Sharpen Your Card Program’s Competitive Edge for Growth
SHARPEN YOUR CARD PROGRAM’S COMPETITIVE EDGE FOR GROWTH
INTRODUCTION
As a credit union, the strength of your card portfolio is pivotal to your success. Your members want a debit product for convenient access to their funds – and a credit card is one of the best ways to reinforce your brand with members. Plus, the credit card is the highest yielding loan product in the credit union lending portfolio. In fact, according to Callahan & Associates data cited by creditunions.com, 42.3 percent of all credit union non-interest income
comes from card-related interchange and fees. And with Experian estimating that $100 billion in new credit card lines are opened each quarter (thefinancialbrand.com), the opportunity for credit unions to profit from this vast and growing market is tremendous. However, while the numbers speak volumes about the importance of your card portfolio, there are thousands of other reasons to grow this business: your members.
contribute to their lives in quite the same way. And every time members transact with one of your cards, the quality of the experience shapes their perception of you. Which is why CO-OP remains committed to helping credit unions build a world-class card program, one that engages cardholders, embraces innovation, and delivers all the convenience and flexibility today’s member expects.
No other credit union products Sharpen Your Card Program’s Competitive Edge for Growth
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CHAPTER 1: HOW BIG IS BIG DATA, AND WHAT DOES IT MEAN FOR YOUR CARD PROGRAM? By all measures, data is powerful. In
According to CO-OP’s Tim Weaver,
that credit unions should call on their
fact, a Nucleus Research study cited
product manager – core products,
processor for support.
by DMN3.com finds that businesses
credit unions that leverage analytics
achieve a 241 percent ROI increase
can realize both a quick return on
when they apply data to their
investment and significant rise in
decisions.
profits. “Using data analytics, your
However, data in and of itself is not enough. As a credit union, you need the right tools and strategies in place to turn member data into actionable insights that can help you engage and
credit union can build a much deeper understanding of your cardholder preferences and grow these
resources for data analysis,” she said. “If your credit union staff members wear a lot of hats, you should utilize the data and expertise your processor provides for help.”
relationships by using more-targeted marketing approaches,” he said.
expand your cardholder base. That is
Andrea Burns, portfolio development
where data analytics come into play.
consultant for CO-OP, agrees, adding
“
“Not all credit unions have dedicated
Using data analytics, your credit union can build a much deeper understanding of your cardholder preferences and grow these relationships by using more-targeted marketing approaches. Tim Weaver, Product Manager - Core Products for CO-OP
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Targeting Incentives Weaver emphasizes the importance
growth can be improved quickly
reward members in very customized
out that data analytics can reveal
of understanding the key member
by identifying cards that are very
ways,” he said. “Many credit unions
important changes in cardholder
segments in your portfolio, noting,
lightly used or not used at all, as
forget that it is just as important
behavior that might otherwise go
for example, that some credit
well as those with the highest usage
to reward active cardholders as it
unnoticed.
cardholders use their accounts to
and spend. Including age groups in
is to incentivize those who are less
finance large purchases, while others
the segmenting criteria, he adds, is
engaged.”
“For example, if an active cardholder
use their cards to earn rewards on
another proven strategy.
every purchase.
Colleen Briggs, director of
this,” she said. “It is possible that this
“Once cardholders are segmented,
implementations and portfolio
member received a better card offer
He suggests that debit program
credit unions can market to and
development for CO-OP, points
from another issuer.”
make great candidates for your credit cards,” he said.
to someone dangling a product in front of them that better meets their needs.”
goes inactive, the data will reveal
Review Credit Bureau Data She adds that credit unions can discover specifics through the credit bureau data. “This information can help you determine when it is timely to order full reports for your members,” she said. “As an issuer, if you can identify new competitors getting your members’ attention, you can tweak your products to maintain existing relationships and recapture
lost credit cardholders.” Weaver also advises credit unions to look beyond cardholder data to uncover opportunities, highlighting savings-only members as good prospects for checking account openings and the associated debit cards. “Remember also that members who are high debit card transactors
Briggs added, “As a credit union, you need to understand your members well in order to ensure that your card products are attractive to them. Consumers receive countless card offers in the mail each month. You don’t want to lose members
And while data analytics can play a key role in a card program’s growth and success, the technology is also a powerful fraud-detection resource, further benefiting both the credit union and its members.
As a credit union, you need to understand your members well in order to ensure that your card products are attractive to them. Consumers receive countless card offers in the mail each month. You don’t want to lose members to someone dangling a product in front of them that better meets their needs. Colleen Briggs, Director of Implementations and Portfolio Development for CO-OP
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CHAPTER 2: HOW TO REWARD – AND INSPIRE – MEMBER LOYALTY While the fight for brand loyalty is
loyalty program should be a “way for
members expect to be rewarded
simple. Make sure members can
fiercely competitive today, consumers
customers to show how loyal they
for their brand loyalty. “Many see
easily earn, track and redeem their
and the companies they patronize
are to their business,” 73 percent
rewards as a way to save money, be
rewards across mobile and online
agree on one thing: rewards
of shoppers think these programs
it cash back, points, miles, product
channels – because that is how they
programs work.
should demonstrate how loyal a
discounts – or lower interest rates on
are shopping today.”
brand is to them.
a loan,” she said.
percent of shoppers say they want
So how can a credit union create an
Vaughn recommends offering a
loyalty programs, and 75 percent of
effective rewards program – one that
variety of rewards, noting that
U.S. companies with loyalty programs
brings value to members, increases
members will shop around for the
generate a positive return on
card usage, and nurtures member
best value proposition.
investment.
relationships?
However, while 66 percent of
According to Jessica Vaughn, rewards
effectively engage your members,”
marketing executives believe a
program manager for CO-OP, your
she said. “And keep the program
In fact, according to Social Annex, 80
“A one-size-fits-all approach will not
The Power of Householding Vaughn also advises credit unions to combine debit and credit rewards into one program for the entire household as this allows members to accumulate points at a much faster rate. “This can be very motivating to members and can drive up card usage and spend,” she said. She emphasizes the important role marketing plays in a program’s success as well. “Data analytics can help you zero in on member preferences and tailor your marketing messages accordingly,” she said. “But remember that what
More than any other factor, the rewards program you offer sells your card program to members. An effective strategy can greatly increase growth and retention – and can be fairly inexpensive to implement. Jessica Vaughn, Rewards Program Manager for CO-OP
members value today can change, so be prepared to adjust your program frequently.” Sharpen Your Card Program’s Competitive Edge for Growth
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REWARDS: THE CENTERPIECE OF YOUR CARD PROGRAM
According to the 2015 COLLOQUY Customer Loyalty Census, U.S. consumers hold more than 3.3 billion customer loyalty memberships today. However, some rewards programs perform better than others. Here is what credit unions need to know:
REWARDS BY THE NUMBERS (Source: 2016 Bond Loyalty Report)
of those surveyed say loyalty programs made them more likely to continue doing business with a brand
of respondents are more likely to recommend brands with good loyalty programs
A Must-Have, But Don’t Rely on It Exclusively (Big Banks Can Beat Your Rate)
Why Stop with Your Card? Reward Members Across All Products
CASH BACK
RELATIONSHIP REWARDS
want to interact with loyalty programs via a mobile phone
times higher customer satisfaction when program reps make them feel special and recognized
Make rewards easy to earn, track and redeem The more rewards, the better, so offer merchant-funded, product discounts, waived fees and cash back Points systems engage – 50 points always sounds better than 50 cents
REWARDING MEMBERS WELL A Checklist for Credit Unions
MERCHANT-FUNDED
HOUSEHOLDING
Getting Community Businesses Involved is a Win-Win for Everyone
Spending Goes Up When the Entire Family Participates
Go mobile – members are shopping, price comparing and paying digitally – you need to be there, too, offering members eBanking and mobile platforms Be aspirational – offer a dream vacation for anyone accumulating points in the thousands – they may never redeem for it, but knowing it is there makes the program more enticing Market your rewards program personally – text members every time they reach a milestone
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REWARDS: THE CENTERPIECE OF YOUR CARD PROGRAM (continued)
Analyzing member spend data and demographics together can help credit unions deliver rewards with real value. Here are a few notable ways to say thank you to members: Millennials living in the city who enjoy dining out
Retired couples who like to travel
Recent college graduates
Merchant-funded for local eateries
Discounted auto loan rates
Hotel, airline and entertainment deals
Luxury rewards, merchant-funded
Professionals in their 40s who shop high-end
Young married couples, starting a family
3X
Triple points for everyday spend
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CHAPTER 3: GIVING MEMBERS ALL THE CREDIT THEY DESERVE (A GUIDE TO LINE INCREASES) Members want your card program to
from someone else, they are more
and weaknesses and identify potential
grow with them, but having to file
likely to simply take that card and
areas of growth.
an application every time they need
do a balance transfer at a lower rate
more credit can keep them from using
than check with you first.”
your card altogether.
And to uncover best practices, Burns advises credit unions to lean on their
She also recommends benchmarking
processor to see how they stack
In order to maintain top-of-
your card program’s success against
up in the industry, and consult with
wallet status, you need to take a
industry averages, comparing per-
colleagues at other credit unions as
proactive approach with cardholders,
account balances, average credit
well. “One of the great things about
conducting regular credit line increase
line and overall penetration rate.
credit unions is that they love to share
reviews – and then surprising
This strategy, she says, can help you
what is working for them,” she said.
and delighting members with the
understand your relative strengths
extended credit they deserve. According to Burns, managing credit lines on an ongoing basis can help credit unions grow both their outstandings and bottom line. “Giving cardholders the proper spending power and adjusting as appropriate will keep them engaged and transacting – both important attributes of a healthy card product,” she said. As a rule of thumb, she adds, don’t wait for members to ask for more credit. “Industry stats tell us that members will stop using your card once they approach 50 percent credit
As a rule of thumb, don’t wait for members to ask for more credit. Industry stats tell us that members will stop using your card once they approach 50 percent credit line utilization. If they receive an attractive new card offer from someone else, they are more likely to simply take that card and do a balance transfer at a lower rate than check with you first. Andrea Burns, Portfolio Development Consultant for CO-OP
line utilization,” she said. “If they receive an attractive new card offer Sharpen Your Card Program’s Competitive Edge for Growth
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3 Card Program Metrics to Benchmark • Per-account balance
• Average credit line • Overall credit card penetration rate How well you fare against industry averages can help you uncover growth opportunities.
3 Reasons Members Switch Cards • They are reaching their credit limit • They are too busy to fill out your application • They get a better offer – credit line, rate or rewards program Members are constantly receiving new card offers. Your program needs to stand out as the best.
3 Reasons to Extend More Credit
+ • The member is approaching one-third utilization of the line • There is a positive change in the member’s credit score (you should run a fresh credit score at least once per year – or more) • Increasingly, your members are receiving offers from other issuers – you should have your staff continually report what solicitations they are getting by mail and email Being proactive works. Extending more credit to qualified members keeps them loyal and transacting.
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CHAPTER 4: TOP OF WALLET - THE RIPPLE EFFECT OF A GREAT MEMBER EXPERIENCE According to the research, when consumers spend, they gravitate toward a favorite card or two. In fact, Experian data reported on creditcards.com shows that consumers, on average, use 2.19 bank cards – and Millennials utilize only 1.57 cards on average. So how can a credit union break into this highly selective group, and what role does the overall member experience play in a card program’s success?
Rising to the Top “It’s really hard to ensure that your card is the one people use the most,” said Nathan Rogers, senior manager, product marketing for CO-OP. “For digital transactions, it can be even harder. The member experience you provide plays into this paradigm significantly. As a credit union, you don’t want to do anything to jeopardize member trust.” Which means, Rogers says, that credit unions need to focus their efforts on providing a consumer experience that is seamless from end to end. “Your members are looking for value, and most of the time value means service to them,” he said. Rogers reminds credit unions that member service expectations can be quite high today, especially when they are seeking technical assistance.
It’s really hard to ensure that your card is the one people use the most. For digital transactions, it can be even harder. The member experience you provide plays into this paradigm significantly. As a credit union, you don’t want to do anything to jeopardize member trust. Nathan Rogers, Senior Manager, Product Marketing for CO-OP
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What Members Expect “When members have trouble
designed to support new advancing
open from an API perspective,
with a mobile app or online
technologies and evolving member
and tightly integrated with back-
banking transaction, credit
requirements.
end systems and best-of-breed
unions need to keep their phone lines open,” he said. “To these members, the clock is ticking.
The platform should be easy for members to access and navigate,
solutions that give members all the functionality they need.
They don’t want to sit on hold, fall into voicemail – or even worse – wait for a return call Monday morning if their issue occurs on a Friday night.” Which is why, Rogers adds, having 24/7 call center support is so important – as is a highly intuitive digital presence. “The onslaught of new technologies today – from digital wallets to mobile security apps – is putting members on a perpetual learning curve,” he said. Toward that end, Rogers advises credit unions to invest in the
Consumer expectations today are shaped by the likes of Amazon and Netflix. Responding quickly and insightfully to member needs in the branch, online and via mobile channels tells them you are a quality brand – and that you value their relationship enough to go the extra mile. Nathan Rogers, Senior Manager, Product Marketing for CO-OP
development of a single, branded digital and mobile banking platform
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SEAMLESS AT EVERY TOUCHPOINT The member experience you provide today will have a lasting impact on the success of your card portfolio. Make sure you understand cardholder needs and preferences well, inspire member loyalty in meaningful ways, keep your credit policies highly competitive, and invest in the right technologies to prepare for the future of mobile/digital. Ultimately, becoming that go-to brand – and top-of-wallet card – requires a commitment to quality and innovation across all your products and services.
As a payments and financial technology company in the service of credit unions, our focus is to build your growth engine to help you attain and remain top of wallet – whether that means card payments, digital engagement or member preference. Todd Clark, President/CEO, CO-OP Financial Services
CO-OP is here to help. To learn more about Engagement and Loyalty solutions, visit CO-OPfs.org, email sales@CO-OPfs.org or call 800.782.9042, option 2 Sharpen Your Card Program’s Competitive Edge for Growth
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