Referrals can be extremely powerful when it comes to accelerating a customer acquisition program. The relationship between your customer and their friends and family is the most credible relationship a financial institution can leverage. This makes the financial institution’s current customer the perfect middleman to help cultivate new, high quality relationships.
Studies show that word-of-mouth marketing is more trusted to the average consumer than traditional tactics. One of the easiest ways to increase incremental revenue and build trust is to reach out to current customers to encourage usage of their accounts or cross sell of additional products or services. This will provide increased profitability per household but will not increase the overall new household growth rate. Once trust is established, it is critical to dig into your customers trusted network of family and friends to bring referrals to your banking institution. The Harvard Business Review found that referred customers are 20% more likely to stay with a bank and generate 15% more profits.
Providing a simplified referral program with an incentive and a means of measuring performance has proven to be the most successful. Not surprisingly, the value of the incentive will have a direct impact on success. Your referral program can also extend to your employees, which will serve to keep them engaged with the program and encourage more customers to participate.
With technology and digital media becoming so prevalent in today’s society, the authenticity of face-to-face interactions and referrals mean more and allow new customers to feel a greater connection to the brand. A brand that grows from a foundation of trusted relationships is built to last.