Bank referral programs are powerful marketing tools for banks looking to grow. An effective referral program encourages existing customers to recommend your community bank to friends and family and spread the word about your products and services. Below are five benefits highlighting why a referral program is so effective for promoting a community bank or financial institution.
1. Reach the larger untapped audience
A referral marketing campaign helps you reach a large audience that you might not otherwise be able to get, all thanks to the power of word-of-mouth recommendations. By enlisting your bank’s current customers to bring in new members, you can supercharge the already valuable phenomenon of word-of-mouth advertising. That personal recommendation for your business is one of the best advertisements available and builds trust. At the same time, your community bank must understand that not all customers will recommend your bank, even when they’re satisfied. Your customers need a motivating reminder to share, which a referral program provides with timely messages and attractive rewards.
2. Creates a new channel for engagement
Referral marketing programs enable your bank to determine which customers will speak on your behalf. This lets you build the perfect opportunities to remarket and promote the business. Referral programs also remind customers why they love your bank. They’re encouraged to share this sentiment with others. When happy customers feel like they’re contributing to your success, they’ll be proud to share your services and engage with you.
3. Attracts warm, targeted leads through trust
Brands are often brought up in conversations because people want to share good finds with friends who can also benefit. For example, after a friend asks about refinancing, your customer will very likely recommend the friend to contact you if he had a great experience with your service. This will lead you to find a qualified lead who has been primed to trust your services since a reliable source recommended you.
4. Brings in new customers at a lower cost
Because referral marketing relies on word of mouth and existing customers, your marketing costs can be cut exponentially. For example, it’s a lot less expensive pushing marketing efforts toward the existing customer base than it is to market to new customers. An existing customer is likelier to open your emails than a potential customer. In contrast, potential customers are more likely to open and act on messages from their friends vs. messages from your brand.
5. Offers predictable ROI
You can’t always predict how many ads it takes to get a single customer or how much you’ll spend on ads. But with referral programs, the exact amount you’ll spend on a new customer is fixed – and you have total control over that amount. You’ll only pay when you acquire a new customer and the associated costs needed to onboard them. When managed with specialized referral software, a bank referral program makes it easy for your bank to track referring customers. Although an added expense, it lets you quickly pay referral bonuses – both for the new customer and the new account holder – so everyone is satisfied.
Referral programs motivate people to talk to friends about your bank. This leads to brand awareness that builds trust and may lead to new customers. Nonetheless, before your community bank promotes a referral program, ensure you have an extensive network of satisfied customers, an excellent customer service record, the capacity to handle many new customers, and an idea of what offer will excite your existing customer base to share. Your bank must plan for an incentive that is affordable enough so you can pay it out consistently and high enough to motivate existing customers and leads to take advantage.
- Reach the larger untapped audience
- Creates a new channel for engagement
- Attracts warm, targeted leads through trust
- Brings in new customers at a lower cost
- Offers predictable ROI