Referral campaigns are one of the cheapest and most effective ways to increase your current market share. There are four components to creating a successful referral campaign. First you need a superior product or service that your current members find value in. You have to offer a “freebee” that people will want. Make it easy. Lastly, get the word out without spending too much in overhead.
What product or service is it that your institution has that retains membership? Is it free checking, a high interest money market, or low fees? When choosing what to highlight it should not be a loan or deposit “special”. Offerings for a limited time should be mentioned by your member service representatives at account opening. Printing deals on collateral decreases the life span of the marketing piece and increases your overall costs.
Incentives are needed for the program to be successful. I warn against the standard “chance to win” campaigns. For most a “chance” is not a motivator, people want an instant reward. The average acquisition cost to obtain a checking account is around $350. If you paid your members $20 for a closing referral and the new member $20 for opening an account you just saved $310. Another way to set it up is a pay per product campaign. The referring member would get rewarded for the referral. The new member would receive money based on the products and services they open. There are many different ways to set up incentives for these programs. The days of offering a waffle iron, umbrella, or a chance to win are not enticing anymore.
Make it easy. People stay with their current financial institutions because the thought of changing their bill pay, linked accounts, and automatic payments appears too difficult and they do not have the time. Most switch kits I have seen do not make it easy either. You are just organizing all of your banking on paper, then inputting it into the new system. Become the concierge, offer to do it for them. Navigate the new website with them and show them all the benefits. This added time with the new member also gives ample opportunity to cross sell some other products and services.
Keep your costs on collateral down. The purpose of the referral program is to pay your members and staff to get you the business. Stay away from newspapers, radio, television, and ad word campaigns. Some printed collateral with program details on it the size of a statement stuffer and a few posters should be all you spend on print. Do not put rates on the printed marketing material, this way it can be used indefinitely. Focus your marketing efforts on getting the word out to your members through the channels they use. Some free examples are; ATM messages, statement messages, Facebook, Twitter, email, your staff, and the telephone.
As you plan your program keep the focus on utilizing your staff and the people who already do business with you. Do not spend much money on marketing. The idea is to have people market for you.