Enhancing Loyalty Program Performance for Member-Centric Success

In the vast financial services landscape, credit unions have long stood out for their member-centric approach to banking that builds trust and fosters emotional connections beyond the typical bank-customer relationship. This unique aspect of credit unions is the secret to their long-term growth. According to a 2018 from Motista, customers who feel a strong brand affinity generate 306% higher customer lifetime value than those who are merely “satisfied.”

Amidst high interest rates and regulatory changes hitting the banking sector, credit unions can leverage their reputation as the “caring” alternative to attract new members, re-evaluating their relationship with their financial institution. To further deepen engagement with their members and reward them for their loyalty – something consumers say banks aren’t doing enough, according to a 2023 Accenture study – credit unions should strongly consider introducing a travel loyalty program or integrating travel offerings into their current loyalty frameworks. Why travel? Because it’s an aspirational product in high demand, it can also come at a high cost. Mitigating some of that cost via a loyalty mechanism can build a lot of goodwill with consumers.

However, many credit unions that already offer this benefit struggle to bridge the gap between member expectations and their assumptions of what the program can deliver. They, therefore, fail to fully capitalize on the promise of loyalty rewards to reinforce positive behaviors, drive retention and increase member lifetime value. In most cases, the reason why is simple: Their programs rely on outdated or very limited technology to deliver the earning opportunities, benefits and rewards their members are looking for. They also lack the ability to communicate their program’s advantages to members.

These challenges aren’t unique to credit unions. In our 2024 Travel Loyalty Outlook Report, which surveyed consumers and loyalty program professionals about their views on their travel loyalty programs, almost half of the consumers we polled said they wanted better redemption and earning capabilities. Additionally, only 7% of consumers turn to their travel loyalty programs first when booking a trip, while just 8% consider the ability to earn or redeem points in the trip planning process.

How can credit unions reverse this trend? Unsurprisingly, it’s all about value – both real and perceived. Below, we share four strategies to help you improve your loyalty offerings and better communicate your program’s value.

1. Diversify Your Travel Options

Credit unions with travel loyalty programs are at an advantage when delivering diverse travel options to their members. They can partner with a wide variety of travel suppliers and adjust the available redemption options based on members’ evolving preferences by integrating third-party offerings. Many big banks that offer their customers expansive travel rewards programs already do this.

Our survey also shows credit unions offer the largest penetration of diverse travel options, including adjacent products like insurance, as part of their loyalty offering. To compete more effectively, credit unions must similarly expand their portfolios and explore travel rewards that can help them stand out, like cruises, which, based on our findings, has significant untapped potential.

Broad rewards portfolios help financial services brands drive spending through their credit cards and within the program’s framework. However, building such a portfolio by establishing bilateral relationships with travel suppliers is inefficient for any bank or credit union. By partnering with a loyalty technology provider with existing relationships with travel suppliers and the ability to seek out new ones, they can easily offer their members the travel options they want.

2. Offer Exclusive Discounts and a Flexible Currency

Nearly 30% of the consumers we polled view securing discounts with travel providers through their loyalty programs as a solution to the rising cost of travel. As a credit union, you can deliver those discounts by leveraging closed user group pricing. This allows you to negotiate far better discounts with travel suppliers that might be unwilling to offer the same discount to the public.

This, however, is something loyalty programs admittedly struggle with – 20% of the providers we surveyed said that negotiating with suppliers for inventory and discounts is their biggest challenge, limiting their ability to deliver value to members. In this context, using a third-party loyalty partner can be extremely valuable. They can tap into their extensive network to introduce supplier-funded discounts strategically tailored to the program’s member base – offering deals that aren’t available through traditional online travel agencies.

A third-party loyalty partner can also help you introduce a flexible loyalty currency, which enables you to modify points’ value, integrate new savings with existing currencies and fund bonus points through the margin earned on other travel products. These types of margin-funded rewards and discounts can incentivize sign-ups, nudge members over a tier status threshold, or otherwise reinforce desired member behavior.

3. Get Personal

Of course, discounts only work if they offer the customer something they genuinely want. Personalization is an extremely important strategy to communicate value in today’s connected environment, where many of our brand interactions are tailored to our interests – from the ads we see on Instagram to the recommendations on our Netflix queue.

Loyalty programs must determine what appeals to individual members and provide recommendations for travel products and bespoke discounts that reflect their unique preferences. You can foster a deeper connection with your members by tailoring your offers and content across all touchpoints, including on the booking platform, in email communications, on paid social media and in member service interactions.

Credit unions have access to quality, user-supplied data that can be leveraged – with the help of the right technology – to create detailed portraits of loyalty members, facilitating advanced personalization strategies. Member data and advanced analytics can drive informed decisions, help you anticipate or predict evolving needs and optimize program performance.

4. Close the Awareness Gap

One startling finding of our survey is the significant awareness gap between what consumers think their loyalty programs can provide and what they deliver. This was particularly stark among financial services brands; nearly all the banks, credit card companies, fintech firms and credit unions we polled offer travel rewards, but only 49% of consumers report that their financial providers offer travel benefits. This significant disconnect signals a shortcoming in marketing capability.

Inadequate communication strategies are also partly responsible for loyalty members’ uncertainty around their programs’ value proposition. Beyond the allure of rewards, credit unions with travel loyalty programs must emphasize the holistic benefits of participation, including enhanced convenience, personalized experiences and financial empowerment.

A travel loyalty platform and partner that can provide agency-level marketing, including segmentation and targeting, SEO/SEM and creative services, takes the onus off credit unions to either hire an external marketing firm to handle their travel loyalty program or use internal resources, who might not have the expertise to execute travel rewards-specific marketing strategies. Additionally, a partner offering marketing services can leverage the data within the loyalty platform to create personalized, value-driven marketing strategies that drive engagement and boost conversions.

Tackling the value/awareness gap should be a top priority for any travel loyalty provider. Offering in-demand rewards and incentives is critical, but just as important is a program’s ability to personalize the loyalty experience, from individualized communication strategies to bespoke discounts. If successfully implemented, a loyalty program can help credit unions deepen the relationship with their members, encourage spending and increase the number of interactions a member has with the credit union brand.

A travel loyalty platform that leverages automated marketing technology, employs artificial intelligence and enables the seamless integration of third-party offerings can deliver those much-desired and necessary gains and that will help credit unions compete more effectively in a crowded financial services marketplace.

Jeff Zotara is Chief Marketing Officer for the Scottsdale, Ariz.-based travel loyalty program provider arrivia.