By Ray Birch
RANCHO-CUCAMONGA, Calif.—Credit unions have a big opportunity now to partner with small businesses to drive card transactions, according to CO-OP Financial Services, which says the move also bolsters community ties and business services opportunities.
“Local restaurants, and beauty and barber shops are not yet back to normal activity,” said Deb Wieczorek, VP of strategic advisory and portfolio growth at CO-OP, about the effect of the pandemic on entrepreneurs. “However, spending levels are improving slightly. Now may be the time for credit unions to look at launching partnerships with local businesses that are popular among their membership, as businesses scramble to try and bring customers back.”
Wieczorek said CO-OP is aware some credit unions already tie their card rewards programs to local merchants.
“But I think, given the current situation, that more small businesses would be willing to work with credit unions now,” she said. “I think it is time more credit unions talk with local businesses about partnerships.”
A Natural Step
With strong local ties already in place, Wieczorek said speaking with community businesses should be a natural step for any credit union to take.
“Credit unions need to go out into their communities now and speak with the mom-and-pop shops,” Wieczorek said. “Create an alliance with them. Create deals where if the credit union member comes into the shop they receive some additional rewards points—give them more points than if they would shop at some large retailer, like Target.”
Wieczorek reminded the “Shop Local” theme is one that resonates even more loudly now throughout the entire community.
“But if I had to estimate, I would say that only 10% to 15% of credit unions have been working with small business to drive more traffic to their stores,” Wieczorek said.
Wieczorek said in working with credit unions that have struck these arrangements, CO-OP can create the electronic tie-in with the merchant(s) to add the extra points when members shop local. There is also an option to do so manually.
Deb Wiezcorek
Not to be Forgotten
What makes these partnerships extremely beneficial as the pandemic continues, said Wieczorek, is that many small businesses are hurting, and when the credit union provides assistance in driving customer/revenue, it creates a relationship that’s unlikely to be forgotten and could lead to more commercial business as the pandemic subsides.
“Credit unions are just beginning to tap the commercial lending and business services markets,” said Wieczorek. “They are looking to expand their portfolios here. This is another way to penetrate these markets.”
And there’s another to the CU, added Wieczorek: the creation greater “stickiness” between the credit union and the communities it serves.
“Small businesses are struggling, and people know that,” said Wieczorek. “Consumers know these small shops are doing all they can to stay afloat—changing their business models when they can; restaurants converting to takeout, for example. If they see credit unions stepping up to help their town, well, it’s a win for everyone.”
Something in Return
Wieczorek said credit unions should ask local merchants for something in return.
“Maybe it’s something like putting up a sign in their stores that says use your local credit union card here and we’ll give you a coupon for 15% off on your next purchase,” said Wieczorek. “I think this sends a message that the credit union is doing everything it can to keep consumers spending in the mom-and-pop stores as opposed to taking their money to the big-box retailers. And these extra rewards points only cost the credit union pennies on the dollar. So it is well worth it.”
Time For More
Wieczorek emphasized credit unions have formed these kinds of partnerships with gas and grocery stores, and now it is time to expand the programs.
“I think it’s time more of this is done with small businesses,” she said. “Rewards for small mom-and-pop shops, it's a move that’s needed—not only for credit unions but for the communities that they serve.”