Credit Unions Encouraged To Get Aggressive With Digital Strategies

The 2020 winter holidays are going to be quite a bit different than they’ve ever been.

In fact, the holiday shopping season is already quite a bit different — starting with the fact that the big kickoff day was Amazon Prime Day in mid-October rather than Black Friday. Beth Phillips, director of strategic portfolio growth at CO-OP Financial Services, told PYMNTS that not only have consumers been shopping earlier this year, they’re also shopping differently.

For example, the digital channel — which had already been growing quickly to take up more of the holiday spending pie in recent years — is exploding as the pandemic has pushed consumers away from shopping in physical stores.

And on Prime Day alone, debit use spiked 79 percent over what was seen the day prior, Phillips said.

Phillips said that sort of gain has been observable with Amazon transactions all year due to Amazon’s organic growth, combined with the move to online spending for essential household items due to the pandemic. The double-digit percentage growth didn’t come as much of a surprise.

Still, she said she doesn’t expect the high numbers demonstrated by debit cardholders on Prime Day to continue for the holiday shopping season as a whole.

“I think with those Prime Day debit users were really more motivated by the Prime Day sales and by Prime Day and the [interest] that comes with the event and those perceived savings,” Phillips said. “But I don’t see that holding through the holidays.”

She said the assumption is that consumers are spreading their holiday spending out over time this year versus only shopping on the major sales days, as in years past. In addition, credit will still probably outperform debit over the holidays, due to the pandemic and as observed in previous years, Phillips said.

The Time To Engage Members Is Now

It’s all a call for credit unions (CUs) to capture the emerging digital landscape. Phillips said it’s going to be a very digital Christmas, with people ordering online for deliveries to their doors, or to pick up their items curbside or in-store.

She said CUs don’t need to plan for a digital holiday shopping season — it’s already here. Instead, they already need to be digitally engaging their members.

“The spend is happening now, which is why a strong digital strategy is critical,” Phillips said. “If the credit union has not deployed that yet, my emphasis would be to deploy it immediately. Don’t be too shy or too conservative. There are competitors knocking on your members’ doors every single day online. There are a lot of options for countering that, but they all start with building a strong digital strategy.”

Phillips said CO-OP’s SmartGrowth team has been advising CU clients since early in the pandemic on ways to increase awareness and usage of digital solutions.

Step 1: Educate The Members

However, a good digital strategy means more than just loading up with digital features in the hopes of capturing the top of the digital wallet. Phillips said it also means making sure members understand what tools their CU is offering — and feel confident in actually using them.

She added that the temptation in building digital capacity is to jump right to rewards offerings. That makes sense on one hand. If you want people to do something new, the best way to get them there is to give them incentives.

But Phillips said that when it comes to bringing a member base into the emerging world of everything digital, focusing on incentives actually skips a step. She said consumers first have to actually understand what they’re being offered and how to use it.

“If there’s anxiety tied to them using that method, they are not going to use it, even if it has several benefits [and] even if you’re incentivizing them,” Phillips said.

That means CUs must train their staffs to educate members on exactly how to leverage a CU-issued card in a variety of digital contexts. Phillips said they must be able to explain to members things like how to load their cards into their preferred digital or mobile wallets or how to actually tap into Apple Pay at the point of sale (POS).

Phillips said that’s what’s going to make members comfortable leveraging their cards digitally. And more importantly, she said that’ll make the CU-issued card not just top of wallet, but also top of mind. It’s thus more likely to become their go-to card for digital use, which is what the CU ultimately wants and needs.

Once CUs have laid down that educational foundation, Phillips said, then it’s time to layer on incentives and rewards. And for that, she said CUs must properly leverage data to offer rewards that their members will actually find rewarding.

Now Is The Time To Tout A CU’s Services

CUs have a tendency toward being conservative when they reach out to their members, Phillips said.

That’s for good reason. She said they don’t want to be perceived as the kind of persistent bother that gets relegated to a spam folder because members get tired of constant messaging.

But Phillips said it’s time for CUs to push past that conservatism and acknowledge that their competitors in the digital world aren’t nearly so worried about knocking on the door too many times.

“Credit unions sometimes shy away from consistent marketing when they really should be thinking about touching that member one to two times per week,” she said. “[It’s] really important to educate your members on your offerings to make sure that they’re aware of all the benefits” — even those that are embedded in an institution, like exceptional service, low rates and no fees. Phillips said those are becoming major differentiators.

After all, the holiday shopping season is already underway. Phillips said that if CUs want to capture the spend that’s out there, now is the time to approach customers with offers, features and incentives. Consumers want them and are ready to favor the players that present them to customers.

“If you want to capture spend, this is the year to [be] aggressive,” Phillips said.