More and more purchasing and other financial transactions are moving online, and whether that means working via mobile app or using a desktop computer, it’s a whole new world when it comes to credit cards. For Credit Unions (CUs) to keep pace with the bigger financial players, offering incentives is crucial for getting members to use their cards for checkout processes. The focus on the digital environment requires you to reimagine the traditional card loyalty programs, too, to ensure that the rewards offered are easy to earn, access and claim online, to encourage win-win behavior.
Examples of Digital-Friendly Rewards
Financial institutions have developed some powerful reward programs, and we rounded up some examples of digitally-focused options for you:
- Amex recently sent out communications to clients who linked their credit card to the Uber app. Now, each time the user travels with Uber, they earn double points on their Amex card. Guess which card is likely now “top of app” or first choice for Uber users?
- A couple of years ago a mid-sized bank offered a $5 or $10 statement credit to clients who connected their credit card to iTunes. The incentive of free money was offset by the interchange revenue earned every time an iTunes purchase took place. Since the setup process for Apple Pay uses the iTunes card as first choice, too, they got in on the initial Apple Pay environment at the early stages.
- Capital One offers its clients one and half times the points all the time when they use the Cap One card for online purchases. Since most digital wallets these days offer the option to add multiple credit and debit cards, this helps give Cap One first choice or “top of app” status. This is also a simplicity play, which counters the rotating quarterly bonus categories of other cards.
Incentives offered by the larger financial institutions might sound impractical for smaller CUs, but that’s no reason to be discouraged. There are ways to apply the same thinking at a local and community institution level, and we have some suggestions for you:
#1: Size Doesn’t Necessarily Matter
Rewards linked to iTunes and Uber are great at a broader level, but CU members are often attracted by the local, community-focused aspect of your services. Many prefer to deal with a financial institution where they feel personally valued and have a sense of ownership. Chances are good those types of customers also do much of their shopping at smaller institutions, such as the local independent supermarket or the corner drug store.
#2: Connect with Community Providers
Organizations like food cooperatives and small local businesses are constantly looking for ways to compete with the big corporations, which typically have national footprints and large marketing budgets. Partnering with a community Credit Union is an opportunity for them that offers mutual benefits, and can lead to a win-win situation for all parties.
#3: Be a Squeaky Wheel
Use member transaction data available to you to discover which merchants are the ones most often used by your clients. Determine whether those merchants are working through a financial processing house and if so, contact the processor to see if they could partner with your CU to create unique and exciting digital reward options. Encourage them to connect with local retailers to negotiate favorable rewards for customers using your card for purchases. You may have to share these opportunities with other CUs and smaller community banks to achieve economies of scale, but together the smaller players could give the big banks significant competition for interchange revenue.
Offering digital-friendly rewards to your CU card holders doesn’t have to give your management team sleepless nights. With the availability of user data you can determine what your members want, where they are doing business, and offer them great incentives for using your card to do it.