We share our top 5 list of customer loyalty strategies for credit unions and banks.
- Even loyal customers have relationships with multiple financial institutions.
- Digital banking and fintechs make it easier for customers to search and switch to new providers.
- Increasing interactions, enhancing customer service, building trust, providing financial advice and offering a bank loyalty program can help with long-term customer retention.
- A bank rewards program should take an approach that supports your organization’s goals.
- There are many types of bank rewards programs that can inspire your loyalty strategy.
The good news: Most bank customers consider themselves loyal to their primary financial institution and even recommend it to others.1 But they also have relationships with 3.3 financial institutions, on average.1 Worse, in 2020, nearly one-fourth of people considered leaving their current primary financial institution for another,2 with millennials and Gen Zs most at risk for defection. And the rise of digital banking and fintechs has made it easier than ever for consumers to search out deals and swap providers — especially if one doesn’t have the customer experience they’re looking for.
So how do banks build customer loyalty in this environment? Read on for strategies to overcome the challenges and build loyal (and profitable) customer relationships.
1: Increase Interactions
Consumers are more likely to have higher customer loyalty when they interact more often with their primary financial institution. According to a Phoenix Synergistics survey reported by The Financial Brand, 44% of consumers who had six transactions per week were extremely loyal to their bank or credit union.1 But of consumers having less than two interactions per week, only 30% were extremely loyal.1
It makes sense, then, to provide as many opportunities as possible for customers to interact with your institution — along with reasons for doing so. This could mean traditional cross-sell and upsell campaigns, since the more products a customer has with you, the more reasons they have to interact.
Credit union and bank loyalty programs let you introduce new touchpoint opportunities. For instance, members can check their points balances, redeem points, update their profiles, take advantage of exclusive offers and so on.
Having a robust mobile app and website can also help. Beyond now-standard transactions, these channels are optimal for providing educational resources and tools — from product descriptions to blogs to video tutorials and calculators.
2: Enhance Customer Service
Excellent service routinely ranks high on the list of reasons customers remain loyal to their financial institution. The pandemic, though, created a new baseline for financial institution customer service — one that involves more channels, capabilities, speed and convenience. Improving your customer experience must address each of these points.
For instance, can customers bank with you across multiple channels — including phone, in-branch, online, mobile app and social media? Can they communicate with your customer service team across those same channels? How (and how quickly) are customer concerns addressed?
On the convenience front, consumers now expect their bank or credit union to support numerous payment options. While a minority of customers may still regularly use checks, others are more likely to use cash, credit or debit. And an increasing number want you to support mobile wallets and person-to-person payment apps.
To find current friction points in your CX, map out your customer journeys. Identify gaps and other areas where customer service may be faltering. Then work to fix those problems.
3: Build Trust
In the same survey, 42% of consumers cited trust as the number one loyalty driver.1 Security and transparency are two essential elements to building customer trust, so make sure you:
- Have strong mobile data security (and let customers know the details)
- Explain how you keep customers’ personal identity information secure
- Clearly communicate interest rates and fees — particularly when they change
Customers also will trust you more if you show you aren’t just there to push products, but actually understand and care about their personal finance needs and wants. In short, take a customer-centric approach. For instance, delve into your data to create more relevant, targeted offers and messages that reflect individual customer’s actual needs and wants, based on transaction history, current accounts and lifestyle clues.
4: Provide Financial Advice and Guidance
Nearly 20% of consumers named providing financial advice and guidance as a top reason for their loyalty to a particular bank or credit union.1 Nearly one-third would switch banks to get that guidance. That’s more than the number who named interest rates or fees and just under those citing features or services as loyalty factors.1
Stepping back from the loyalty question, more than 25% of consumers simply want more financial education and tools.3 A third of Gen Zs and millennials say they would use a mobile app more if it provided education on products, services and financial behaviors to help them reach their goals.3
Obviously, delivering on those desires is critical for credit unions and banks to build loyalty. Providing education can come through personal appointments, workshops and webinars. And it can come through value-added content distributed as videos, blogs, newsletters, email bulletins, podcasts, social posts and various forms of visual content. All created expressly to help customers gain confidence in their ability to make smart financial decisions. In the process, your institution gets positioned as a helpful friend (not a salesperson) and becomes a valuable resource for your customers.
Test and learn to see which channels and formats are best for your customers or customer segments. Use customer data and research to choose topics they care about.
5: Develop a Financial Services Loyalty Program
Fourteen percent of consumers said a generous rewards program is a top reason they stay loyal to their financial institution.1 Credit union and bank loyalty programs can increase purchasing behavior and let you collect data you can use to personalize messages and offers. They can create a differentiator between you and the competition by adding value. And they can support organizational goals, such as increasing digital engagement, using a mobile app and, yes, increasing revenue.
We get into more detail about financial services loyalty programs below.
How do bank loyalty program members earn rewards?
The easy answer is, it’s up to you. There are nearly countless ways you can allow customers to earn rewards. Ideally, though, your loyalty strategy should support your organization’s goals. For instance, if you want to increase debit card usage, tie rewards to that action. If you want to build engagement beyond transactions, offer rewards for activities such as watching a webinar or signing up for email rate alerts.
Here’s a quick list of just a few ways you could have customers earn rewards through your bank’s loyalty program:
- Use a credit or debit card a certain number of times per month
- Purchase or open product bundles or service packages
- Build deposit balances by a certain amount or to a certain level
- Engage outside of the buying cycle — sign up for your newsletter or an email series; watch a webinar or participate in a workshop; download your mobile app or sign up for online bill pay; start a direct deposit
What are some bank loyalty program rewards?
One of the most common loyalty strategies is to have members earn points that they can redeem for rewards. It’s a proven way to drive desired behavior and engagement, which supports loyalty. A points system also gives you some flexibility in what rewards to offer and the ability to change rewards.
When it comes to which rewards to offer, these are a few popular perks:
- Cash back
- Reduced lending rates or boosted deposit rates
- Physical/tangible gifts
- Priority service line
- Zero-fee services
- Partnership rewards, such as travel, restaurant or entertainment discounts, or gift cards
Periodically refreshing your rewards can help keep customers interested and actively participating. Adding tiers — where customers meeting certain criteria get “better” rewards — can create aspirational momentum in driving behavior. You could even try targeted rewards based on customer segments. For instance, if one group tends to be discount-oriented, their rewards could focus on cash back and lower lending rates. If you have a high wealth segment, you might focus on travel benefits.
Along with your rewards structure, don’t overlook easy ways to recognize loyal customers, such as acknowledging relationship anniversaries. Two-thirds of consumers say they expect a perk for reaching the five-year milestone — but few banks deliver.1
What are some good bank loyalty program examples?
Here are four examples of the best loyalty program features for banks and credit unions, showing the variety of approaches you can take when developing your own strategy.
Bellco Credit Union Boost Checking Account
While not a traditional rewards program, Bellco builds loyalty by letting its Boost accountholders earn a higher interest rate than for other accounts — and higher than for many CDs, money market and savings accounts. (At press time, the account was giving 2.25% APY for balances up to $25,000 versus 0.70% for a money market account with a $50,000 balance requirement.) Members need to meet a few requirements, such as making 15 debit card purchases per month, scheduling a monthly direct deposit and logging into online or mobile banking monthly.
This is a unique feature of several of the company’s rewards credit cards. It allows cardholders to use their rewards miles to “erase” travel purchases made with the card within the previous 90 days. Capital One has multiple rewards cards, including those offering cash back and others with travel-oriented rewards. In general, cardholders earn miles through card purchases. There is a tiered card system, with some cards earning more miles per purchase and delivering greater perks — sometimes in conjunction with an annual fee, making these the equivalent of a premium or fee-based retail rewards program.
Citi has a fairly traditional bank rewards program. Customers earn points through purchases made using eligible Citi credit cards or by banking with an enrolled checking account. Citi also gives cross-sell incentives, allowing customers to earn points by using qualifying products and services tied to their Citi checking account, such as a savings account, home equity line of credit or personal installment loan. And they can convert cash rewards from the Citi Double Cash Card to ThankYou points. Customers can redeem points for a variety of rewards, including statement credits, direct deposits, airfare, gift cards and merchandise from online partners.
The Zions Bank loyalty program takes a different path, aiming to engage the next generation of customers “and their parents” by paying students aged 12-18 for good grades. Students bring in their report card and receive $1 — deposited to their Zion Young Savers Account — for every A. If the student doesn’t have an account or isn’t a current customer, they can still get paid, but just 50 cents per A. Students who participate are also entered into a drawing to win a scholarship savings account worth $500. The bank holds drawings twice a year and awards 36 students per drawing, with winners eligible for the year-end grand prize of $1,000 in scholarship savings.
The Bottom Line
It’s clear that banks and credit unions can’t take loyalty for granted, even with long-time, satisfied customers. But they can implement strategies to strengthen ties and give customers more reasons to stick around.
CCG has spent 45 years focused on helping businesses build loyal, profitable customer relationships. Our financial marketing experts have developed data-driven strategies and creative solutions for many of the country’s top 100 financial institutions. They’re complemented by our retail marketing team, which has developed or refined loyalty and CRM initiatives for dozens of retailers across North America. See what we can do for you. Schedule a complimentary consultation or call us at 303.986.3000 today.
1 “Ease of Switching in Fintech Era Jeopardizes Loyalty to Banks,” Craig Guillot, The Financial Brand, posted Feb. 15, 2022, https://thefinancialbrand.com/130382/ease-of-switching-in-fintech-era-jeopardizes-loyalty-to-banks/, accessed June 22, 2022
2 “Revamping Loyalty Programs Could Be the Key to Customer Engagement,” Len Covello, Forbes, posted July 19, 2021, https://www.forbes.com/sites/forbestechcouncil/2021/07/19/revamping-loyalty-programs-could-be-the-key-to-customer-engagement/, accessed June 22, 2022
3 “How Banks Can Humanize Customer Interactions,” Jonathan Valenti and Ryan Alderman, The Wall Street Journal, posted Nov. 1, 2021, https://deloitte.wsj.com/articles/how-banks-can-humanize-customer-interactions-01635780869, accessed July 1, 2022