When most credit cards offer enticing rewards, how can community banks and credit unions ensure that their cards get used?
Community banks and credit unions often complain, “Our clients have our card, but they don’t use it.” While your customers may have your card in their wallets, they are savvy about their payment options. They know they have a choice, and they tend to prefer to use cards that offer the best benefits.According to research by the American Bankers Association, total spending from 2007 to 2014 on cards that offer rewards has nearly doubled while spending on non-rewards cards has declined 32%. As the ABA explains, “Credit card customers are savvier about their credit card usage habits." The ABA adds "Credit card users are transitioning to cards that provide greater benefits." In fact, JD Power reports that 10% of consumers switched their primary credit card in 2014, and 42% of those people switched for a better rewards program.
Where is the value in using your FI’s card?Your FI’s card may offer no annual fee and 0% introductory APR. You may also offer a rewards program that gives points or perks based on your customers’ spending, but big banks and credit card companies with larger budgets often promote more generous offers. Discover card pays consumers 1% back and even more if they pay on time. Your customers’ Macy’s card gives them exclusive deals that they couldn’t get otherwise, and their Chase card helps save money when they travel.
How can your FI go “above and beyond” the benefits provided by other cards and make sure that *your* card gets the swipe?
- Make the transaction easy. When consumers receive typical rewards offers, they ask questions like “What do I get? How much do I save? What’s the fine print? Are there fees? How much do I have to spend to earn points?” Your customers are more likely to use a reward if they understand it. Simple offers with succinct instructions are most likely to lead to a payment transaction – e.g. “Receive 50% off a latte at Biggby Coffee right now when you pay with your Main Street Savings card.”
- Make the reward immediate. Provide rewards when customers use your card so they can see the instant benefits that your financial institution provides. “Get 10% off at Aunt Edith’s Oil Change now” puts money in their pockets and the savings show on the receipt.
- Provide location-based discounts for instant gratification. With the convergence of GPS and mobile technologies, your FI can be there with clients “in context” while they are shopping. With a mobile discount program, you can provide perks via smartphone alerts while your clients are going about their daily routines. They’ll get immediate, on-the-spot savings by using your FI’s card.
- Offer exclusive, local discounts that no one else offers. Your clients want to know that they are part of an elite group that gets “members only” discounts or access to exclusive deals at local establishments. Your customers will enjoy local discounts that support local businesses, (and local businesses will appreciate the increased promotion, foot traffic, and revenue).
Community banks and credit unions can compete successfully with bigger financial institutions on debit and credit card rewards by offering easy, immediate, local and exclusive rewards.
Read more about creating reward programs for your FI's debit and credit cards.
- CU Insight: Eight Questions to Ask About Card Rewards Programs
- Why Aren't People Using Our Rewards Program?
Larky is here to help with a mobile platform that provides the right rewards for using your FI’s debit and credit cards. Talk to us today to learn how we can make your card front and center.