Rewards programs are popular in many industries, they have been around a long time, and are familiar to most people. The airline, hotel, grocery, pharmacy, and many additional industries leverage rewards to influence their customers. In the financial services industry, credit card rewards are common. More likely than not you are a participant in rewards programs yourself. Rewards programs are popular, but are they effective?
Yes! According to a recent KPMG study, 80% of consumers get excited to find a new way to earn loyalty points, and 74% will go out of their way to shop at a store where rewards are accrued. According to a 2016 Forrester study, 48% of respondents stated loyalty programs influenced what they purchased. This is basic behavioral economics; an incentive can influence how people interact with your organization. Perhaps you have experienced this yourself…paying a little more to book a flight with an airline that provides points, or booking with a certain hotel chain to get that free night stay, or signing up for a specific credit card because you would benefit from the rewards. My project proposal encourages members to engage in a similar way, and with each reward the credit union difference is reinforced.
Attracting and retaining millennials is an important element of my project proposal as well. Millennials are familiar with, and are motivated by rewards programs. According to the same KPMG study referenced above, 90% of millennials belong to at least one loyalty program, and 55% reported some type of reward would keep them most engaged. Here at Unitus, we recently held two focus groups with millennials in Portland. Our goal was to understand their banking preferences and what they want from a financial institution. An interesting takeaway was that participants did not speak using financial terminology (e.g., using terms like “interest rate”); rather, they spoke in terms of “reward.” This further supports the idea that rewards resonate with a key target audience for us: millennials.
Creating a simple and intuitive member rewards program at Unitus will give us the ability to influence engagement, drive home the credit union difference, improve loyalty, and be a key tool towards our long-term organizational goals.