In 2013, Community Choice, a $532 million credit union headquartered in Farmington Hills, Mich., made the risky move of launching a totally revamped rewards program that ended up boosting product penetration, increasing loan volumes and giving over $1.5 million in cold, hard cash back to members last month. Now, Vice President of Retail Delivery Tracy Cameron is sharing her advice on what other credit unions can do to create more robust rewards programs, too.
The new program, dubbed "GetBigReward$," offers cash and loan-interest rebates based on how many products and services a member uses. There are four membership levels: Copper, silver, gold and emerald, ranked from lowest to highest. Members reach the gold level if they use six to seven Community Choice products and services; for example, the emerald level requires at least eight.
Things such as prime share and checking accounts qualify, as do IRAs, auto loans, Visa cards, debit cards, e-pay, mobile banking, mortgages, money market accounts and several other products and services. In redesigning the program, it was important to include products and services used in everyday banking, such as debit cards and e-statements, Cameron said. About 17% of eligible members fall into the emerald category, she added. Members can also qualify for up to 10% annual interest rebates on loans.
Of course, it all didn't start out this way, and Cameron said Community Choice has learned a few lessons.
The credit union's previous rewards program was largely based on points, she said, and its relatively complicated rules were too difficult for credit union employees to explain to members. The rewards also didn't feel very tangible, Cameron said.
"There were all sorts of elements to get to those points," she said. "If you had deposit balances of a certain amount, you could get to the points. If you had your membership with the credit union for so long, you could get to certain points. Then you had to add all of those points up to get to certain levels in the program."
The redesign took a little over a year, she said, and now Community Choice has a program based simply on the number of products and services used, making it easier to understand and explain.
"It is very easy for members to say, 'Yes, check, I have got a checking [account],'" she said. "'Yes, I have got a savings. Yes, I have got an auto loan.' There weren't all of the balance requirements and all of that in there."
The new program is also somewhat unusual because it pays out cash rewards and loan interest rebates rather than offering less tangible rewards such as fee discounts, Cameron added.
A common complaint about rewards programs, however, is that the rewards themselves are too small to motivate members to do more business with a particular credit union. Cameron said Community Choice, which has about 56,000 members, considered that during the redesign.
"All signs for us led to cash being king," she said. "So that is the route that we ended up taking."
At Community Choice, gold members get a $3 monthly credit; emerald members get $9. The credits go into their GetBigReward$ account, which offset or eliminate overdraft and other fees. Whatever is left at the end of the year goes into the member share accounts, she said.
Read more: The program helps increase the average number of products per member…
It may not seem like much to some, she said, but for emerald members it translates to a $108 annual deposit in addition to any loan interest rebate money. Some members got up to $750 this year, Cameron noted. Members earned $886,903 in rewards during the first few months of the new program, which started in June 2013. And last month, Community Choice awarded $1,527,667 to members for their activity in 2014.
Success is relatively easy to measure in the new program, because it's all about the average number of products and services members use.
"Before we started the program, our average product/service penetration was 4.28; today it's 4.62," Cameron said. "Almost every member has added about a half a product; which is pretty good. Our e-suite, which is all of our e-services – it would encompass e-pay, e-banking, e-statements and mobile banking – has improved by 69%."
Direct loan volume increased by 20% between 2012 and 2014, too, she said.
"You are not only getting this low interest rate, you are also eligible to get 10% of that interest paid back with this program," she said. "We do a lot of comparative analysis for [members]. Even if they found a rate that was 10 basis points lower, our rate would still be lower if they take into account that additional loan interest rebate they are getting."
Cameron estimated Community Choice spent about $236,000 to redo the logo and market the new program; another $6,000 was spent on programming, which created what is perhaps one of the best features of the program because it is automated.
"The computer is pretty much doing all of the work," she noted. "There is very, very, very little time on our part spent doing anything just besides reevaluating the program."
Cameron said revamping the rewards program was worth it, and she had some advice for other credit unions thinking about giving their own rewards programs a face-lift.
First, she said, defining the goals early in the process is crucial.
"At what stage do you want it to be easy to administer?" she asked. "Do you want it to be tangible? What type of award do you want to give to your members? Is it cash? Is it discounts? Is it rebates?"
Second, don't rush it.
"I think the time that we took to make sure it was implemented right and ensure everything was working, made it work really well and made it so that members were very accepting of the program," Cameron explained.
Last but not least is good chemistry. Frontline representation on the member side and strong support from the IT team is particularly important.
"I think the secret sauce is having a cross-functional team," she said.
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