LEAD WITH LOYALTY. BOB LEGTERS VP Loyalty S ervices FIS

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2 LEAD WITH LOYALTY BOB LEGTERS VP Loyalty S ervices FIS

3 FINANCIAL SERVICES LOYALTY PROGRAMS ENTERPRISE-WIDE REWARDS AND BENEFITS Credit Rewards High Yield Checking Debit Rewards Lifecycle Programs Enterprise Loyalty Solution Relationship Rewards Embedded Benefits Merchant Funded Rewards 3

4 ENTERPRISE LOYALTY SOLUTION: A HOLISTIC VIEW OF THE MEMBER 9 IN 10 INTE R NE T HOUS E HOLDS PAR TICIPATE IN S OME TYPE OF REWARD PROGRAM 7 IN 10 PAR TICIPATE IN ONE R E LATE D TO FINANCIAL PR ODUCTS FINANCIAL REWARD PROGRAMS HAVE BEEN FOCUSED ON INCR E AS ING US AGE OR TR ANS ACTIONS PR OVIDE R S S HOULD CONS IDE R ORIENTING REWARDS TOWARD INCR E AS ING B ALANCE S, AS WE LL AS B R OADE NING AND R E TAINING R E LATIONS HIPS. Synergistics: The Future of Rewards Programs 4

5 CR E DIT/DE B IT R E WAR DS SERVE AS FOUNDATION FOR ENTERPRISE REWARDS PROGRAMS ENCOURAGE TOP OF WALLET PLACEMENT BY REWARDING MEMBERS WITH POINTS OR CASH BACK FOR TRANSACTIONS MADE WITH CR E DIT AND/OR DE B IT CAR DS. PHILOSOPHY E = M x P E ffort = Motivation x Perceived Opportunity to E arn Drive value to members Incent behavior, not achievement Live within funding Balance do more, get more Multi-channel marketing 5

6 RELATIONSHIP REWARDS REWARDING MEMBERS FOR THE STRATEGIC AND AGGREGATE VALUE OF EACH OF THEIR RELATIONSHIPS WITH THE CR EDIT UNION USING A COMMON CUR R ENCY/SHAR ED AWAR D. POINTS E AR NE D 2 Products 3+ Products 1 Product 6

7 RELATIONSHIP REWARDS STR UCTUR E Reward Behavior s Reward Offers Products/S ervices L ongevity Customer R eferrals Us age Balances Number of Accounts On-time P ayments Other Value Adds Merchandise Travel E xperience Cash/Gift Card Financial Credit Fee Waivers P roduc t Dis c ounts Tangible R es ults Increased R evenue Increased S ales Higher R etention R ates Higher Cus tomer Profitability Intangible R esults C ompetitive Advantage Higher Cus tomer S atis faction Higher Word-of-mouth Advertis ing Increased B rand Perception 7

8 ME R C HANT - FUNDE D R E WAR DS A PAY FOR PERFORMANCE MARKETING PROGRAM THAT FOCUSES CARDHOLDER SPEND WITH SPECIFIC MERCHANTS IN E XCHANGE FOR FUNDED B ONUS POINTS. B ringing benefits to all of the moving parts Cardholder Drives incremental revenue through increased spend Assists with member s atis faction, acquis ition and retention Accelerates earnings available to cardholders Increases rewards program value Financial Institution Retailer 8

9 EMBEDDED BENEFITS Customer loyalty accounts for 38% of margin, 40% of revenue growth and 38% of shareholder value. Differentiated Delivery of Commoditized B enefits (Source: Accenture Research) Category Auto Dining & Entertainment Health Home Insurance Protection Savings Small Business Travel Sample Benefits Roadside Assistance; Engine Diagnosis; Mechanics Helpline Discounts on Dining, Entertainment, and Shopping; 24x7 Concierge Discounts on General Medicine, Dental, Vision, Hearing, and Preventive Care Discounts on Carpet Cleaning, Paint, Picture Framing, and Moving Supplies Accidental Death & Dismemberment (AD&D);Travel Accident Insurance Card Registry; ID Protection & Monitoring; Extended Warranty Rebates on everyday purchases; Discounts on Thousands of Products Discounts on Business Equipment, Delivery Services, Postage, and Tax Preparation Discounts on Travel; Online Trip Planning 9

10 LIFECYCLE PROGRAMS Rewards Acquisition Retention & Portfolio Risk Management ProDirect TIP Rewards Readi-Review Packaged Enhancement s Cardholder Lifecycle Fast Track LetterChecks Activation Usage Rewards Packaged Enhancemen ts LetterChecks A 1% increase in customer loyalty is equivalent to a 10% cost reduction. (Source: Bain & Co.) 10

11 HIGH YIE LD CHE CK ING Increased R evenue S teams <-> Increased Member E ngagement Launch Model Opt-In Retail Pay as You Go Incentives Free to Fee Self-Selected Enhancements Traditional Model Sign Up Once; Pay for Use Limited Time Benefit Access (Trials) A 5% increase in customer retention results in a 75% increase in aggregate lifetime profits from an individual customer. (Source: AAIA) 11

12 CONSUMERS SPEAK PROVIDERS SHOULD VIEW REWARD PROGRAMS ASSOCIATED WITH CHE CK ING ACCOUNTS AS ACCOUNT R E TE NTION AND R E LATIONS HIP B UILDING TACTICS. MORE THAN FOUR IN 10 CONSUMERS SURVEYED HAVE HEARD OF THESE TYPES OF REWARDS. ONE -THIR D OF THOS E AWAR E INDICATE D THE Y PAR TICIPATE D IN A CHECKING-BASED REWARDS PROGRAM. CURRENT PARTICIPATION TENDS TO BE MORE PREVALENT AMONG THOSE WITH HOUSEHOLD INCOME OF $100K+ AND MODERATE AND HEAVY DEBIT CARD USERS. CASH REBATES AND REWARD POINTS ARE THE MOST POPULAR TYPES OF REWARDS. Synergistics The Future of Rewards Programs, February

13 CONSUMERS SPEAK SIX IN (10) OF THE PARTICIPANTS FEEL THE PROGRAM MAKES THEM LESS LIKELY TO SWITCH PROVIDERS. MOR E THAN ONE -THIRD OF RESPONDENTS INCREASED THEIR MONTHLY S PE NDING ON A DE B IT CAR D. OVER ONE-QUARTER OF RESPONDENTS OPENED ANOTHER ACCOUNT WITH THE INSTITUTION. OVER ONE-FIFTH INDICATE THEY INCREASED THE BALANCES IN THE ACCOUNTS THEY HAVE WITH THE INSTITUTION. Synergistics The Future of Rewards Programs, February

14 S UMMAR Y CREDIT UNIONS SHOULD BEGIN MOVING MEMBERS TO REWARD PROGRAMS THAT EMPHASIZE RELATIONSHIP FACTORS: OPE NING NE W ACCOUNTS MAINTAINING AND INCR E AS ING ACCOUNT B ALANCE S K E E PING LONG-LAS TING ACCOUNT RELATIONSHIPS (THOSE PAR TICIPATING IN THE S E PROGRAMS APPEAR TO VALUE THEM, WITH MORE THAN E IGHT IN TE N). 14

15 THANK YOU