Free and earned premium incentives can help you maintain loan margins without always lowering your loan rates. In fact, studies show that incentives can help you increase your overall response rate by up to 15%. Here are some factors to consider before you add incentives to your next promotion or campaign.


  • Free and Earned Incentives: Offer an absolutely free incentive to prompt members to apply for a loan (the member does not have to close the loan to receive the incentive, just apply) – or offer a higher value earned premium Incentive when a member closes a loan or takes advantage of services individually or bundled..


  • Popular Incentives: Use a popular premium or freemium incentive, such as cash or a gift card.


  • Unique Incentives: Unusual premium/freemium incentives can help generate member interest . For example, a northern state credit union offered a snow blower and a west coast credit union an antique jukebox as sweepstakes prizes (members earned additional entries when they took advantage of loans, accounts and services).


  • Generate Interest & Excitement: A sweepstakes can add excitement to your promotion, especially when there is a significant grand prize, such as a car, vacation or big screen TV. One credit union offered a full-sized jukebox.


  • Illustration Sells: Use a photo or appropriate art with a brief description of the actual premium in all marketing materials. A higher value premium should be prominently featured in your promotion or campaign − make it important or your members may not perceive its higher value.​

  • Integrated Marketing Channels: When appropriate, highlight your premium offer in all of your marketing channels − in all collateral advertising, including your newsletter, email and on your website.


  • Cost Vs. Response: The lowest possible premium cost is always a consideration, but the cost should not be the primary selection criteria. In most cases, a high perceived value premium incentive will deliver a better response and therefore will be more cost-effective. Always base the premium cost on the value of the loan or service you are promoting. For example, a loan premium should have a higher value than a service incentive. Consider that your premium cost is only higher if your promotion or campaign is successful.


Overall, you should make it as easy as possible for your members to redeem the free premium or earned incentive. When there are significant restrictions or fulfillment requirements, your response rate will be lower.