 percent more card swipes than the national average and $5 more in annual interchange revenue, the study found.
Karen Bankston is a long-time contributor to Credit Union Management and writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Middleton, Wis.