Credit card reward programs are vital to maintaining cardholder loyalty and remaining relevant to members.
Consumers see an endless stream of commercials and direct mail solicitations from national card providers promising more cash back, better travel, and other types of rewards. So, how can a credit union compete?
Three credit unions Alliant, Elevations, and Fort Knox FCU are employing different strategies to offer the right rewards for their members and develop enviable reputations as the best card to carry in their markets. Here, they offer advice on how other credit unions can do the same.ContentMiddleAd
No. 1. Pay Attention To What Members Want
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Alliant Credit Union
Data as of 12.31.17
HQ: Chicago, IL
12-MO SHARE GROWTH: 4.8%
12-MO LOAN GROWTH: 12.8%
Alliant Credit Union ($9.7B, Chicago, IL) had offered its Platinum and Platinum Rewards credit cards for many years when it noticed a portion of affluent members were choosing other payment methods.
We had a gap in our offerings when we looked at high earners and high spenders, says Michelle Goeppner, senior manager of credit product strategy for Alliant.
So, the credit union went back to the drawing board and launched its Alliant Cashback Visa Signature Credit Card in the first quarter of 2017. The new card is designed for those who spend $50,000 or more every year and has attracted positive press coverage with its rich 3% unlimited cashback rewards for the first year.
Although the credit union’s new signature card has attracted attention and driven card growth among current and new members alike, Alliant’s platinum cards continue to grow as well.
If folks don’t qualify for the signature card, which requires a higher credit score and meeting other underwriting criteria, they choose one of the other options that is beneficial for them, Goeppner says.
The Visa Signature card from Alliant Credit Union has underpinned card growth at the Chicago cooperative; however, its other card offerings are growing, too.
Alliant trained staff extensively to help members navigate the new card options. For example, the signature program features richer rewards but includes an annual fee, which the credit union waives the first year.
We put together a comparison chart for staff to help them guide the member to the product that fits their lifestyle and behavior, Goeppner says.
To enhance the Platinum Rewards program, Alliant added a cashback feature that has become the credit union’s largest redemption option followed closely by gift cards. These additions and improvements didn’t happen in a vacuum, however. The credit union made sure it understood what members wanted.
Each of us had opinions about what the card should look like and were excited about potential features and benefits. But, none of that matters if it isn’t what your members want.
It’s so important to do the research, Goeppner says. Each of us had opinions about what the card should look like and were excited about potential features and benefits. But, none of that matters if it isn’t what your members want.
In the case of Alliant, members wanted cashback and didn’t want it limited to certain times of year or categories. They also appreciated having purchase item security and warranty extensions. Notably, the flashier features the credit union thought would interest members didn’t resonate at all.
It was telling, Goeppner says. They helped us create exactly the right card for them.
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No. 2. Think About Life Stages
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Elevations Credit Union
Data as of 12.31.17
HQ: Boulder, CO
12-MO SHARE GROWTH: 8.8%
12-MO LOAN GROWTH: 8.9%
In 2014, Elevations Credit Union ($2.0B, Boulder, CO) embarked on a project to rebrand its entire credit card portfolio everything from the rewards program, fee structure, and interest rates to the plastic cards themselves.
We wanted to transform the card portfolio, says Gary Kindle, senior vice president of operations for Elevations Credit Union.
To that end, the credit union conducted focus groups, talked to members about the existing card offerings, and even asked members to vote for a new plastic card design.
Members indicated they wanted a signature card. Elevations agreed, however, it needed to roll out enhancements in stages. The Centennial State credit union put new foundational elements into place in 2014, stabilized the program in 2015, rolled out EMV and Apple Pay in 2016, and launched the signature card in February 2017.
Some members really want cash back and others prefer the travel benefit. We wanted our cards to fit both lifestyles
Today, the credit union offers members a choice between two signature cards a Travel Rewards or a Signature Cash Rewards as well as a more traditional rewards card and a plain vanilla card with a low interest rate.
Wherever a member is in their lifecycle, we have a product that fits them, Kindle says. That’s part of the reason we introduced two different signature cards. Some members really want cash back and others prefer the travel benefit. We wanted our cards to fit both lifestyles.
Elevations Credit Union launched its signature cards in early 2017. Members now have four program choices that fit a variety of lifestyles and stages.
Both signature cards have proven to be popular. According to Kindle, the credit union is opening two new signature cards for every one traditional card. However, members are conducting more transactions on the cashback card and higher dollar transactions on the travel card. And even though Elevations allows members to change cards as their preferences change, staff encourages members to spend their points within the traditional rewards program before upgrading because old points don’t convert.
The new rewards programs aren’t just about accruing cash, travel, or merchandise. Members can donate points or money to charitable causes, which Elevations has promoted through its Be a card-carrying member of the community campaign.
Of course, all of this means nothing if members can’t access information when they need it.
Our members can view their points on credit union statements, online banking, and their smart phones, Kindle says. Finding a partner who will support all of your channels is important.
No. 3. Make It Easy
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Fort Knox FCU
Data as of 12.31.17
HQ: Radcliff, KY
12-MO SHARE GROWTH: 4.6%
12-MO LOAN GROWTH: 8.7%
Fort Knox Federal Credit Union ($1.5B, Radcliff, KY) was recognized nationally this year for having the best gas rewards credit card. According to a post on MagnifyMoney.com, the credit union’s Visa Platinum card presented a better deal to consumers looking for gas rewards than similar cards offered by Sam’s Club, Costco, Wells Fargo and American Express. The unlimited 5% cash rewards on gas purchases and no annual fee pushed the credit union’s offering to the No. 1 spot in this category.
Becky Ates, executive vice president of Fort Knox Federal Credit Union, says the credit union has been offering 5% cash back on gas purchases and a 1% cash back rebate on all retail purchases since 2008. And for the past decade, the incentive continues to resonate with current and potential members alike.
Members like that the cash back reward is automatically credited on their monthly statement.
Members like that the cash back reward is automatically credited on their monthly statement, Ates says.
In fact, members have upgraded to the platinum card because of the richer rewards it offers.
Fort Knox FCU has been offering 5% cash back on gas and a 1% cash back rebate on retail purchases for the past decade. The program still resonates with members.
Prior to the cash back reward, the credit card portfolio at Fort Knox Federal was stagnant. Since rolling out the enhanced reward structure in 2008, the portfolio has grown tremendously 50% in the first year and 438% overall.
But the credit union isn’t stopping there. With slightly more than 25% penetration, Fort Knox Federal is looking for ways to reach a larger member segment.
For credit unions looking to refine their own rewards program, Ates says ease is key.
Provide a program where members do not have to take action to get the reward, Ates says. Cash back rewards reach a wider member segment than points and appear to be more attractive.