Last week I was on my annual “veg out at the beach” at one of my favorite places, South Seas Island Resort. Over the weekend, the place filled up with top performers from a leading educational firm on their recognition and reward trip. It was deja vu all over again. Colleen and I were sitting in the sun with our beach bags all labeled from rewards trips we had been on to Hawaii and Mexico “back in the day” when I was a sales manager, watching this energetic crop of top guns. We started reminiscing, and the conversation worked its way around to how you motivate sales staff.
It reminded me of the question that I often hear from clients: “What is the right mix between monetary and non-monetary recognition?”
So here are my “notes from the beach”:
- Top performers crave recognition. They are already at the top of the incentive pay scale. They want the feeling of recognition, especially the knowledge that they are part of a select group.
- Come to think of it, all good salespeople, not just top performers, crave recognition. People who like sales do so because they like the positive feeling they get from interacting with people, and having people respond to them. Recognition of a job well done is as important
- sometimes more important – than money (but they’ll never tell you that). - It’s not just about recognizing your top performers – you’ll learn more from them than you realize. When I set up my own “President’s Club”, I got my best sales management tips when I asked each of my participants for one good idea, something they did that worked for them. I got some of the simplest solutions, that I could then turn into coaching tips for the rest of my staff.
- It’s not as expensive as you think. I was in Florida during the off-season. Some of my most successful recognition trips sent Texas branch managers to Mexico in July (from hot to hotter!), or Chicago branch staff to a Wisconsin ski resort when there was no snow. It was all about the fun, excitement and recognition.
And here’s my last thought: if you need expert help improving the performance of your branch staff, contact us. Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results. We can help you unlock the key to additional profitability and efficiency.
I’ve been polling banks and credit unions on the results of their Reg E opt-in efforts. Successful financial institutions are achieving a total opt-in rate in the mid 80% range, with opt-in rates for the most active overdraft privilege users in the mid 90%.
Deposit fees are an important source of revenue and it is critical that your opt-in program successfully minimizes income loss. In the short term, this means maximizing consumer acceptance, especially among the roughly 10% of customers who are the source of about 80% of deposit fees. This is important now to preserve revenue, but it is also a long term strategic imperative: as fewer consumers write checks, deposit fees will be driven by debit activity and you’ll lose that future income opportunity if you don’t get your customers to opt-in.
If your program is not attaining total opt-in rates around 85%, and if you aren’t getting about 94% opt-in for the 10-15% of your customers who are the heaviest users, then you should be re-evaluating your program.
While many financial institutions have a very good handle on these dynamics, I’m continually surprised by the very basic questions I get, especially (but not always) from community banks and credit unions. I’m particularly surprised at how often I’m asked “Do we need to get consumer opt-in if we don’t charge for debit overdrafts?”
The simple answer is “no”, but if you don’t get positive opt-in you never can charge a fee for that service. And you should.
It’s OK to have more flexible and forgiving policies, if that is your customer centric and competitive strategy. But not charging at all either means you are refusing all transactions, even for customers who have very significant relationships with you and simply made a mistake (therefore not delivering the highest level of customer service), or you are authorizing payment without any compensating fees for the service you are giving and the risk you are taking.
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There’s a balance that works for you and your customers/members. We can help you find it. Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results. Contact us
- our experts can help you unlock the key to additional profitability and efficiency.
I’ll probably get lots of feedback from this, but here goes: Debit Rewards programs mostly reward vendors who sell Debit Rewards programs. There – I’ve said it.
Strategically, it makes sense to encourage customers to use their debit cards and it makes sense to reward loyal customers. But the simple fact is that most Debit Rewards programs don’t significantly shift customer behavior or increase retention, so there is little return for the marketing investment. Here’s why they don’t work, and here’s what you should do about it.
Debit cards are used as a substitute for cash and the typical spend is about $38. At this level of activity, it is very difficult to generate meaningful rewards. Customers recognize this it is why participation in Debit Rewards programs hovers around 8-9%, even when financial institutions offer it for free. Furthermore, revenue from interchange will only decrease in the future, leaving less available to fund rewards programs. More retailers are finding ways to automatically recognize debit cards and direct them to PIN debit (vs. higher interchange Signature Debit), and interchange rates are under significant political and regulatory pressure. Long term, there is no upside for debit interchange revenue, and lots of downside risk.
This is a very different proposition from Credit Card Rewards, where the average spend is higher, the interchange is higher, and there is revenue from interest charges and annual fees.
So it is hard not to come to the conclusion that the typical Debit Rewards program just results in paying incentives for volume that financial institutions would get anyway.
But, as I said earlier, it makes sense to encourage debit usage and to reward customers. There are effective ways to do this — institutions in the top quartile of debit card usage have 27% more transactions and create about $120 per customer in debit related revenue. They do this by better targeting of customers to stimulate truly incremental volume
- not a “one size fits all” rewards program. In fact, many don’t even offer debit related rewards, but just focus their energies on shifting behavior of specific consumer and business debit card usage segments. Here’s just one example: changing the behavior of the 8% of debit card holders that only use their card at the ATM, and don’t use it at all for merchant purchases.
Rewards programs may have their place, especially when they recognize the total financial relationship (consumer and business) that a household has with your financial institution. But for most Debit Rewards programs, the value simply is not there.
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Need expert help improving revenue from your consumer and business checking accounts? Want more information on how to significantly improve the performance of your debit card portfolio? Peak Performance Consulting Group has best practices and unique solutions, with a proven track record of success helping clients achieve industry leading results.
Contact us
- our experts can help you unlock the key to additional profitability and efficiency.
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