What is a loyalty program &
How do they work?
April 10 2025 | Authored by: Jasmin Athwal
4 min read
Loyalty programs are more than just a nice-to-have, they're a game-changer for credit unions, transforming everyday transactions into long-term partnerships.
Consider this: 84% of consumers say they're more likely to stay loyal to a brand that offers a loyalty program. And engaged members, those who actively participate in these programs, drive 12–18% more incremental revenue annually. With one-third of brands expected to roll out loyalty initiatives by 2027, loyalty is no longer optional, it's essential.
So, what exactly is a loyalty program?
At its core, a loyalty program rewards members for repeat engagement. It could look like points for using your debit card, cashback, or exclusive perks. The goal is to build trust, deepen relationships, and keep your credit union top-of-mind, not just as a place to bank, but as a partner in financial wellness.
You might be thinking, “But we already give back. We have no-fee accounts and offer member dividends through our patronage model.” And you’re right; patronage structures are a powerful reflection of the credit union difference. But while those features reward past behaviour, loyalty programs are designed to encourage and shape future member engagement. That subtle shift can be transformative.
How does it work?
A well-designed loyalty program goes beyond reducing churn. It sets your CU apart in an increasingly crowded field. Big banks, fintechs, and digital-first disruptors are all fighting for your members’ attention. Loyalty programs give you an edge by offering tangible value: rewarding behaviour that aligns with both your members’ goals and your own strategic priorities.
So how exactly do these programs build long-term relationships?
1. Member Rewards:
Modern loyalty programs aren’t just about points, they’re about purpose. Think: points for shopping locally, cashback for bringing in referrals, or exclusive access to perks in exchange for certain behaviours. These aren’t gimmicks; they’re nudges that help your members make better choices while feeling recognized and valued.
2. Incentivize Strong Financial Behaviours:
In today’s world of TikTok money advice and Reddit budgeting threads, financial guidance can feel scattered and overwhelming. Loyalty programs offer an opportunity to cut through the noise and reward meaningful behaviours like reaching a savings milestone, improving a credit score, or attending a financial wellness seminar. In doing so, you're not just encouraging good habits but you’re also reinforcing your CU's role as a trusted guide.
3. Build Insight-Driven Relationships:
The more members engage with your loyalty program, the more insight you gain into their financial habits, preferences, and goals. This data isn’t about surveillance, it’s about service. With a deeper understanding of how members bank day-to-day, your CU can offer more relevant products, timely nudges, and tailored support. It’s the kind of hands-on, personalized care that credit unions coined in the first place but elevated to meet the expectations of today’s digital member.
A Competitive Advantage in the Digital Age
A robust loyalty program doesn't just keep pace with the big banks, it can help your CU outperform them. Engaged members interact more frequently and are more likely to consider your CU first when making big decisions like opening a new account for their child, applying for a loan, or choosing where to invest.
And don’t forget about younger members. Gen Z and Millennials are more responsive to value-based incentives and digital engagement. A smart, flexible loyalty program speaks directly to their expectations and allows you “to compete in a new digital environment”.
One Size Doesn’t Fit All
Every credit union is unique, and your loyalty program should reflect that. It’s not about copying what other financial institutions are doing. It’s about crafting a strategy that fits your members, your mission, and your long-term goals.
That’s where Cyder comes in. We've developed “a new loyalty program specifically designed for credit unions”, no clunky systems, no one-size-fits-all templates. Just a smarter way to connect with members and drive real results.
With Cyder, CUs can offer rewards for referrals, support savings goals, and promote financial literacy, all in one place. Our platform helps credit unions modernize without losing their community-first identity. You choose the behaviours to incentivize, we handle the rest.
Whether you're looking to deepen engagement, attract new members, or build stronger financial futures together, a loyalty program can be your most powerful tool.
The landscape is shifting. Member expectations are evolving. The time to build is now.
Build the right loyalty program with Cyder.
If you're looking to thrive amidst a changing loyalty and rewards landscape, Cyder can help. We encourage you to book a one-on-one demo today with Cyder’s loyalty experts.
April 10, 2025 | Author: Jasmin Athwal
If you're looking to thrive amidst a changing loyalty and rewards landscape, Cyder can help. We encourage you to book a one-on-one demo today with Cyder’s CU loyalty experts.