ABA Banking Journal - September/October 2016 - (Page 40)

FEATURE > MARKETING Card-Linked Rewards Give Banks a Competitive Edge Banks find synergies in promoting local merchants, delighting their customers and boosting debit card profitability. BY MONICA C. MEINERT E verybody loves to be rewarded. Whether it's a free cup of joe at a local coffee shop or a special sales discount at a favorite store, getting a little "thank you" from a business can go a long way in boosting customer satisfaction and loyalty. Bank customers are no different-in a recent survey by CGI, consumers ranked the desire to be rewarded for their business as their "top want" from their financial institution, and 72 percent said they would consider switching banks if they found another institution offering better rewards. And yet, just over a third of consumers say they are currently satisfied with what their bank is doing in this area. For banks struggling to attract and retain millennial customers aged 18-35, that statistic should be a particular wake-up call-in a 2015 Accenture study, millennials identified high fees and poor loyalty programs as the top reasons they are dissatisfied with their banks. Combine that with the fact that millennials switch their bank at nearly double the average of other generations, and it makes a compelling case for offering a rewards program. 'Cashing in' on customer engagement In 2013, Macatawa Bank-a $1.7 billion institution with 26 branches in western Michigan-saw an opportunity to use debit rewards to grow customer loyalty, increase card usage and deepen existing customer relationships. As some of the bank's national and regional competitors backed away from their rewards offerings after the financial 40 ABA BANKING JOURNAL | SEPTEMBER/OCTOBER 2016 crisis, Macatawa started up a program through UChoose Rewards, the card-linked platform offered by Fiserv- ABA's endorsed core processing service provider. "It seemed a little counterintuitive to what was happening in the marketplace at the time," admits Jill Walcott, the bank's chief retail banking officer, but "we thought this may be a differentiator for us. We put in a program that rewarded customers for their debit card activity, but also gave us the flexibility to reward them with points when they did additional business with us, like a loan or deposit product." Unlike most programs which allow customers to redeem points for gift cards or merchandise, Macatawa's program gives customers the option of redeeming their points for cold, hard cash. "We wanted to make sure we were offering something the customer wanted," Walcott adds. The bank saw results quickly-just over a year after the program launched, 21 percent of eligible cardholders had registered and today, the bank has more than 30 percent enrolled. Using the detailed metrics provided by Fiserv each month, Walcott says the bank was able to track card usage among enrolled consumers compared to non-rewards customers, and noticed consistent increases in both the average transaction value and the average number of transactions. "Usage increased 54 percent six months after an existing cardholder enrolled. Their spend increased by 59 percent and our interchange income per month for those cardholders increased by 70 percent."

Table of Contents for the Digital Edition of ABA Banking Journal - September/October 2016

PRESIDENT'S VIEW
UPFRONT
LEGAL BRIEFS
PICTURE THIS
COVER STORY
CECL FROM THE INSIDE: A CONVERSATION WITH FASB’S RUSSELL GOLDEN
WHERE ‘HABITS OF ECONOMY’ WERE SHAPED
HAT TIPS
CARD-LINKED REWARDS GIVE BANKS A COMPETITIVE EDGE
MARKETING
CYBERSECURITY
BANK-INSURANCE SALES
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - September/October 2016

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