Increase Member Engagement with High-Value Credit Card Loyalty Programs

With as much as 40% of an institution's Net Interest Income coming from payments, banks and credit unions cannot afford to get it wrong. 

Credit card loyalty programs have long been recognized as a successful marketing strategy, providing a means to both reward and elevate the member experience. Although the concept of credit card loyalty programs is not novel, the current offerings have undergone significant evolution, introducing innovative methods to motivate members.  

According to a Forbes Advisory survey in April 2024, 57% of respondents said they are more inclined to utilize a credit card from a financial institution where they currently bank. Thirty-three percent of those questioned noted earning rewards on daily purchases as the primary reason for acquiring their most recent credit card. Because of this, credit unions must be agile enough to understand the evolving card loyalty trends and build the appropriate program with proper incentives to ensure member satisfaction.  

As members redeem more points, their card usage frequency increases, nurturing a stronger bond with the credit union and enhancing loyalty.

Focus on Customer Needs and Preferences 
Financial institutions are partnering with merchants to create even more incentives while ensuring a simple and effective way for cardholders to redeem points. No longer is it only about the rewards but also it is about relationship engagement. The idea is to surprise and delight members and to continue bringing them back to your credit union’s products and services.  

Several trends have emerged that allow users to access points through popular merchants, including: 

• Cards that allow the cardholder to receive 5% cash back; earning 3 points per dollar spent on grocery items, 5 points on dining out, etc.  

• Partnerships with retailers such as Best Buy, which provide the ability to redeem points to purchase the latest electronics directly through the retailer’s website. 

• Pay at the pump, allowing users a cash-free option to buy gasoline directly with credit card points. 

For credit union members, both the variety of the products and the creativity of the loyalty program offered can significantly strengthen their relationship with the institution (and likely discourage seeking alternative options). For example, a member might use 10,000 points to reduce the interest rate on a car loan and establish an even stronger relationship with the respective credit union.  

Recognize What Each Generation Values 
Millennials and Zoomers are often drawn to programs with unexpected rewards. According to the Merkle HelloWorld loyalty report, “spend and earn” programs continue to rank at the top with the younger generations. The report stated that "64 percent of all consumers indicated that the traditional “earning points for rewards” programs remain appealing." However, younger consumers prefer when brands offer creative and unexpected rewards. Since many are skeptical about debt, millennials will choose debit cards with no fees and great benefits. This could include cash-back incentives and air travel perks to discounts from retail stores or restaurants.  

Boomers, however, are in favor of cashing in on retirement and health care programs. Even medical providers are getting in on the points game— allowing the use of rewards to pay down medical bills. Also top of mind with this generation is retirement planning. Program benefits can provide cardholders access to special investment webinars, courses on investing, and even redemption for fractional shares of stock. 

The Right Combination for Solidifying Member Retention 
The evolving digital age is enabling more choices than before which can easily overwhelm consumers. To be successful in the loyalty trends race, financial institutions must have the right merchant partnerships and card programs to maximize member engagement. The right partner will help your credit union build and grow your credit card program. They will look for ways to help your financial institution attract new members and retain existing ones.  

Know Your Customer – A Winning Strategy 
With most cardholders favoring instant rewards or discounts and the flexibility to choose, it is more important than ever to understand your members. Knowing your demographic balance and what matters most to them is crucial.  

The key to fostering loyalty lies in creating a personalized experience for your members, rather than a one-time sign-up benefit. Consistently providing valuable rewards that cater to what people care about most and giving them control over how they redeem their points is no longer optional, it is essential.  

Tailoring your credit card loyalty programs to meet the unique preferences of your members will not only enhance their experience but also build lasting relationships that drive continued engagement and long-term program success for your financial institution.