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CO-OP Financial Services Blog: Insight Vault

Member Rewards and the Modern Consumer

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In today’s ultra-competitive credit/debit landscape, the benefits offered can make a substantial difference in a consumer’s mind. Like many other aspects involved in the buying experience, rewards programs are quickly evolving to meet escalating consumer expectations.

This past week, we had the opportunity to talk with Andrew Gates, Loyalty Consultant with CO-OP, about how CO-OP Member Rewards is staying a step ahead of the competition to offer members a uniquely gratifying experience. Here are his valuable insights from our discussion.

Q. How does Member Rewards differ from a typical credit/debit loyalty program?

A. We are making it easier than ever for members to earn points, without adding cost for the credit union. Where CO-OP makes a big effort is primarily in the merchant-funded space. It is safe to say that we have the most robust merchant-funded rewards program in the industry. In terms of national online products, CO-OP is leading the way with the soon to be released browser plugin, which allows a member to get their rewards from the merchant they are buying from without going through a third party or a rewards website. It makes things more convenient for the member because the logo of the program shows up everywhere they can earn bonus points, including search results in Google, Bing and Yahoo searches.

Q. Are there any other points of differentiation?

A. Tackling the local merchant arena is much harder in general because there are so many “mom and pops” out there—but that’s where our members shop and want to earn rewards. We will soon have close to 30,000 merchants involved in our local merchant program—and we’ll continue to grow and expand over the coming months. We also make it easy for our clients to add their own local merchants through an online boarding tool – which increases the value to the member.

Q. What effect does merchant funded have on the increasing value of rewards?

A. At the end of the day, what we are trying to do is deliver value to the member where and when they want it. By partnering with merchants, there is funding for more customized incentives. We give them greater access to our members in exchange for the ability to offer a better deal. We expect the deals to get more and more exclusive as our data set gets better and richer. So instead of a member going to Groupon for a local deal, they will turn to their credit union.

Q. How is Member Rewards uniquely suited to today’s modern consumer?

A. Today’s modern consumer is looking for value through increased personalization. They are okay with appropriate usage of data if it is being used to deliver a personal experience. When you look at how people are using the Internet—especially millennials—they are putting everything out there. So from our standpoint, the two critical items are delivering value in a timely,  relevant fashion and in the way they want it.

Q. Are there any precedents to learn from when delivering such an innovative rewards program?

A. The hot one right now is mobile. Ultimately, when you download your credit union app, you have access with ease. What people don’t want is to have to think when they go into a store. “Do I use my card? An app? PayPal?” That’s why Visa and MasterCard have been successful for so long and mobile wallets have had a hard time taking off. The former takes extra thinking. So we want to provide something that is available almost without thinking. But at the same time, the controls have to be in place so I can turn it off or that I’m not inundated with offers every time I walk into a store. This is a fine line to walk, and we are working to understand that. This is also where personalization comes into play, because for example, I will likely be more open to receiving alerts than another person. It’s not one size fits all.

Q. What about credit unions that might be uncertain about how to market to millennials without “turning off” their existing membership base?

A. I don’t believe the non-millennials are that different anymore, in terms of what they want to see from their credit union. The world is moving forward together on this, millennials and everyone else. Each person is an individual, so giving people the ability to manage how they are alerted and set their own preferences is critical. I think the biggest difference between millennials and the rest is that millennials use technology and expect certain features and personalization. The rest of us are surprised and delighted by it.

For more insight on managing your rewards program, visit our Member Rewards page of our website or check out related posts in Insight Vault.

Will Your Debit Heat Up This Summer?

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Debit drives PFI relationships. It represents a large and consistent source of activity and revenue. But could you describe it as a hot item at your credit union? Using portfolio analytics and a targeted marketing campaign, you could spark a significant rise in debit usage this summer – one that will continue well into the future.

How do you personally heat up your debit program?

Taking an active role is the key. While there’s no question that members want and use debit, there is also considerable competition for wallet share. At the same time, credit unions don’t have unlimited resources to encourage low spenders and members who are slow to activate their cards. Targeting and efficiency are a must.

Credit unions that work with CO-OP for debit processing have access to its Preferred program, which combines the data insight of CO-OP Revelation portfolio analytics with turnkey marketing to create smart incentives for increased card usage and activation.

How One CU Did It

In a recent case study, Preferred Credit Union (PCU) increased its debit spend significantly using CO-OP Preferred and Revelation. Here’s how:

To begin, CO-OP worked with PCU to establish a baseline in April 2014. Then they identified members who were spending less than $250 in POS PIN and signature with their debit cards. The average debit card spend in April was $136.

Next, they promoted a unique rewards program through PCU’s “Drive On” campaign. This rewards program provided consumers with a $10 gas card for spending between $500 and $750 in June 2014. Members spending more than $750 on their debit cards were awarded a $20 gas card.

The gas card reward offered at the $500 level was in line with credit cards offering 2 percent cash back. At the $750 level, the $20 gas card provided a “return” to consumers that exceeded many cash back credit card offers. Not only did PCU’s campaign result in heightened spending in June, but there was also a sustained increase in debit card spend through August 2014.

Too Good to Be True?

Debit card purchases per card increased 55 percent through August, showing that consumers continued to use their credit union debit cards even after the “Drive On” campaign ended. The same held true for interchange, which increased 74 percent in the three months during and after the campaign.

The biggest results, of course, were seen in June, when the average spend per card rocketed up to $1,002. While there was a drop off in the months following the end of the campaign, debit card spend levels remained higher overall, and there is an expectation of continued higher spend over a 12-month period.

Heat up Your Debit Spend

Thinking about heating up your debit spend this summer? CO-OP’s “Swipe for Summer” campaign just kicked off and there’s still time to participate. The campaign rewards cardholders for using their debit cards during the month of June: $10 gift cards when they use their debit cards 15-24 times and $20 gift cards for those who make 25 or more purchases. Gift cards are redeemable at more than 40 restaurant and retail chains nationwide.

CO-OP helps with Revelation data analytics, so your efforts will be focused on members with the greatest potential. Even reward fulfillment and reporting are included in your participation, reducing the amount of work you need to do yourself.

Past CO-OP Preferred campaigns have shown a significant bump in debit spending and a sustained increase in debit usage over time. The most recent campaign, 2014’s “Season of Gifting,” yielded a 519 percent spend increase among qualified cardholders and a 137 percent projected ROI over 12 months.

To learn more about CO-OP Preferred and the “Swipe for Summer” campaign, click here.

Take the Quiz: Did You “Seize The Now?”

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THINK Prize 15: Collaborate and Win!

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How might we use the power of communities to financially empower, educate and protect those who need it most?

Crowdsourcing has helped do everything from beat L.A. traffic to build better websites – even fund a potato salad recipe. So why not use the power of crowdsourcing to solve the biggest global issues today?

CO-OP THINK and MasterCard have teamed up to do just that with the THINK Prize 15, which will award $10,000 to individuals who best answer the question: “How might we use the power of communities to financially empower those who need it most?”

Using the platform managed by OpenIDEO, a global design and innovation company, participants in the challenge collaborate for nearly three months on the most innovative ideas in response to this question.

Anyone can participate, including members and employees of credit unions, as well as the general public.

Stan Hollen, President and CEO of CO-OP, says the fifth annual competition is a way to build more good will for credit unions. “We are also endeavoring to change the way people think about problem solving,” he added, “to show how communities can be mobilized to collaboratively address important challenges.”

How it Works

The challenge is broken into four phases:

Phase 1 (March 18 – March 31): The first phase of the challenge is the Research phase, which allows anyone to share personal perspectives and examples on the challenge topic.

Phase 2 (April 1 – April 28): The second phase is the Ideas phase, when anyone can submit and comment on new ideas.

Phase 3 (May 5 – June 2): During the third segment of the challenge, a shortlist of participants enter the Refinement phase. This shortlist will be announced at the THINK 15 Conference, which takes place May 5-8 in Colorado Springs, Colo.

Phase 4 (June 9): Finally, approximately five finalist ideas will be announced. The group of participants who develop the winning solutions will share the $10,000 prize.

You can enter your ideas any time before April 28, 2015, which marks the end of Phase 2.

Get Involved

What could be better than $10,000 and a shot at changing the world? The challenge is live, so get involved today by visiting OpenIDEO and signing-up in the top right hand corner of page. You can also check out this video for more information about the four challenge phases and ways to join.

Top 10 Payments Must-Reads

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Credit Card Balances Hit 6-Year High

Credit card balances rose 5 percent last year, showing the strongest growth since 2008. Originations are up; delinquencies are down. “These factors point to a healthy, well-functioning card credit marketplace,” a TransUnion spokesperson told the Credit Union Times.

Will Mobile Payments Merge with Loyalty? 

Right now, NFC is a one-way street – meaning that mobile payments and loyalty can’t merge effectively yet. But HCE could change all that. This story from Payments Source sheds some light on whether and why consumers will want redeemable mobile rewards with their payments.

Consumers Love Paying Bills with Smartphones

This may be a surprise to no one, but it’s still heartening to see facts and figures that back up our best suspicions about mobile bill pay. A full 57 percent of 30 to 39 year-olds used their smartphone to pay a bill in the last 30 days. And 41 percent of bill payers are using a bank or CU app.

Will Fraud Take a Bite out of Apple Pay?

In news that is as surprising as it is attention grabbing, details have surfaced that suggest that Apple Pay has become a fraudster’s favorite “go-to” for using stolen cards to make in-store purchases. What does this mean for Apple – and for card payments in general?

The Wild World of Mobile Wallets

Here’s an op-ed summary of what we’ve seen in the mobile wallet space in recent weeks – namely, Google buying Softcard, Samsung buying LoopPay and PayPal buying Paydiant. This year is gearing up to be a big one for wallets, though we’re still waiting to see how it plays out.

Plastic Cards Are Far from Dead

Not only are plastic cards holding their ground in payments, but they’re also gaining momentum as more and more smartcards are being shipped in the U.S. While you’re mapping out your growth strategy for the next few years, don’t forget to consider plastic.

Speedy Payments Slow to Arrive?

The hurdles to modernizing the payments infrastructure are daunting, said participants in a panel at the Retail Banking 2015 conference. How daunting? One Bank CEO said faster payments, “May not happen in my lifetime.” Is it time for other alternatives?

PayPal Here Card Reader Supports NFC

Good news for users of Paypal: The company’s new PayPal Here reader, coming to the U.S. later this year, is expected to support both NFC and EMV-enabled cards. With PayPal’s recent purchase of Paydiant, this may be good news for Paydiant loyalists as well.

Adoption Curve Is Steep for Apple Pay

A full 42 percent of iPhone 6 users have tried Apple Pay. Of these, three-quarters have gone on to make repeat purchases. Though Apple Pay is still a bit shy of world domination, it is making headway in what used to be thought of as a reluctant mobile wallet market.

Google or Samsung: Who Wins the Wallet War?

Google and Samsung have both made recent plays for the Android side of the mobile wallet market. Who will win the competition? Here’s a quick sketch of the competitive advantages for each. Perhaps the biggest winners will be wallet-minded consumers.