o Two credit unions found card success with creative, low-budget card promotions.
o Each emphasized the use of frontline staff in the promotion.
o One CU saw its card portfolio double its card balances over the year of the promotion.
Two credit unions, one in Texas and the other in Michigan, have recently been recognized for the ways they have used creativity and enthusiasm to rebut the myth that credit unions cannot successfully manage credit card issuing.
The $178 million MemberSource Credit Union, Houston, and the $75 million Community Alliance Credit Union, Dearborn, were among the 60 credit unions recognized by Card Services for Credit Unions with a Card Marketing Award this year. CSCU is an association of card issuing credit unions which process their card transactions on the Fidelity National card platform.
"This year we saw some exceptional nominations touting the credit unions' successes in what can be considered one of our most challenging years," said Bill Lehman, vice president of portfolio consulting at CSCU. "Our CAMEO winners seized an opportunity to make their card programs more profitable, and we like to recognize our credit union members that work hard to grow their card portfolios."
CSCU encourages credit unions to take an active approach in growing their credit and debit card portfolios. By highlighting the outstanding results of effective campaigns, the CAMEO awards provide an opportunity to recognize high achievers and showcase best practices for all members.
"We always enjoy spending time with our members, and the exchange of ideas was especially energizing this year," said Robert Hackney, CSCU president. "It's a great opportunity to connect with colleagues and learn from each other's success."
Diana Fisher, vice president of marketing for MemberSource, explained that the credit union had decided to incorporate the popular reality television program "The Biggest Loser" into its card marketing promotion effort. But instead of dropping weight, the credit union urged its members to become the biggest interest losers in terms of balances on high interest rate cards by turning to lower rate CU-issued cards.
"We wanted to help make members aware of just how much money they were spending on these sorts of higher interest cards," Fisher said. "We are proud of our card offering and believed we could offer our members a better deal with our cards than those other cards."
The credit union budgeted $10,000 for the campaign and spent $7,000, Fisher reported. And over the course of the three-month promotion (February through April 2009), it saw members open 273 card accounts and increase balances by 14%. Fisher thinks that the CU could probably have opened more accounts but, as a rule, it does not like to run promotions for too long.
"When I saw the other CAMEO award winners and saw that some of them had run promotions for six months, for nine months or more, I was a little shocked," Fisher said. "We like to keep our promotions shorter than that. [It] lets us keep them fresher and keep our members interested with new things."
Fisher said the CU was also pleased with how well its effort to build enthusiasm for the promotion among its frontline staff had gone and how well they had been able to cross sell the cards. The credit union issued the frontline staff pieces of tape measures that they wore around their necks to spark member questions and interest, Fisher explained.
She also acknowledged that the CU benefited from the overall consumer awareness of cards and interest rates that was going on at that time. In fact, the CU reported that the customary balance cycle had been muted in 2009 as the steady flow of balance transfers even outside the promotion kept coming. That flow dropped off as the year progressed, however, so that the usual cycle has reasserted itself this year, Fisher said.
Scott Williams, the chief operating officer for Community Alliance Credit Union, scoffed at the idea that May 2008, on the brink of what turned out to be the worst recession in years, was a particularly poor time for a CU to launch a credit card program.
"On the contrary," he said, "it was a great time for us to position ourselves well with our members who really needed a credit card product."
Williams explained that with Michigan having become "the poster child" for poor economic conditions, the credit union determined that its members really needed a card product from the credit union, one they could trust not to tack on additional fees or abuse them through higher interest rates.
The credit union launched a yearlong promotion campaign aimed primarily at its 7,000 members in January 2009. The goals of the program were to build balances in the card program, help boost card interchange and help position the credit union as a member resource in the current down economy.
Community Alliance combined a 0% APR offer for six months to draw existing balances and double points through its card rewards program for the use of the card for "the necessities of life," which the CU defined as food, clothing, medical expenses and gasoline. The CU used targeted direct mailings to preapproved members and also advertised the program to nonmembers living close to the credit union.
The CU budgeted $26,000 for the yearlong campaign and saw it succeed enormously, Williams reported. Over the course of the year, the CU almost doubled its card balances, moving from $792,598 to over $1.5 million. That was 15% above its goal of $1.3 million and helped sharply increase the CU's income from card interchange, Williams added.
Williams also reported that the credit unions careful card underwriting had been rewarded so far with a significantly lower card delinquency rate than its peers.