In the first 6 months of 2009 Piedmont Advantage Credit Union, located in Winston-Salem, NC experienced declines in year-to-date member purchases on their credit cards. Rather than giving up on the program, the credit union recognized that the time was ripe to reach out to members with revamped card offerings and lower rates. According to Candice Champe, director of e-commerce & IT, "With so many consumers and members receiving notifications of rate increases or reduced credit lines, we really saw an opportunity to improve our credit card market share."
The credit union sharply reduced rates effective July 1 on the two types of credit cards they offer, lowering the rate on their Visa Platinum card from 9% to 6.9% and their Visa Platinum Rewards from 13.95% to 8.9%. Both card offerings can easily be explained to consumers, have a 25-day grace cycle, no balance transfer fees, travel accident insurance, and minimal fees.
Getting the Word Out
With so much static surrounding the cards market, Piedmont Advantage decided to keep their message simple for consumers, focusing on their new low fixed rates and emphasizing the opportunity to transfer balances at the same low rate.
To keep costs down, they are relying heavily on internal marketing channels to spread the word about their card offerings. Their employees proactively ask members if they would like to apply for the offering over the phone, front line staff wear stickers, signage is placed inside and out in front of branches, and the on-hold message and cash envelopes have both incorporated promotional credit card messaging as well.
A newsletter was also sent out with their quarterly statements explaining the implications of the CARD Act on credit card lending programs, how their credit union offerings were affected, and inviting members to move their credit card relationships over to the credit union.
Offering a Secured Card Option
The credit union rolled out a new Secured Visa option the following month for members who failed to qualify for the Visa Platinum card. This secured card allows members to deposit funds into a Visa share account as collateral, and those funds act as the credit line for that account. Unlike many secured card offerings, Piedmont Advantage's has no annual fee and offers the same low fixed rate as their Visa Platinum card. These cards allow members to build or re-establish credit.
Piedmont Advantage plans to now go back to members who didn't qualify for the one of their other credit card cards with a message focused on helping them rebuild or establish credit. The credit union also recently began promoting their Secured VISA card with an outbound marketing campaign and direct mail letter specifically targeting younger members aged 18-25 to help them establish and build credit.
How Have Members Responded?
Just barely into the second month of their 90 day campaign, Piedmont Advantage:
Opened 335 new cards
Reached 67% of their total goal (500 new accounts)
Received $1.4 million in new balances
Surpassed their original goal of $750,000
Obtained 23 new members directly from the new credit card promotions.
Piedmont has increased its credit card penetration from 8.6% at year-end 2008 to 11.5% in 2009. Over the same period, the number of credit card accounts increased 31.5%. The credit union was also successful in getting both current and new members to use their credit cards as the outstanding credit card balances increased 62.4%.
The front-line staff is so successful at attracting balance transfers that the branches are continuously raising and surpassing their own goals. "We are less than 45 days into the campaign and are averaging 12 new accounts and about $48,000 in balance transfers per day," says Champe.
Managers are receiving great feedback about offering the new cards from their staff. According to Champe, "These offerings are not a hard sell to members, and are really giving our frontline staff confidence to get out there and talk about the program." She added, "Everyone is getting involved, they're excited, and we are experiencing great success because of it."
Remote delivery channels are vital as well. Almost half of the new credit card accounts so far came in through the call center and website. "It really shows that those channels can have a very big performance impact, especially since about half our members don't live within close proximity of a branch," says Champe.
According to Champe, "Many people are looking to reduce bills or consolidate debt right now, our new cards give them a platform that can help accomplish those goals, and our members have been very appreciative of the programs that we rolled out." She added, "Right now, credit unions have a very real opportunity to reach out to consumers and provide transparent and reasonable card offerings that they can very easily see the value in."