Pointing the Way: Easy Tips to Incentivize Profitable Behavior

bear scratching its own back against a tree
Quid pro quo.
Scratch my back, I’ll scratch yours.
What’s in it for me?

People have different ways of saying it, but we can all pretty much agree little gets done in life without giving something in return.

As goes life, so goes commerce.

Your community bank or credit union can cross-sell more products, generate more interchange revenue, and deepen loyalty just by embracing this simple—and ancient—concept.

The trick is knowing just where your account holders wants their back scratched.

Create a Currency with Points

Americans looooove rewards programs. On average, we’re enrolled in 13 loyalty programs and active in seven.1 We can examine this up, down, and sideways. But it boils down to the simple satisfaction of quid pro quo.

Recognizing this, many community financial institutions successfully use a point-based rewards program as a back scratcher. This effectively creates a currency out of awarding points. Want account holders to select e-statements? Give ‘em points. There are countless ways to incentivize money-saving (or revenue generating) behaviors by using points as a currency:

  • The aforementioned e-statement enrollment
  • Establishing a direct deposit
  • Enrolling in online or mobile banking
  • And/or a small amount of points each month the above three examples remain active
  • Opening another account
  • Opening a credit card

This adds dimension to the points-per-purchase mainstay of a rewards program. You can get creative beyond these basics.

And having some awarded on monthly basis is a way to keep the program—and the benefit of banking with you—top of mind.

What works best is having some anchor activities that earn points, and some point campaigns spaced throughout the calendar. This keeps engagement up, which is critical to get the most out of a rewards program.

Everybody Loves a Game

There’s something psychological at play too. After all, every credit union and community bank has done their fair share of campaigns with special offers. But the points game is, well, a game.

And a little bit of daydreaming.

Millions of Americans prefer points or rewards to cash back because they see cash as a practicality (to use to pay a bill or credit card) while points are saved up for a luxury item or vacation. And since the rewards are seen as extra freebies, daydreaming about toes in the sand or a big screen TV is guilt-free for even the most diligent money-saver.

Another psychological advantage points programs have is how they create a “status” for participants. Many successful retail loyalty programs incorporate levels based on spending or activity. Reaching premium levels nets premium rewards, and just as importantly to many, it bestows a special status. There’s no reason a debit card program couldn’t create status levels. Even without them, consumers love tallying up more points and feeling special compared to those poor souls without the points.

It all becomes a game. And it gets real exciting when your institutions incorporates cardholder data and analytics to customize the game to each cardholder. (See Top 4 Personalization Techniques to Drive Non-Interest Income for examples how.)

The March of the Millennials

Millennials are among the most likely to change their behavior for points. Apparently, they’re more accustomed than previous generations to get something in return for their engagement.

Some noteworthy stats:2

  • 68% of millennials will change when and where they shop if it means getting more program benefits.
  • More than half of millennials (60%) are willing to switch brands if it means getting more benefits.
  • A third confessed to buying something they didn’t need or want in order to earn points or maintain program status.

While some of these retail or brand measures aren’t exactly apples-to-apples for community financial institutions, they’re certainly not apples-to-toasters either. There are very strong dots to connect that millennials—and all age groups—can be motivated to choose a financial institution based on rewards, and will use more of their products and services for ongoing rewards.

Research and results show this is true, and there are many rewards programs available to community banks and credit unions today. If you’d like more info why we think Buzz Points is among your best options, please send us an email to rewards@buzzpoints.com.

This article originally appeared in CU Insight.

1Bond Brand Loyalty, “2015 Loyalty Report,” 2015
2Bond Brand Loyalty, “The Loyalty Report,” 2014

Dante Dominick

Danté Dominick is an award-winning marketing and content strategist with specialized knowledge for the financial services industry. He has helped over a hundred community financial institutions improve their image, creative assets, user experience, and content – and looks forward to the next hundred!