SALEM, Ore.-Maps CU here has increased its partnerships with local businesses and boosted transaction volumes on credit/debit cards by instituting a program encouraging consumers to patronize local businesses.
The program came out of a desire to both promote Maps Credit Union as a locally owned financial institution, while also working to benefit the local economy. Launched in early 2011, "Buy Local" offers deals to members each month, including free deals for anyone in the community-such as a free latte or a free bar of soap-along with deals for members only at featured partners. The CU reimburses businesses for the free items, which costs the credit union about $3,000 per year.
Businesses don't pay anything to MCU to be featured, and the deals are promoted via its website, newsletter, statement inserts and more. Coupons for the deals are available online and in branches. In addition to tracking the number of free items distributed, Maps' primary tracking method was to monitor credit and debit card usage at participating businesses.
Spikes In Business Can Be Seen
One of the criticisms frequently leveled at Groupon and other "daily deal" sites is that users don't become repeat customers of those businesses-they redeem the deal and often never return. But Jill Nowacki, VP of development, said that by tracking card usage, Maps CU can look at month-over-month transaction volumes and see the spike in usage at a particular merchant during the period when that shop is a featured partner, and then a continued elevated level of transactions following that period. The typical business averages a 30% to 50% increase in transactions after being a featured partner, Nowacki said.
The number of businesses partnering with Maps nearly tripled between Q2 2011 and Q2 2012, and the CU currently has 53 partners, with others pending.
While Maps CU tracked the increase in transaction volumes (as well as the effect that had on interchange revenues), Nowacki was hesitant to attribute recent membership gains to the Buy Local campaign.
"This was hitting its stride right around the same time as Bank Transfer Day came into play," she said. "We saw growth in the end of Q3 and Q4, and continued to see record growth throughout the first half of 2012 as well. Whether that's because people are really excited about things like Buy Local or are generally excited about the fact that we're a local credit union, we are noticing that people are choosing us, and we're seeing significant membership growth."
Transaction Volume Grows
Since instituting Buy Local, transaction volumes at Maps have grown by about $500,000 per year, said Nowacki. Overall debit card usage has risen by more than 17% year-over-year between January and May of this year, and Maps is projecting a 15% increase for the entire year, according to media writer/graphic designer Jennifer Cadiente, who noted that "we don't believe we could single out Buy Local as the defining factor in this increase."
Consumers are not required to pay with a Maps card to receive the deals, but Nowacki said that the CU is considering making that a requirement on some deals, though she said that the CU has concerns about how that will affect cash-only businesses.
"If they're going to pay with plastic, we want it to be our plastic," she said.