Loyalty Truth

Relationship Banking is making a comeback with the launch of Regions Relationship Rewards this  past summer. The $137 Billion asset bank ranked #3 among 11 banks in the Southeast region of a JD Power survey on customer satisfaction, but was facing some challenges as the survey footnoted their ranking this way; “customer loyalty and perceptions of brand image among retail banking customers continue to decline, while satisfaction has leveled off.”

Seeking to engage customers and encourage them to consolidate their banking relationship with Regions, Relationship Rewards was announced in June 2010 with the brand promise “To thank customers for their business” and the tagline “the more you bank, the more you earn”.

Anyone with one of three checking accounts (business or personal) is eligible to enroll in the program as long as they also have an active Regions Visa CheckCard to boot. Customers can enroll across multiple channels including toll-free call center, program website, or via the online banking application. Interestingly, the branch was not used to enroll customers.

Points are earned by making signature based purchases with a Regions CheckCard and, as is the norm in debit card rewards schemes, no credit is given for PIN based purchases. The earning rate per dollar spent on the check card varies by type of customer with Consumer checking holders earning 4 points/$ while Business customers earn 2 Points/$ and Private Banking customers earn 1 Point/$.

Bonus points are awarded based on how many products are owned by the customer and the level of average balances held in deposit accounts.

Program rules are simple and reasonable. There’s no annual fee to join Relationship Rewards and no cap on points earning per year. Points expire 36 months from the date earned and customers which close accounts in good standing have 90 days to redeem their points.

Based on two sample customer scenarios that I tested, the first a lighter debit card user with lower average balances ($250/month and Avg Bal $2,000) and the second a heavier debit card user with high average balances ($2,000/month and $50K), annual reward value could be accumulated between $90 – $385.

Considering that points are valued between 50 – 100 basis points, the light user could redeem for a one free wire transfer fee, a $100 Visa gift card, or a Wet/Dry Shop Vac. The higher earner could walk away with a bicycle, $500 gift card, or a Bose Sound Dock.

Rewards are available in four categories, merchandise, gift cards, bank rebates and travel.  There is no lack of reward choice and it appears the most value can be found by redeeming for free bank services.

A few observations from my review:

• Even though this program is created to encourage broader relationships and higher account penetration per customer, most of the value that can potentially be accumulated by customers comes from the debit card spend.
• The highest reward value can be found through reduced fees on bank services. Whether customers will find compelling reason to consolidate their banking with Regions to earn a free wire transfer fee, or pay for a safe deposit box is questionable.
• Including a redemption option for NSF (returned check) fees is bad form. I know bad things can happen to good people, but who wants to cash in points to pay for an overdraft?
• The travel rewards offer no-blackouts, and cash and points can be combined to earn rewards. Both are good features for travel rewards in today’s market.

Regions Bank Relationship Rewards is a solid entry into the retail banking market and follows TRB best practices closely. I’ll look for any results published and update those in Loyalty Truth when available.