By Mladen Vladic, Head of Loyalty Services, FIS
There is no doubt that the global pandemic continues to have far-reaching impacts. One of the COVID after-effects for credit unions is the opportunity to reposition their brands to reflect the changes that occurred within the institutions as well as within our member communities. As I think about the loyalty industry, I see four guiding principles that are going to continue to define and drive loyalty programs forward for years to come:
- Data – Clean, accessible data has been a talking point for many years, but its importance has grown as credit unions measure the impact of their loyalty promotions.
- Customer experience – Customer experience is a key to success! Members are looking for integrated, real-time engagement.
- Network effect – Technology now allows for credit unions to adopt specific components of a loyalty program without making a full platform switch, which reduces the impact to credit union operations.
- Constant change – Credit union teams learned how to handle continuous change throughout the past two years and are now prepared to deal with change as “the new normal” as members demand faster, more integrated and more frictionless experiences.
Loyalty programs are recognized as a credible way to engage members and to create long-term relationships. To this end, credit unions spend significant dollars each year to fund this member benefit, but 39% of loyalty card holders don’t know their rewards balances. Another interesting fact is that 29% of members see their reward balance as a way to stretch their budget and 64% think the reward balance is as valuable as cash. Both of these statistics point out the need for credit unions to make it easy to view and track rewards balances and to evaluate the “spending power” of the rewards. Members who recognize the value of the loyalty benefit and find it easy to access are less likely to switch financial institutions in search of more valuable benefits.
One of the most important things to remember is that one-size-fits-all loyalty programs may not work for all credit union members. FIS recently completed the Generation Pay Study that included data from different age groups on payment preferences and preferences in general. A few key takeaways from the survey include:
- Gen Z, generally defined as born between 1997 and 2012, are tech-savvy, with 70% using biometric authentication to authorize payments and 25% shopping through social media.
- Millennials, people born between approximately from 1977 to 1995, are also tech-savvy with 46% using mobile wallets to make payments. However, they don’t want to wait for rewards, with 53% interested in loyalty programs that give smaller rewards more often.
- Gen X, with birthyears between the mid-60s and early 1980s, are very value driven, with 69% saying their payment preferences are influenced by the associated rewards.
- Baby Boomers, those born between 1946 and 1964, are not interested in digital payments. In fact, only 22% use mobile wallets, most likely because 53% are concerned that mobile payments are not secure.
These are interesting statistics, but what do they mean for loyalty strategy? To stay relevant to members, credit unions might want to consider:
- Providing the opportunity to monetize loyalty currency in real-time or near-real-time.
- Structuring rewards that may be smaller but offered more often.
- Offering members an opportunity to contribute to local charities with loyalty rewards.
- Creating a user-friendly mobile app and website for members to use.
- Developing options for the reward program that allow members to customize their experience.
The goal of a loyalty program should be a long-term relationship with the member that relies on regular engagement and true value-added service. Credit unions have an advantage over other financial institutions that may rely on offering the most up-to-date app features. Credit unions’ focus on meeting member needs allows them to go beyond a simple loyalty program with services that provide:
- Financial literacy education;
- Budgeting tools;
- Member well-being; and
- Community service opportunities.
The unique mission of credit unions combined with a responsive loyalty program can further strengthen engagement and build solid relationships that lead to success for credit unions and their members.
Hear more details about the current and future state of the loyalty industry for credit unions, as well as specific recommendations, from Mladen Vladic, Head of Loyalty Services, FIS by watching his full webinar Member Loyalty Through the Ages: Generational Payment Trends.