Back to school for credit unions
While parents are buying school supplies and getting organized for a new year and kids are lamenting the end of summer, credit unions across the nation are busy with their own version of back-to-school. In fact, the fall back-to-school period – August and September – is the second biggest shopping season and second most popular time of year for credit union promotions.
This makes sense given that in 2017, back-to-school spending in the United States reached $83.6 billion, according to the National Retail Federation (NRF). In 2018, it is expected to be nearly as high, estimated to reach $82.8 billion with American families shopping for clothing, supplies and other items for the new school year.
The most successful back-to-school promotions for credit unions are merchant category-driven programs, or usage promotions, that help drive transactions and balances. For example, during the back-to-school season, cardholders purchasing school supplies at big box retailers and office supply stores can be incented to receive cash back or other rewards for school-related items bought in-store or online. Usage or merchant campaigns are effective at maintaining and increasing spend and balances, while appealing to a broader base of cardholders, including both transactors with cash-back incentives or revolvers with low-rate incentives.
PSCU’s Advisors Plus, with a mission to help credit unions meet their financial and business challenges through consulting and marketing campaigns, helps PSCU Owner credit unions determine whether these back-to-school campaigns might be the right fit for their programs. According to Advisors Plus, results for back-to-school campaigns can vary by type, but average monthly lifts in purchases during the post-campaign period are typically around $40 higher and average revolving balance lifts can be more than $250 higher. Average annual account profit from usage campaigns falls into the $30 to $40 range.
On average, back-to-school campaigns received a response rate of 42 percent, with only holiday and travel and home improvement campaigns receiving better rates in 2017. In fact, the ROI for back-to-school campaigns last year was 559 percent on average, ranking higher than both holiday and travel and home improvement campaigns.
While these back-to-school campaigns have impressive results, credit unions need to consider some shifts in consumer spending trends when determining how to best approach their ideal campaign. For example, due to events like Amazon’s Prime Day in July, the NRF has found that back-to-school shoppers are starting their search for the perfect backpack earlier in the season compared to the average one to three weeks before school starts. Other retailers like eBay and Apple have also started “Black Friday in July” sales to appeal to these early-bird shoppers and compete with Amazon. Additionally, a study by Deloitte found that parents who begin their back-to-school shopping before August are likely to spend 20 percent more than late starters. As such, credit unions should think about the impacts of expanding their back-to-school promotions to start in July and run through August and September.
Across the nation, credit unions should consider incorporating back-to-school campaigns into their marketing budgets, even considering launching their own efforts in early summer to get the best bang for their members’ bucks for back-to-school 2019. With the proper planning and execution, the fall just might become the second most wonderful time of year.
