ANAHEIM, Calif.–Are your credit card promotions working? And what can you do if they’re not?
Both questions were at the center of a discussion during the CUNA Lending Council annual meeting here, where metrics and strategies for addressing both issues were shared.
Michelle Goeppner, director of Credit Product Strategy with Alliant Credit Union in Chicago, said neither issue can be resolved or even known if the credit union doesn’t first have a fundamental in place.
“If you don’t have goals, you don’t know if they are working,” said Goeppner. “Do you have KPIs around originations, balances, interchange, member penetration? Or do you have engagement goals, such as page visits?”
Goeppner leads a product management team that manages all facets of the credit union’s products, including target market, competitive intel, pricing, marketing strategy, member experience and more.
Card Menu
Alliant offers three card products: a Platinum card (low rate, for revolvers, those new to credit); a Rewards card (its general utility card), and its newest card, a Signature card that offers cash-back rewards (3% in first year, 2.5% thereafter, only card with annual fee).
“Originations for the new Signature Card is outpacing our other offerings now,” said Goeppner.
Goeppner addressed card campaigns in five steps: Acquisition, activation, usage, sticky and retention. Here’s a look at what she had to say about each step:
Acquisition
Acquisition is about who is being targeted, the messaging and the timing.
“Preapprovals typically outpace general messages, as people want to know if they apply that they are going to be approved,” said Goeppner. “You have to have an offer out there with a sense of urgency. I recommend attaching a spend promotion just to get them to start using the card. If you don’t get them in the first 90 days using, they are not going to use. Balance transfers are another great way to leverage bureau data.”
Seasonality definitely matters, reminded Goeppner, pointing to periods ahead of the holidays and then post-holidays with balance-transfer deals as prime opportunities.
Activation
Approximately 20%-25% of issued cards are never activated, according to Visa data, said Goeppner.
“So if you are sending them usage offers that’s going wasted. You want to do some sort of activation campaign first and foremost,” she said. “You definitely want to include an offer to start behaviors you want. Have your front-line staff follow up to get that 20%-25% rate down.”
Goeppner said it might be considered controversial, but a credit union should consider shutting down the card if it isn’t activated after a certain period of time. “Look at your processor invoice: you are paying for every plastic. You want to get the most out of it.”
Usage
With usage, Goeppner recommended a “divide and conquer” strategy, such as understanding how often members use the card, how recently and the monetary value of their cards. She said CUs should also seek so drive incremental income with inactive cards.
“If they haven’t used in 90 days or six months, you want to send an incentive to get them to start using,” Goeppner said, adding Alliant sees a lift after its usage campaign.
Incentives can also be used to drive the spend to certain categories where there may be more income opportunities due to interchange differences.
Balances go up 16% after a credit line increase is given to a cardholder, according to one data source, Goeppner said, and she said every CU should review its card portfolio at least twice annually.
Stickiness
This is all about getting a payment method “locked and loaded” and is critical, said Goeppner, pointing to the most sticky of all transactions, the recurring payment. Frequency campaigns can be used here as well, she reminded.
Retention
With retention, Goeppner urged CUs to look for triggers, such as balance paydowns or payoffs, a decrease in purchases or even the closure of other products with the credit union. “Sometimes you have to just reinforce the benefits of the credit card, or sometimes it’s that the member is in the wrong card. Ask them what they need in their card and what it will take to be top of wallet. In our portfolio we have seen there was a product we were marketing that members weren’t using or understanding, and we made some tweaks and saw an increase in usage.”
General Campaign Best Practices
Goeppner offered an overview of general best practices to follow, including:
- Set clear goals and measure
- Seasonality matters
- Focus on incremental
- Credit union vs. bank. “This is something we could all capitalize on more with all the anti-bank sentiment. Let’s share the reasons to believe in the credit union movement.”
- Card holder lifecycle management
- Keep your messages simple
- Create a sense of urgency. “Don’t leave the offer out there for a long time, as people think they have time to act and then they won’t.”
Lessons Learned at a Big Issuer
Goeppner, who previously worked at a large bank, shared some of the lessons in marketing cards that were learned at that institution:
- Test and learn. Test offers, creative, channels and don’t be afraid to fail
- Use analytics and use propensity models
- Reduce irritants. Make it easy to do business with you. Understand members and their behavior
- Invest in technology, including systems, resources and tools. Avoid Band-Aid solutions
- Say no. “Do not reverse fees or reduce rates, and close cards”
- Know who you are and why you are here. “What do you stand for? What’s your unique value proposition? How are you different?”
- Less Manual, more automation. “Use trigger-based campaigns”