For some consumers, these types of programs are very effective. The patient consumer willing to slowly collect 50,000 points that he/she can redeem for two airline tickets is perfectly happy with this program. And for credit cards, these programs have been relatively successful.

However, the loyalty these programs engender is to the card, not the institution offering the card. Thus they are not very effective for you in building loyalty to your institution. They are easily replaced by the next best credit card offer.

Most of the early approaches to debit card rewards were simply copies of the credit card programs of the past. But the debit card is not a standalone product like a credit card. A debit card is a link to that primary relationship account with your member. As such, a loyalty program with a checking or savings account as its base has the potential to foster a deeper, broader loyalty. Thus, in credit unions, where the member relationship is so important, you will be better served with the new breed of program that ties your members to you in many ways.

Such a loyalty program will likely include credit card and debit card usage incentives, but it should go far beyond that. The goal must be to drive member loyalty to your institution and all its various products and services. For instance, some of the credit unions we work with extend these loyalty programs to home mortgages, auto loans, online banking, online bill payment, and home equity lines of credit. Any product that the credit union offers, or any type of member activity, can be incorporated into a wide-ranging loyalty program.

The question a credit union must ask itself is "What are our objectives as an institution and how do we fashion a loyalty program that supports those objectives?" A me-too rewards program will not differentiate you. A loyalty program should motivate members' behavior. If the objective is to retain members, or gain more checking accounts, or make more mortgage loans, then reward those behaviors appropriately, providing one-time or ongoing bonus point rewards.

If, to retain existing members, your strategy is to have more of them embrace online banking and online bill payment, you can promote these "sticky" services with enrollment and/or monthly usage bonus points.

The beauty of flexible loyalty programs is that if your credit union's objectives change next year, and you want to drive new checking accounts and more auto loans, the program allows you, virtually "on the fly," to modify its points matrix to fit this new objective. The customizable, changeable nature of these loyalty programs allows them to be shaped to motivate whatever behavior you desire. Their look and feel is the credit union's, and they feature a much greater variety of rewards, going well beyond the "save for travel or merchandise" model of the past.

Today's rewards engage people quickly and gratify them early and often. This is important where the points rewarded may be lower than with credit cards, but the goal is overall engagement by your member and the resulting loyalty. For a small number of points, for instance, a loyalty program can offer downloads of music, videos, audio books, or cell phone ringtones. Online gift certificates are another option. Some of our credit union customers let members donate points to local or national charities. Others give bonus reward points to purchases from local merchants. These types of options fit perfectly with the community-focused nature of credit unions. Increasingly, we see institutions giving members the opportunity to apply reward points toward other credit union products and services. For some, that means using points to lower the interest rate on a loan. In another case, one of our clients encourages customers to forego traditional gift cards and instead use points for their own branded Visa gift card.

The best program will always be a customized one, based on the close relationship between the member and the credit union that helps portray the credit union in the way it wants to be seen among members and in its community.

For credit unions, the new generation of loyalty programs lets them step back, determine their goals, then implement a strategy that motivates behavior both through the way points are awarded and in the benefits offered. In the end, the program will successfully tie members to the credit union as a whole, not just to the credit or debit card.