By Michelle Hillenbrand
The credit card is one of the most effective and profitable relationship building tools in a financial institution’s retail product suite. Credit card program managers know the value of creating awareness about the benefits and value of their card programs. Strategies for card program growth likely include tactics intended to increase card penetration in the member base, spark higher rates of activation and usage, and responsibly lift outstanding balances through balance transfer and credit line increase offers. These types of tactics are no trade secret.
But there is a difference from one credit union to another in the success rates of growth campaigns. This discrepancy is often dependent on the precision of data analytics and segmentation strategies that identify the members most likely to accept these offers. Informed and targeted marketing investments invariably outperform broad scale offer solicitations.
This is why a collaborative partnership with experienced portfolio growth and marketing experts can be one of a card program manager’s best resources for achieving growth objectives.
An Ideal Example
Take the $600-million Ideal Credit Union in Woddbury, Minn. as an example. Since 2013, Ideal has outperformed peer credit unions in year-over-year growth of credit card loan balances. In the second quarter of 2015, the credit union set a new benchmark of 12% growth in outstandings for its consumer products from the prior year.
Over the past three years, Ideal worked with Advisors Plus on five successful balance transfer campaigns and two credit line increase campaigns. The campaigns were part of the credit union’s partnership with PSCU’s Advisors Plus, the marketing services consulting arm of PSCU. Advisors Plus uses a combination of account historical performance, account level inclusion and exclusion criteria, as well as credit scores and debt-to-income ratio to determine if an account is eligible for a credit line increase. Ideal’s Alliance-level relationship with Advisors Plus gives it access to two options for marketing campaigns:
Customized campaigns utilize predictive modeling as well as behavioral and profitability segmentation analytics to identify cardholders most likely to respond. A targeted offer is deployed via the appropriate communication channel, which translates to a better return on a credit union’s marketing investment. This comprehensive approach provides promotion planning, forecasting, project management and implementation, response tracking, and results measurement.
Attention-Getting
Structured campaigns make it possible for credit unions of all sizes to actively market the advantages of their card programs to members under a pay-for-performance model. Ideal took advantage of two attention-getting structured campaigns to ignite a flurry of activity to grow its balances.
According to Alisha Johnson, Senior VP of Marketing, Sales and Service at Ideal, the high-impact, cost-effective programs gave Ideal the jumpstart it needed in terms of increased balances. The credit union plans to continue utilizing the expertise of the Advisors Plus team in balance transfers and credit line increases in 2016.
Growth In Cards & Usage
Adding to Ideal’s success was its recent participation in two credit line increase campaigns. Combined, these campaigns resulted in credit card loan growth, as well as an increase in usage. According to Jane Hennen, Marketing Director at Ideal, the combination of these campaigns with other campaigns being run under the guidance of Advisors Plus was a key component of the overall success.
The PSCU’s Advisors Plus strategic portfolio consulting and marketing team has a long track record of success in campaign targeting, as well as tracking and measuring the effectiveness of these campaigns. Data analysis is crucial in their ability to help more than 400 credit unions each year understand where their portfolios are today, where they want them to go in the future, and how to get them there.
Michelle Hillenbrand is the VP of the Advisors Plus Marketing Services group. Advisors Plus was established in 2004 as the consulting arm of PSCU to help credit unions meet their financial and business challenges and grow. For more information, visit AdvisorsPlus.com.