Which do you and/or your CU prefer for a Prize-Linked Savings account??
As we continue to develop the Prize-Linked Savings (PLS) concept, we are looking at two different avenues for the prize. I want to know which is better in your opinion, which appeals to you more, and if you represent a CU, which will most appeal to your membership?
***Not sure what a PLS is? Let me give you the basis of the PLS in one 3 short sentences. PLS is the idea that members are more likely to save money if they are given a chance to win a prizes and/or a large cash prize. For every (insert $ amt. here) they deposit to their PLS they get an entry into the drawing for the prizes for that month, quarter, and year. Okay now back to my question...
The first (traditional) construct of the product, is to have monthly prizes of vary value that range from several at $20, $50, $100, and even one at $1000. Of course in many cases, prizes such as iPods, TVs, etc., fill in for cash prizes. Then there is a larger quarterly prize, and an annual prize of $10k to $15k, depending on the CU. This prize is guaranteed and will be given away to one lucky member.
The second construct is a chance at a much larger prize. Say for each entry the member has a 1 in 1 million chance at winning $100k at the end of the year. This prize is not only non-guaranteed but the chance of someone/anyone winning it is very small. In addition to this large non-guaranteed prize they will also be able to similar monthly prizes as in the traditional construct.
So the main difference is that the CU can either give a member $10k or they can underwrite a chance to win $100k. So which do you prefer, if there will be smaller prizes won, would you rather play and be guaranteed that someone would get the $10k, or would you rather play and know that you have a chance to win $100k, an amount that most likely will not be given to anyone.
Which do you prefer? Which is a better fit for your CU? Which would your membership prefer? Thanks for the insight.
P.S. Your opinion could have an impact on how this product develops in the future.
1 comment:
This is a very interesting question. We actually have used both applications for a used car sale that we've done for several years. Here's what we learned through that process:
The years that we insured ourself and gave members a chance to win a vehicle...we had tons of members come out to the sale, but few serious buyers. Most just came to put in their free entry and eat a hot dog.
The years that we gave away a large gas card (i think last year was $500 or something like that)...we had less foot traffic, but sold the same amount of cars.
In the application of a savings account, I think you might find the same thing. The big prize will definitely draw interest, but I'm not certain that it would actually incent members to open that type of account.
Personally, it was always disappointing to advertise that a member could win a car and then never give one away.
I guess it depends on the credit union's goal...eyeballs vs. action.
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