CUcorp / aaa show Your Card & Save Participation Proposal for Michigan Credit Unions June 2008 Background

A Proposal for Michigan Credit Unions

Presented by: CUcorp and Auto Club Group



CUcorp / AAA Show Your Card & Save

Participation Proposal for Michigan Credit Unions

June 2008

The Auto Club Group (the Club) is the parent company for AAA in eight mid-western states with over 4 million members including 1.6 million in Michigan. Nationally, AAA’s 50 million members are individuals that credit unions would typically want to attract as well. They are in their prime borrowing years, the decision makers of the household, have future credit union members living at home and use the internet.

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  60% are 35 – 65 years of age
  
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  55% are female
  
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  61% of primary members are married
  
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  20% have children under 18 living at home
  
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  45% have earned a college or postgraduate degree
  
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  Average household income: $71,500
  
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  Exceed national average 87% to 78% with access to internet
  

Show Your Card & Save (SYC) is a program where AAA members receive discounts at participating business nationwide. The number of AAA members taking advantage of the SYC program continues to grow. Show Your Card & Save partners tap into a strong AAA brand loyalty to attract and retain their ideal customers. Nationwide, AAA members save over $400 million annually at over 150,000 establishments. Recently, some SYC partners have reported:

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  53% of all AAA member transactions were new customers
  
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  AAA members spend up to 30% more than the average customer
  
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  25% of AAA members tend to buy “up” and 35% spend more frequently
  
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  16% of transactions came form previously inactive customers
  

Specifically, Reebok reported that AAA generated a 15% increase in sales and a 9% increase in gross margins during a recent event. Similarly, Target reported that in a recent aaa.com/Target partnership, AAA member shopping habits have successfully outperformed existing Target.com shoppers.

As a result of the partnership between CUcorp and AAA, there is an opportunity for Michigan credit unions to participate in the SYC program and offer discounts to AAA members. Working together, CUcorp and the Club hope to expand the benefits of AAA and credit union membership and strengthen the value proposition of both organizations. Specifically, for the Club, including credit unions in the program provides an opportunity to build a stronger affinity with credit union members by offering yet another benefit in addition to auto, home and membership. The additional savings benefit may attract new AAA members and retain current members. For credit unions, it can extend their marketing reach to AAA Michigan’s 1.5 million members. Offering discounted auto loan rates and higher deposit yields will help attract new members and deepen the relationship with existing AAA members that may only utilize the credit union for their AAA membership and insurance discounts. The program builds on two strong brands, your credit unions and AAA, and is designed to increase membership and member loyalty.

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  Auto loan rates 25 basis points lower than the credit union’s normal annual percentage rate for AAA Members. This discount is offered on specific auto loans at the discretion of the credit union. For example, credit unions may decide to offer the discount on used autos only or only on 48 month loans. Due to the strong connection between an auto loan and auto insurance, this is the only loan discount currently approved by AAA. However, other products such as Home Equity Loans may be considered.
  
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  Deposit product annual percentage yields that are 25 basis points higher for AAA Members. This incentive can be offered on any savings product at the discretion of the credit union. For example, credit union may choose to offer the incentive on share certificates with a specific maturity allowing them to attract and fulfill a particular deposit maturity need. Or the credit union may choose to offer the incentive on another product such as an Insured Money Market or Regular Savings Account.
  

AAA will provide marketing support including the following:

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  Launch of offer will be listed on the Spotlight on Savings and New and Featured Partner pages of AAA.com/savings.
  
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  Launch of offer will be listed in the AAA Living – Michigan edition, Show Your Card & Save® advertorial in the month that the offer begins. Circulation to approximately 1 million households. Following issues of the magazine may also include advertisements related to credit unions participation in the program. CUcorp will work with the Club to try and print individual credit unions participating in the program based on geographic region or zone.
  
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  CUcorp’s Show Your Card & Save® offer will be listed on the AAA.com/savings page and in the AAA Member Savings Directory for Michigan. This directory lists participating vendors offering Show Your Card & Save discounts. The listing will indicate that discounts are available at Michigan credit unions and provide the phone number to the CUcorp call center. The call center will direct callers to participating credit unions.
  
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  Show Your Card & Save® signage will be provided to participating credit unions for display. This is the familiar Show Your Card & Save mark that is to be displayed on the front door or window or inside the lobby. The mark may also be used in credit union ads with approval from the Auto Club Group.
  

CUcorp will execute a master agreement with the Auto Club Group that will allow credit unions to participate in the program and will market the program to credit unions in Michigan. The Auto Club Group requires that a substantial majority of credit union members be eligible to receive discounts to avoid the embarrassment of a member seeking a discount only to find that their credit union does not participate. Therefore, before the program will be launched, CUcorp must obtain commitments from credit unions representing 80% of those currently endorsing the AAA Group program. All Michigan credit unions, regardless of weather or not they participate in the AAA Group program are eligible for the Show Your Card & Save program. After reviewing this document a credit union can opt in to the program by signing and faxing the attached Opt-In agreement to Nikkia Riggins at 734-420-1540.

Please check the appropriate box indicating your interest in participating in the AAA Show Your Card & Save program

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  Auto loan rates 25 basis points lower than the credit union’s normal annual percentage rate for AAA Members on auto loans determined by the credit union.
  
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  Deposit product annual percentage yields that are 25 basis points higher for AAA Members on savings products determined by the credit union.
  

I have read the proposal and would not be interested in participating in the AAA Show Your Card & Save program at this time.

Signed by:

___________________________________ ______________________________

(Signature) (Credit Union)
___________________________________ ______________________________

(Title) (Address 1)

(Date) (Address 2)