How Credit Unions Can Grab The Holidays’ Top-Of-Wallet

It goes without saying that the holiday shopping crush presents a massive opportunity for merchants and banks to cash in on the incredible uptick in consumer spend.

In 2018, American consumers spent a combined $998 billion, and forecasts for 2019 predict a 3.8 percent increase to $1.008 trillion, which would be the first 13-digit holiday season in U.S. history.

With a trillion dollars in consumer spending up for grabs over a period of about six weeks, it is unsurprising that everyone even vaguely connected to the commerce ecosystem is awake, alert and avidly looking to cash in on the windfall. Credit unions (CUs) nationwide are no exception, according to Matt Kardell, chief revenue officer at CO-OP Financial Services.

“Obviously, when you look at the numbers and what happens at this time of year, the shopping events are huge opportunities for credit unions,” he noted. “Last year, the average cardholder spent $292 between Black Friday and Cyber Monday, a 20 percent increase from 2017. And we have every reason to believe we are going to see that growth trend continue this year — on Amazon Prime Day, for example, we saw spending jump by 50 percent year-on-year across our entire credit union portfolio.”

The opportunity is big, said Kardell, but to leverage it to its full potential, CUs need to think about how they can reach top of wallet during the holiday season — no small feat, since pretty much all card issuers are essentially tracking the same goal during the most wonderful time of the year. And top-of-wallet status, he said, isn’t something CUs should aim to capture at Christmas and then surrender when the regular shopping season resumes in January.

“This is a great time of year to revisit your strategies for reaching customers so that your credit union isn’t just top of wallet right now, but that the experience you create is so enjoyable and tailored to them that the card stays at top of wallet,” said Kardell.

And while there is no single switch that all CUs can flip this season to own that top spot in a wallet, he said, they can benefit from thinking about the holiday season and how to best capture the tidal wave of consumer spend.

But the race will go to the swift because the season has already started.

Tapping the Data

In a very important sense, Kardell told PYMNTS, CUs have a leg up in working with their customers during the holiday season because those relationships are very much built around trust and intimacy.

“To their advantage, they tend to know their members better than anyone and can use that knowledge to construct offers and experiences that speak directly to what they want and need during the holiday season,” he pointed out.

One CU that CO-OP works with, for example, offered customers a temporary bonus of triple points for money spent on Amazon during Prime Day 2018 — a highly relevant offer that drove a lot of Prime Day spend on that issuer’s cards.

Those kinds of opportunities abound throughout the holiday season — both in terms of big shopping events as well as more individualized offerings that CUs can push because of their close and trusted relationships with customers.

To do that, said Kardell, it’s not enough to just have the data. The CU must also know how to mine it, interpret it and, most importantly, how to turn the insights into actionable plans to drive consumer engagements and spend. That can be a challenge in terms of technological capacity.

Larger CUs often have some of the infrastructure they need on the backend to really start digging into their data and creating plans around it, Kardell noted. Smaller CUs don’t have that — but in some sense, they don’t need to. CO-OP aims to fill in those gaps and work with their partners to mine their data, break it down into relevant points and find ways to act on it.

And, of course, once a CU has built the reward paradigm they think they want, it can’t just be set and forgotten.

“The key is to start running these programs, and then keep checking in to see where members are spending and which targeted offers are working,” Kardell said.

Simply offering seasonally appropriate rewards to members during a high-traffic time of year is a good start, and a good way to capture the spike in spend. But it’s also about preserving the result throughout the year — and that requires engaging consumers in addition to rewarding them.

The Power of Engagement

There are plenty of things consumers find rewarding other than tangible rewards like points or cash back, said Kardell. They also like the feeling of control, and knowing their funds are stable and protected.

That is particularly important to CU customers, he noted, which is why CUs have to think more about those issues than traditional banks when it comes to strengthening and deepening relationships.

The good news, Kardell added, is that when those enhancements are in line with customer desires, they are incredibly sticky and loyalty-producing. Card controls — which allow a consumer to turn their credit or debit card on or off, or set spending limits in categories — don’t give anyone extra points or dollars, but they do increase engagement by a non-negligible margin.

And for retailers who are thinking about how to capture and keep that top-of-wallet status, that whole customer experience is critical — both during the holiday season and when it is over.

“The most engaged members will always be the ones who are most likely to use the card,” Kardell said. “They’ve developed the muscle memory, which is a platform credit unions can keep building on to develop that relationship year-round.”