Social Media Fuels Relationship Loyalty Programs

Members benefit from linking all of their credit and debit accounts under one rewards umbrella.

June 28, 2013

Social media empowers relationship loyalty programs to become powerful acquisition tools—but only if credit unions ensure members know how to reap the rewards.

“Once the technology’s ready, you’ve got to talk about it,” says Paul Kelzer, executive vice president, client services, for RAZR Marketing. He addressed a webinar from The Members Group, “Relationship Loyalty in a Social Media World.”

“Secret programs don’t work,” he says. “You need to communicate often, you need to be consistent, and you’ve got to make sure everybody in your credit union understands it. And then it’s about explaining to consumers not just what to do but what the possibilities are.”

The exponential rise of social media and smartphones, combined with the advent of a cooperative model for point accumulation and redemption, has infinitely expanded those possibilities since relationship loyalty programs came onto the scene a decade ago.

Members benefit from linking their heretofore scattered credit and debit accounts under one rewards umbrella, either individually or with spouses, family, and friends. This simplifies benefit tracking, grows members’ treasure chests more rapidly than if the accounts were separate, and allows for collective purchases or donations to various charities via both online and mobile channels.

Credit unions possess a vehicle to drive further engagement by offering point incentives for members who take out additional products such as mortgages and other loans. And when members advertise that they’ve cashed in their points for rewards or donated them to a certain cause, the ripple effect is felt not just within their personal circles, but throughout their social media circles as well.

This increases brand awareness and transforms members into ambassadors for a powerful grass-roots acquisition effort.

“Now members have the opportunity to say, ‘Hey, if we link our points together we could invite a friend home and pay for their trip,’” says Molly Plozay, First Data’s vice president of loyalty rewards. “Or, ‘We could give a flat-screen TV to dad, who’s using the oldest technology available.’

“Whatever it may be, it creates a conversation piece, and that conversation creates a unique opportunity for credit unions to acquire new cardholders through that family relationship.”

NEXT: Foster member engagement

Foster member engagement

Consumer interest in relationship loyalty has been high since the programs emerged in 2003, but technology limitations proved restricting. Then came the recession, when most programs were scuttled or suppressed, Plozay says.

The programs have returned as the economy stabilized, just as social media took off, so “this old concept has kind of a new wrapping around it,” she says.

Financial institutions eliminated another hurdle by turning to a consumer-driven model for sign-up.

In the early days of such programs, credit unions had to decipher which groups of people could or would want to be linked, and that “guessing game” held up companies from further developing the programs. Now, both accountholders must confirm they want to be interwoven, and either can unlink their accounts at any time.

“The self-serve tool makes all the difference,” says Matt Flynn, director of client relations for The Members Group.

Authentication remains a primary concern, and credit unions must have controls during the sign-up and redemption processes, including an audit function that allows for reviewing transactions brought into question.

Credit unions can foster engagement by creating “wow” experiences that allow members to drive the interaction. They include:

Events, which can bring in new members and provide incentives for current members.
Clubs, which provide calculable benefits in exchange for fees that offset expenses.

“Many of us working in loyalty rewards would not have expected that members would be willing to pay $79 to be part of a club,” Plozay says. “The benefit derived from being part of that—such as free next-day shipping—is significant, so there has to be a value equation there. But that concept around club membership is continuing to grow.”

Product review via blogs or consumer opinions.

Games and online connections.

Self-directed point management, which empowers members to choose their own gifts using the points they earn.

Another recent phenomenon is pooling loyalty points toward a one-time fundraiser for a charity or cause. “That’s something we’ve found a lot of enthusiasm around, especially from the credit union perspective,” Plozay says.

Kelzer’s advice for successful relationship loyalty programs: Develop a comprehensive marketing strategy prior to launch and leverage existing channels, Kelzer says.

Also, design external and internal marketing efforts around encouraging members to engage. Communicate the message frequently and consistently, and monitor your social media channels to maximize the reach of your credit union’s relationship loyalty program.

“There are a lot of different social media outlets,” Kelzer says. “It’s not important to be on all of them, but those that you are on, make sure you do very well and monitor the activity and help shape the conversation. This will bring opportunities for you to better represent your brand and message.”