Credit Unions: Stimulate Portfolio Growth and Increase Profits Via Existing Cardholders

Credit Unions: Stimulate Portfolio Growth and Increase Profits Via Existing Cardholders
Posted: Mar 9, 2016
Comments: 0
Author: Bill Lehman

It’s not uncommon for credit unions to overlook existing cardholders as a significant opportunity to help stimulate portfolio growth and increased profitability.  But, it is more common for credit unions to equate portfolio growth and increased profitability solely on new account acquisition.  However, it is easier and more cost effective to leverage your existing cardholders for increased portfolio growth and profitability than to acquire new accounts.    

When you consider there are billions of credit card solicitations a year that are going out in attempt to acquire your credit union’s existing cardholders, you need to make sure that you are actively managing your existing cardholders with care.  You also need to regularly communicate on why your card program is best for them, and encourage them to keep and use your card as their card of choice.  In addition, you need to offer products and features that will drive increases in balances, volume, usage, and loyalty with your credit union rather than allowing them to accept another financial institution’s offer. 

What do you do to better manage your existing cardholders?

First, evaluate whether you have a competitive credit card program that will help retain your cardholders.  It is easy for a cardholder to make the decision to jump to another offer if you don’t offer what is considered a competitive program in today’s market.  For example, if you don’t currently offer your members a Platinum credit card with an option for rewards, including the periodic price incented balance transfer promotion, your credit union is not going to be considered competitive.  Platinum and Rewards cards have become the standard, and in today’s competitive market, it will be very difficult to hold on to the existing accounts without a competitive card program. 

Once you have evaluated your card program and feel confident that you do in fact have a competitive offer in place, consider the following strategies to help increase your existing cardholder’s chances to stay aboard and make your card “Top of Wallet”.    

  1. Meet Your Cardholder’s Expectations – Win them over with exceptional customer service!  Make sure that you are providing timely and accurate responses to their requests.  Always provide them with professional and courteous service.

  2. Implement a Call Center Retention Strategy – Empower your Customer Service Representatives to be responsive to your cardholder’s requests for a payoff or a lower rate.  

  3. Regular Credit Line Increase Programs – By awarding your existing cardholder the limit they have earned, based on their card history with you, you will reduce voluntary attrition.  Awarding targeted credit line increases greatly enhances your cardholder’s loyalty and provides them the increased purchase power they need to help increase balances, volume and usage.

  4. Product Upgrades – Why make them ask for the upgrade they have earned?  Whether it’s to increase their limit, graduate from your student card, or go from Platinum to Signature, don’t wait for them to approach you, go after them before they go elsewhere.

  5. Offer Rewards – A rewards program is necessary in today’s market.  Be assured that it will help increase your cardholder’s loyalty and average length of their relationship with you.  Not to mention, increase balances, volume and usage.

  6. “Spend and Get” Incentives – Drive your existing cardholder’s volume and usage up by providing them the occasional added incentive to use your credit union’s credit card.  For example, you could offer your cardholders double the ScoreCard points for the month of September to encourage increased back to school shopping on your credit card. 

  7. Relationship Pricing – You can easily build loyalty with your existing cardholders by offering lower rates for those members who maintain a multiple product relationship with your credit union.     

  8. Recurring Payments – Encourage your existing cardholders to setup recurring payments using your credit card.  Today, it’s not uncommon for your cardholders to use their credit card to pay their utilities, memberships, internet service provider, or insurance premiums.   

  9. Balance Transfer Promotions – Balance transfers can help your credit union stimulate balance growth.  It is very important to offer existing cardholders a periodic balance transfer offer.  Today, they expect it!  If you don’t, your competition will, and you risk losing your existing cardholders balances.   

There is a lot that you can do to keep your existing cardholders happy and satisfied with their credit card relationship with your credit union.  By incorporating these strategies in to your regular portfolio management, you can help stimulate your existing cardholders to help drive your portfolio growth and profitability.  Remember, your existing cardholders are too valuable not to actively manage them.

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Bill Lehman

Bill LehmanBill Lehman

With over 20 years of progressive executive leadership in the electronic payments industry within the credit union industry, Bill now serves as the SVP of Managed Services for Trellance.

In this role, he and his team of Sr. Portfolio Consultants are responsible for assisting member credit unions

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