DES MOINES, Iowa-To drive credit card revenue, the CU can't "set and forget" the card once it's issued, reminds one analyst, who recommends aggressively pursuing activation and usage strategies, along with good analytics.

Dan Lozier, director of client relations for TMG, believes many credit unions have a lot of room to add more non-interest income to their credit card base, and it starts with activation strategies. "It's no good to issue card that sits there, and that can cost you money. You need to adjust programs to encourage new account holders to begin using their cards right away."

Lozier said sometimes it's not that much more effort on the part of the CU, such as sending another piece of mail, e-mail, or text message reminding the member of their new card's benefits and to activate the plastic.

"On top of that the credit union can couple some sort of incentive to use the card in the first 30 to 60 days," he said. "Give them an account credit or gift card. It does not have to be huge incentive, but you have to dangle some carrot. Don't let the card get relegated to the sock drawer."


Natural Inertia

TMG has seen CU cards exhibit "natural inertia" following card activation, where users tend to continually use the plastic. "They activate the card quickly and it doesn't seem to collect dust."

Handing out extra rewards points in the first few months has proven to work well to get the card moving, said Lozier, who said rewards programs are effective at increasing transactions and interchange. "Interchange is the name of the game and rewards are a big part of that."

But the types of promotions offered, rewards and others, should be based more on members' card usage trends, and should not be blanketed across the entire card base, stressed Lozier, who emphasized using analytics to segment promotions. "For example, you can target promotions to the most profitable cardholders, and then to the least active cardholders. And don't think you don't have the money to use analytics because analytics prevent you from wasting dollars. So instead of sending 5,000 mail pieces and getting a low response, you send 1,000 and get a response five times higher."


Where To Use Analytics

Lozier shared the example of using analytics with a balance transfer promotion, checking data to find which members have balances elsewhere and then targeting them. "Balance transfer promotions are very popular. But why do you offer that to every cardholder? Go after the ones who can bring over the balances."

Analytics also help the CU drive additional spend, insisted Lozier. He encouraged CUs to examine the spending habits of their cardholder base, determine which kinds of retailers members are using their cards at, and then create promotions to encourage usage at different types of stores.

"You have already captured one type of spend, so focus on getting new spend."

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