When a referral results in a new core relationship, something beautiful happens! It’s a positive endorsement of your bank or credit union’s customer service and typically results in a more loyal relationship.
Referred customers and members require fewer marketing dollars than non-referred new customers, so your institution can generate more revenue at a lower cost.
According to Harvard Business Review, these referred relationships also have a 25% higher lifetime value, a 25% higher profit margin, and are 18% less likely to leave you. Additionally, referred customers are about five times more likely to make referrals themselves – they’re the gift that keeps on giving!
Understanding their affluent value, it’s important to recognize that most referrals will NOT happen on their own. We have to develop a strategy to maximize each opportunity.
In marketing your financial institution, there is a customer/member journey funnel that starts with raising awareness of your institution, creating interest and closing the deal – a pretty standard practice. However, over the last few decades, the most successful marketers have been the ones who added four additional steps to this customer/member journey:
- Take steps to retain their customers/members with exceptional products and service
- Convert these customers/members into advocates
- Motivate them to spread the word and invite their friends and family
- Thank and reward them to encourage more referrals
Having an established referral strategy in place could mean the difference between capitalizing on your advocates and missing out on the exponential growth they could set in motion. Your best customers and members are willing to give you a positive endorsement and tell their friends – but you have to give them the tools and motivation to do so. According to the Nielson Group, 83% of customers indicate that they would be willing to refer after a positive experience, but only 29% actually do. You need to frequently ASK and then reward them to show them you appreciate their advocacy.
With the advent of technology, we’ve been able to enhance our clients’ referral strategies and offer customers, members and employees a multi-channel approach to generating, tracking and reporting referrals. Each client receives a customized referral website on which customers and members can email, post, tweet and share the message about their institution and referral program. This website integrates with an online portal that tracks and reports in real time. Each client can also create tracking URLs for their website to use in various referral marketing campaigns. The URLs track clicks, referrals and even new account conversions. Not only do clients see their most successful referral marketing campaigns, they can also tell how many people are referring and access their most loyal advocates.
So what can you do to earn more referrals for your institution? The answer is simple: you have to develop an effective strategy. Then, make sure your customers and members are on board. Remind them of the benefits of participating and motivate them to take action.
The process has to be easy – not only for the customers and members – but for the employees too. So while you might be getting some referrals today, you could be getting a LOT more tomorrow.