How relationship rewards can boost credit union member loyalty
Across the financial industry, card-based rewards programs continue to emerge as institutions large and small compete for business and brand awareness. However, when it comes to nurturing member loyalty, savvy credit unions are moving past credit and debit transactions to blend a wide range of member touch points into their rewards offering.
“One of the newest trends in the industry is the movement toward ‘Relationship Rewards,’ which take a more holistic approach to inspiring member loyalty,” said Andrew Gates, CEO of Azigo, Inc. and Member Rewards by CO-OP consultant for CO-OP Financial Services. “The reality is this: If rewards work with a credit card to drive behavior, then they can work when a member applies for a loan, signs up for e-statements, opens a retirement account or uses online bill pay functions. If you can track it, you can reward it.”
Early Engagement Promotes Long-Term Loyalty
Gates notes that, across all industries, there is increasing recognition that early engagement with a consumer is a predominant factor in developing long-term loyalty. “When a consumer engages with a financial institution three times within the first 90 days of service – for any reason at all – the likelihood of that consumer becoming a long-term, engaged and profitable customer goes up significantly, by more than 30 percent in some cases,” he said. “So if the member is on the phone, visits an ATM, refers a friend or chats with you online, reward that member with points.”
According to Gates, mobile and social channels open up a new world of opportunity for rewards. “As a credit union, you can run a campaign that rewards members for posting pictures of themselves in front of your branch on Facebook,” he said. “You can also reward them for downloading an app and using its features. These kinds of rewards provide a memorable consumer experience by making it fun to do business with you.”
Gates affirms that rewards are just as powerful offline. “One of the best ways to deepen a relationship while the member is in the branch is to start a dialogue,” he said. “Rewards provide an easy way to talk about something good for the member without a hard sell. It’s very easy to train your staff to say, ‘Did you see that you can earn double points now at the local dry cleaner?’ Rewards make a great ice breaker because members want to hear about them.”
Keep It Simple
To make the most of rewards, Gates advises credit unions to construct a program that is easy for members to understand. “Rewards should always be in the same currency,” he said. “I advise against combining points with cash-back offers and special rewards. There is no need to confuse members about what they are earning and when.”
Gates recommends a points system in most cases. “Points present rewards in an enticing way,” he said. “Where cash back becomes less effective is when 50 points equals 50 cents. You feel great about 50 points, but may pass on 50 cents.”
While rewards are a valuable tool for driving member loyalty, Gates reminds credit unions that they are one part in an effective loyalty strategy. “Rewards work best when members are already engaged in your brand,” he said. “So train employees in customer service and ensure that your products meet and exceed member expectations. When you focus time and resources on delivering a superior member experience, a well-managed rewards program adds dimension to that experience and can prove transformative to your business as well.”
For information about CO-OP’s rewards programs, click here.