Bank Premiums and Giveaways

Abstract

The concept of using premiums and incentives to attract customers is far from new for business in the United States. In fact, the idea is quite old. Industrial marketeers pioneered premium merchandising in the pre-Civil War period. | It was only recently, in the early 1960's, that a few venturesome bankers overcame their built-in scruples against asking people for business and adopted the customer-incentive-premium approach. | But the idea soon caught on in banking circles and the result is part of banking's history. Today, just a short while since a bank first offered a premium to a customer, hundreds and hundreds of American banks are conducting incentive promotions, not only to attract new customers, but to hold onto present depositors. | The purpose of this research was centered around the following two questions: (1) What necessary information is required when determining whether a bank should initiate a customer incentive program, and (2) What type of success have banks had with customer incentive programs? | The two sections of this paper cover these two questions. Information in chapter one was obtained from a variety of sources including the American Bankers Association, the Federal Reserve Bank of Kansas City, state banking supervisory authorities, numerous banking publications and various business magazines. Information in chapter two was obtained from twenty-four bank officers, representing twenty-four different banks, using a questionnaire prepared during my research.