4 Examples of Great Bank Loyalty Programs
4 Examples of Great Bank Loyalty Programs
Bank loyalty programs are a tried and true marketing tactic, offering the ability to both reward and incentivize customers. While customer loyalty programs in the banking industry are far from new, many of the tactics used in modern programs are drastically different today than those even 10 years ago. Today’s audiences are digital savvy, able to compare products and programs quickly and easily, and often incentivized by cost savings. In fact, 81% of modern bankers expect incentives in the form of loyalty programs or signup bonuses, according to a study by CGI. As a result, bank rewards programs are an important marketing tactic for banks and you should be using them.
Where do you start? These 4 examples of great bank loyalty programs will give you some inspiration on how to set up your own.
4 Great Bank Loyalty Programs
Capital One Purchase Erasure
Banks often integrate loyalty programs designed to help customers accrue points towards travel (Air Miles) but Capital One took this a step further. With Purchase Erasure, customers are able to accrue points towards “erasing” already purchased travel. Here, customers simply make the purchase with their credit card or mobile phone, and then submit the purchase for erasure within 90 days of purchase and are refunded.
Capital One has many other bank loyalty programs, including a developer-focused DevExchange, allowing third-party organizations to add to and customize customer loyalty options with their own additions. Why is it great? Simply adding more flexibility to an existing loyalty program idea gives CitiBank customers a lot of advantages because they don’t have to worry if they forget to use points during a purchase.
The Approachability Gap: How to Connect with Untapped Consumers
50% of consumers hesitate to approach their financial institution for products and services. Learn how financial education can help bridge the gap.
CitiBank actively works to promote customer activity and engagement with “thankyou”, a bank loyalty program designed to reward customers for using the bank’s network and partners. Points are accrued through using mobile apps, ATMs, checking accounts, and other services and can be redeemed towards products, travel, and even previously purchased products.
This program not only incentivizes customers to use CitiBank’s cards, but it also promotes them to use other services, while rewarding individuals for actively doing business with the bank.
Wells Fargo Customer Relationship Discount
While many bank loyalty programs revolve around credit and debit cards, many don’t. Wells Fargo offers reduced rates on car and student loans as well as other perks such as no ATM fees and discounts on safety deposit boxes through their Relationship Discount program.
Relationship discounts apply to consumer checking accounts with automatic payments enabled, and essentially reward active customers for using services like auto-payment. The same program offers discounts on a range of Wells Fargo services and even cash-back refunds on things like ATM charges from other ATMs. While this program certainly costs Wells Fargo a lot, it also greatly incentivizes customers because being more active with the bank saves them a great deal in fees and service charges. When combined with increased interest rates on accounts, plus bonuses for having more than $25,000 or more than $250,000, Wells Fargo actively rewards customers for using their services.
What can you learn from it? Bank loyalty reward programs don’t have to be based around spending money, you can just as easily reward using services, especially when those services save you money or earn you money.
Zion’s Bank Pays for A’s
Zion’s Bank actively targets Gen Z bankers with their Pays for A’s loyalty program, rewarding students aged 12-18 for good grades. While the loyalty program is only available in very select areas (Utah and Idaho) it’s a great example of how some banks are using creative and inventive ways to connect with consumers.
Pays for A’s basically offers students $1 per A or A+ grade for students with a Zion’s Bank account and 50 cents per A or A+ grade for students without a Zion’s Bank account. Students with eligible accounts are also entered into drawings to win savings accounts with college money.
Why is this bank loyalty program a great example? It actively targets an up-and-coming generation of customers and encourages them to open accounts with Zion’s. At the same time, it actively promotes the bank to parents, who will become more aware of the bank and its programs as a result of something that actively benefits their children.
Tips for Setting up a Bank Loyalty Program
Bank loyalty programs have existed for decades, but traditional programs often don’t work. You have to be creative, take an extra step, and specifically market your bank’s loyalty program to your customers. These tips will help you to set up a bank loyalty program that works for your customer.
Use Big Data and Automation – Many banks use customer loyalty programs to offer free perks and rewards such as concert tickets, but most customers won’t be impressed unless they specifically need those things. Using big-data and automation, you can choose and select rewards based on how customers spend their money, so perks are always relevant. For example, if someone frequently spends money with airlines, they’d likely appreciate perks in the form of free flights where someone who frequently spends money with music venues will be much more likely to appreciate concert tickets.
Go Mobile – Many people no longer use credit cards but instead purchase directly from their phone and debit using apps like Apple or Google Wallet. Making your bank’s loyalty program mobile-friendly is essential for capturing this audience as well as creating something that’s appealing to younger generations.
Set Goals – You want your bank’s loyalty program to have an end goal, such as customer retention, incentivizing signup, incentivizing credit-card use, or so on. Many financial organizations create multiple customer loyalty programs with different goals, working to incentivize customers into different actions. You should likely do the same.
Bank loyalty programs are an important part of marketing banking organizations and some customers will review them when choosing a bank. Good bank loyalty programs will also help you to promote customer satisfaction, brand awareness, and to reduce customer churn because individuals who are happy with perks they get from their bank are less likely to go elsewhere. However, you don’t have to offer free products and services, some of the most successful bank loyalty programs today are simple discounts on loans and mortgages, increases in interest earned on savings accounts and CDs, and even reduced ATM fees. As long as your customers feel as though they are saving money or getting a great deal, they will be happy, and often more so than if offered something they didn’t necessarily want or need anyway.
Creating a Truly Personalized Digital Experience in Financial Services
Consumers expect seamless digital experiences everywhere—including with their bank or credit union. Are you keeping up with these digital demands?
Explore More Resources
The Financial Brand podcast: Delivering Financial Education to Customers and Communities
Providing trust through personal finance education is an imperative for the entire finance services sector.