[Credit Union Business News] Building a Program that Sticks

The largest credit union in the United States, with a network of 300 branches and 12 million members, stands in contrast to the smaller entities that cater to just a few hundred members across a handful of locations. A common thread, however, unites them: a commitment to personalized member-focused banking.

As the financial services landscape becomes more competitive, particularly with fintech companies offering novel ways for consumers to maximize their finances, credit unions must blend their well-regarded customer-centric approach with innovative incentive programs to build and maintain their membership. Effective loyalty and rewards programs can ensure credit unions remain top of wallet and mind and the preferred choice for members’ banking services.

Introducing a rewards currency does involve certain risks, but credit unions of all sizes can manage these by developing programs that not only offer rewards but also actively engage members, retain their interest, and encourage consistent interaction. This is the crux of ‘stickiness’ in loyalty programs.

Creating this 'stickiness' hinges on striking the right balance between tangible benefits and an enriching experience where members find ongoing value, use the program regularly, and remain loyal despite slightly better offers elsewhere; these programs dissuade members from “shopping” their loyalty.

For credit unions, a ‘sticky’ rewards program also incentivizes members to keep spending and investing with the organization by increasing their savings deposits, regular use of credit union-issued cards or turning to them for loans — all actions that can be rewarded under a well-structured loyalty program.

How is this 'stickiness' achieved? Ultimately, it boils down to identifying the right combination of benefits and member experiences that collectively create a unique and indisputable value for every member.

Benefits that Resonate with Consumers

Travel is, by far, the most desired benefit or reward of any loyalty program. A recent report from iSeatz reveals that nearly half of American consumers (49%) place the highest value on saving money on travel through their loyalty programs. As credit card debt in the United States climbs to new levels, consumers are most satisfied with credit cards that provide attractive spending rewards and won’t hesitate to switch cards in search of a better rewards program.

Traditionally, loyalty providers have offered reward redemption and discounts on the big three — air, hotel, and car rental. Increasingly, however, consumers are looking for more redeemable opportunities. The same report found that 37% of loyalty program members would engage more with their programs if they were offered a broader selection of rewards, including dining (23%), tours and activities (21%) and gift cards (17%). These lifestyle rewards create additional value and can be enjoyed from anywhere, allowing credit unions to capture more of their members’ spending.

A Loyalty Program Versus an Entire Ecosystem

Offering lifestyle rewards that complement the primary travel component encourages 'stickiness.’ This is evident when looking at the 50% of consumers who say they have purchased additional products from their loyalty provider when booking travel online. These rewards spur revenue growth for loyalty programs and deliver substantial value for members.

But for credit unions to replicate this success, they need to build more than just a program; they must establish a comprehensive ecosystem with a robust booking platform that’s on par with online travel booking sites where members can find travel inspiration, review and manage their rewards portfolio and utilize their rewards on desired purchases. Where loyalty programs falter is by not developing this integrated environment. Instead, they often rely on external coupon codes that divert members away from their platform, thereby losing potential engagement and revenue opportunities.

Personalization: The Credit Union’s Big Advantage

To deliver real value to program members, credit unions need to be able to give members what they want. While members of your credit union might share certain commonalities, a loyalty program built around personalization is the only way to achieve actual stickiness.

Unlike other rewards providers, here’s where credit unions have a unique advantage: access to first-party data that, when interpreted by the right technology platform, can fuel true personalization, including dynamic content recommendations, travel offers tailored to individual interests and responsive marketing.

When a loyalty program feels relevant, members are likelier to keep engaging with it and its sponsor. A personalized travel loyalty platform also just makes sense for a credit union’s brand as an extension of the type of service model that makes these organizations so attractive in the first place.

It's important to recognize that building travel loyalty programs and booking platforms from scratch may not be within the resources or expertise of most credit unions. However, this shouldn't be seen as an obstacle. Instead, credit unions should seek partnership opportunities with established loyalty technology providers. These partners can offer scalable, ready-to-integrate platforms, enabling credit unions to seamlessly launch new programs or enhance existing ones. The goal should be to present members with an enticing mix of experiences, benefits, and rewards that encourage their continued loyalty and keep them returning for more.

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