Ten years ago, Rogue Credit Union ($1.4B, Medford, OR) introduced a three-pronged strategy to increase member loyalty to the credit union.
Each prong started with a question:
- Do our decisions create and keep promotors?
- Do we create profits that members value? That keep the credit union operational?
- Do we reward member participation?
It took several years for the Beaver State credit union to hit on the right way to reward members. In February 2016, it launched the Ownership Account a non-transactional savings product that pays 2.00% APY.
The ownership model is what differentiates credit unions and any other financial institution, says Rogue CEO Gene Pelham. We asked how we could reward members and create awareness around this difference.
CU QUICK FACTS
Rogue Credit Union
Data as of 12.31.17
HQ: Medford, OR
12-MO SHARE GROWTH: 11.0%
12-MO LOAN GROWTH: 12.4%
In this Q&A, Pelham discusses the Ownership Account, why Rogue limits how members deposit money into the account, and how it’s approaching new opportunities to save.
Why did Rogue create the Ownership Account?
Gene Pelham: We introduced our loyalty dividend program, Rogue Rewards, at the same time as the Ownership Account. Most credit unions mail a dividend check directly to the member, but we wanted ours to be stickier than that. So, we created the Ownership Account into which we deposit our loyalty dividend.
Explain the stickiness aspect.
GP: The account gives us a launching point to promote the credit union difference in everything we do. It’s the first account listed on a member’s statement, the first account on our internet banking page, the first account on our remote product suite.
By showing members what their ownership does for them, we hope to create sticky members.
How does the account work? Can members only deposit money through loyalty dividends?
GP: Members have to earn Ownership Account deposits. And once they withdraw from the account, they can’t redeposit funds.
We deposit money through the Loyalty Dividend and our VISA credit card. Members receive 1% cash back on every purchase, which we deposit every monthly into the Ownership Account.
We’ve implemented additional ways for them to deposit money and are constantly trying to find ways to drive member value and remind them of the credit union difference.
Gene Pelham, CEO, Rogue Credit Union
What are some of those other ways?
GP: We introduced Save the Change in March 2017. When members spend $10.50 at the grocery store, or wherever, with their debit card, we round up to the nearest dollar and deposit the difference into the member’s Ownership Account. They automatically save a little bit with every transaction.
For all new members, we match those savings for their first 30 days. So that $0.50 turns into $1.
The unforeseen benefits of Save the Change have taken us all by surprise. It reminds members, after every debit transaction, that they are an owner of the credit union. But it also underscores the importance of saving.
Think about the foundational objective of credit unions to promote thrift. This does that with every transaction. People who wouldn’t have normally saved are saving and finding value.
Can you give an example?
GP: We had a staff member go to a local gas station and paid the attendant with her Rogue debit card. He stopped her to ask, Do you want me to round your transaction up to $0.01 so you can put $0.99 into your savings account?
This happened two or three more times, same attendant, same conversation. So, we asked him why he was promoting this for us.
He told us that this was the coolest thing ever. He said he’d been able to save $70, even though he’d had trouble saving more than $5 at a time before.
So, this was a kid sharing this message with everyone who drives up with a Rogue debit card. And the best part is he saved money for the first time in his life because we gave him a vehicle to do that.
Members saved more than $1 million in 2017 through Save the Change, according to Gene Pelham, CEO of Rogue Credit Union. The credit union deposited another $144,000 into those accounts through its 30-day new member match.
Why does Rogue limit how members can deposit funds into the Ownership Account?
GP: We are paying a much higher rate of interest and don’t want it to be a place where members simply park money to chase the rate and not understand the value of ownership.
By limiting the deposit opportunities, it makes the account more productive and affordable for us. If people are dropping $1,000,000 into the account, it doesn’t work.
As the credit union grows, will you be more strategic as to how you deposit money?
GP: Every time we think we can manage our growth, it goes crazy. But we’re finding other ways to deposit money into those accounts.
Through our 1% cash back VISA card, we contributed $942,000 into Ownership Accounts in 2017. Members themselves contributed just over $1,000,000 through Save the Change last year.
We’re getting ready to introduce what we’re calling Dividend Max, which will give members the option to have CD, money market account, or savings account dividends paid into their Ownership Account. They’ll be able to take money they would normally earn 5 basis points on and earn 200 basis points.
Anything else you’re considering?
GP: We haven’t quite figured out how to do it yet, but we could alter our annual skip-a-payment to our members each November. Instead of skipping the payment, members could put that payment into their Ownership Account.
We’ve got that skip-a-payment in place because it was a low-cost way to fund holiday shopping. But for those who want to save, it will be an opportunity for them to do that.
Any other best practices?
GP: We have a lot of people ask about the Ownership Account and just want to hear about the rewards component. It’s a mistake to consider this as only a rewards account. It is a part of our overall strategy to drive awareness of ownership and the credit union difference.
For us, the reward lasts for as long as the money stays in the account. And right now, we have $4.5 million in our 79,000 accounts 79,000 of our 121,000 members to whom we are driving home the credit union difference.
This interview has been edited and condensed.