Simple means your credit union staff won’t have to pull out a calculator to understand how your program works, and your members won’t look like deer in your credit union’s headlights when they read your program’s promotional materials. The best solution is a very basic “have this” and you “get this” strategy. In fact, unless your staff and members perceive your program as easy to understand, it will be ineffective and downright fail.
How Many Levels?
The most successful programs have no more than three reward levels and are based either on a Product/Service Bundle, an Aggregate Balance of Loans and Deposit Accounts, or a combination Product/Service Bundle and Aggregate Balance.
Choosing the products and services for your Product/Service Bundle is usually fairly clear-cut. You want to include the ones that help develop members that consider your credit union to be their primary financial institution. A basic bundle usually includes Checking, Check/ATM Card, Online Banking, Direct Deposit, and your Credit Card. Aggregate Balances usually include loans and deposits, with some loan and/or account exceptions. The value-added benefits members receive are also flexible, but must have real value.
Once you decide how many levels, which product/service bundle and/or aggregate balance criteria your program will be based on, and choose the value-added benefits members will receive, naming the program level(s) is the next step. Be sure to choose a name or name series that projects value, and in the case of multi-level programs, be sure each level is easily distinguishable. For example, for a one level program, a name such as “Preferred Member Rewards” is one possibility. If you want two levels, consider names like “Premier Rewards” and “Classic Rewards,” and if you decide on three levels, possibilities include “Platinum, Gold and Silver” or Blue Ribbon, Red Ribbon, and White Ribbon” Rewards.
Another pricing option is a “points” program. Each product, service, loan and deposit account you include in your program is assigned a points value. The total points for all eligible products and services determine which level of reward the member is entitled to. Of course, the member reward level can vary substantially depending on how products and services are weighted; and since determining how members can achieve a higher level is more complex, member interest can decline or disappear when they realize they have lost rewards, especially if they aren’t sure what they need to do to get them back. Unfortunately, when rewards are lost, members may also adopt a “who cares” attitude. The death knell for any relationship pricing program.
Increase Your Profitability With
A Relationship Pricing Program
The primary reason to introduce a Relationship Pricing Program is to increase your overall household profitability. With the right program, you can attract and retain members, cross-sell products and services, increase member satisfaction, and develop per member product/service penetration and usage.
But how you structure your program will determine its success. Simple instead of complex is always the most successful approach.