Consumers love loyalty programs. In fact, 80 percent of consumer spending today occurs on rewards cards. In a market dominated by industry titans such as Capital One, Citi and American Express, how can a credit union grow a thriving card-based rewards program, engaging members in meaningful ways without breaking the bank?
“Merchant-funded rewards help credit unions very effectively promote card usage by delivering the kind of consumer experience their members have come to expect from loyalty programs,” said Jennifer Kerry, Vice President, Credit Card Services, for CO-OP Financial Services. “And these programs yield a great return on investment because they are funded by the merchants that participate.”
Merchants and Members – a Winning Combination
According to Kerry, merchant-funded rewards are proven in the marketplace and offer a compelling value proposition to everyone involved.
“Your members like the idea of getting an extra perk from you, whether it comes in the form of redeemable points, exclusive offers or better pricing on the products and services they value,” she said. “And sponsoring merchants gain access to thousands of potential customers throughout your member base. These programs also elevate your own brand image by linking the credit union to both prestigious national retailers and the small community businesses your members want to support.”
Making Merchant-Funded Work
While Kerry affirms that merchant-funded rewards should play a role in every credit union’s loyalty strategy, selecting the right program – and managing it well – are critical to success.
“Most importantly, the merchant network needs to be wide and deep, with lots of options available to members and a balance of online and big box retailers,” she said. “Always ask the program provider for a merchant map so you can verify the offering.”
Kerry also emphasizes the importance of differentiating your program from others by including a strong portfolio of merchants from the surrounding community.
“Select a program that can be customized by your own staff,” she said. “You want to be able to reach out to local businesses directly and get them signed up quickly and easily.”
And, Kerry notes, the simpler the program is for members to use, the more likely they are to use it. “Don’t make members hunt and peck for their benefits,” she said. “They don’t want to have to think about rewards, check an outside website, or go through the hassle of entering new credentials in order to receive the program benefits.”
She advises credit unions to provide access to their rewards solution via their mobile and online banking applications to ensure a seamless digital experience for members.
“Review your options carefully,” she said. “The best programs out there automatically alert members and display available offers whenever they are checking out in-store and online. Make sure your provider can deliver that level of functionality.”
To maximize member engagement, Kerry recommends putting as much marketing muscle behind the program as you can.
“You have to promote the program consistently in order to see results,” she said. “And that means highlighting it throughout your branches and ATM network, and across all online and mobile channels. Keep your employees talking about it as well. Get them enrolled and engaged in the program so they can champion it with members.”
As a best practice, Kerry suggests sending affirmation e-mails or text messages to members as rewards are accumulated. “Congratulate them, for example, when they have earned an extra four percent off at CVS,” she said. “Simple gestures like that can go a long way toward keeping members engaged in the program.”
She also advises credit unions to lean on their program provider for marketing support.
“Look for a provider with someone on-staff who is an expert in the loyalty industry, and who can help you develop successful marketing strategies and promotions,” she said. “Your provider should also offer you a variety of tools and materials, such as FAQs, e-mail blasts and brochures, to educate members and keep the program in front of them. And make sure you can personalize these materials with your credit union’s logo, color scheme and other branding elements.”
While member engagement is always a program’s primary focus, other benefits can prove equally valuable. “Merchant-funded rewards help credit unions further their relationships with local businesses,” said Kerry. “This can have a very positive ripple effect, opening up valuable marketing and cross-selling opportunities.”
She continued, “There really is no downside here. Merchant-funded rewards very effectively and cost efficiently generate enthusiasm for your card products and brand while spreading goodwill throughout the entire credit union community.”
Find out how to turn up member satisfaction this holiday season.
The post Winning the Loyalty Game: The Value of Merchant-Funded Rewards appeared first on Insight Vault.