A new initiative from Keesler FCU will see the credit union paying 35 randomly selected members a total as much as $9,000 through an expansion of the credit union’s member giveback program.
Under the program, effective May 2017, each month ten members of the Biloxi, Miss.-based CU who perform an in-branch transaction will receive $100; ten members who use the Keesler mobile app will receive $100; ten members who use Online Bill Pay will receive $100; one member with direct deposit will have their deposit doubled (up to a maximum of $2,000); one member with a mortgage through Keesler FCU will have their payment reimbursed up to $1,000; one member with an auto loan payment will be reimbursed up to $1,000; one member with a signature loan payment will be reimbursed up to $1,000; and one member with a Keesler FCU credit card will have their payment reimbursed up to $1,000.
Members will be chosen based upon their meeting “specific service usage criteria” and will have the prize money deposited into their primary share accounts, the credit union said.
All told, the credit union is set to pay out as much as $108,000 to members over a 12-month period.
Sharon Keller, vice president of marketing at Keesler FCU, said the monthly aggregate payout will amount to up to $9,000 (or potentially up to $108,000 over a 12-month period).
Sharon Keller, vice president of marketing at Keesler FCU, said the credit union has run a similar program for the last two years, though on a more limited scale. Indeed, in 2015, Keesler FCU commenced a monthly Mortgage Give Back program drawing, where a member with a mortgage at the credit union was randomly selected to receive one month’s mortgage payment.
The credit union's director of mortgages, Chris Lowery, first came up with the idea in 2015 to attract and retain mortgage members, Keller explained. “He had seen this used successfully in another financial institution for mortgages only,” she said.
In 2016, Keller said, they added the same program for their auto loan members.
On the whole, in calendar 2016, the credit union awarded more than $20,000 to 35 credit union members through givebacks under the auspices of the auto loan and mortgage loan giveback programs.
“This year we have greatly expanded the member giveback program so that more members would have a chance to win,” said Keller. The credit union elected to expand the program since earlier similar givebacks were “very well received” by the members.
“We wanted to offer more ways for members to get more benefits from their membership,” Keller elaborated. “We promoted this heavily on social media, on the website and in the branches, so members noticed the happy faces of [other] members [who had received payments].”
Keesler FCU picked the products highlighted in the new member giveback program because they tended to be used by members with a “strong relationship” with the credit union. “These members are more likely to call us their primary financial institution,” Keller said. ”We want to encourage more members to use these products.”
The value of giving back
It's unclear just how many credit unions give back cash payments to their members.
According to Tansley Stearns, chief impact officer at the Filene Research Institute, many credit unions have conducted giveback programs for a "long time." She cited, for example, CoVantage Credit Union, a $1.4 billion institution based in Antigo, Wis. which has paid out a cash patronage refund since 1981. (In 2016, CoVantage CU paid out a record $2.5 million in patronage, or 18% more than in 2015.)
Also, Dow Chemical Employees CU, a $1.6 billion institution based in Midland, Mich., has been paying a patronage for more than 50 years. (In 2016, Dow Chemical Employees CU’s giveback amounted to more than $15 million, the largest in its history).
But do such programs have much of an impact on the overall membership?
Keesler’s Keller said that although it is too early yet to track the success of her credit union’s new, expanded program, but officials hope the institution will “benefit from this new initiative by retaining members and improving relationships” between members and the credit union.
One metric that would indicate success for this program would be an increase of services per member, she said.
The debate over the value of giveback programs is similar to -- but separate from --
Filene’s Stearns believes givebacks do have real value, particularly on credit union performance and upon member loyalty.
According to
In addition, the report noted, “long-term loan growth appears to be an additional strength for credit unions offering interest refunds."
However, it is not entirely certain if such dividends are universally beneficial for credit unions. A 2015 report from Callahan noted credit unions see both pros and cons with such payouts. On the positive side, these dividend payments “build loyalty,” provide “great publicity” and “equitably” return excess capital. On the other hand, such payouts may become “open to misinterpretation,” can be difficult to track and, if done even once, might lead members to expect more similar payments in the future.
Anecdotally, Stearns commented, from credit unions she has dealt with that pay givebacks, she hears about these challenges “as the program may evolve or expectations may be set and the changes can have a negative impact.” This is manageable, she added, “but it is an important element to keep in mind as these programs are used to enhance loyalty and member engagement.”
Givebacks gaining ground?
Will givebacks proliferate across the credit union landscape?
Keesler FCU plans to continue this giveback program for one year and then evaluate its results, Keller said. “But, right now, we have no end date,” she added. Keller also noted that with the expansion of the program, they will measure the upgraded member giveback program by improvements seen in organic growth – like increased service usage – over time. “This will require more advertising,” she stated.
For now, Keller said, Keesler FCU has a number of other goals with the new giveback structure: to communicate to members how they can benefit from the success of their financial cooperative; maintain member retention; increase the number of services-per-member; and increase the number of members who consider Keesler FCU as their primary financial institution.
Stearns said she believes these sorts of initiatives won’t slow down any time soon. These efforts, she added, to “leverage the cooperative model to differentiate and build loyalty engagement” will likely continue to expand.
Keller also hopes that more credit unions start giveback programs.
“I think all credit unions need to find new ways to share their success with their member-shareholders,” she concluded.
