Incent, incent, incent. And after that, try using an incentive. In our over-cluttered, over-informed world, one of the best ways to grow it through referrals. If you think that think this strategy sounds like you’ll be paying people to sing your praises, you’d be right.
There’s no shame in rewarding people for expressing what they already believe. These folks have enjoyed working with you. With the proper motivation, they will happily refer their friends, family, and inner-most circle. And that’s when the magic happens. Once more people find out you’re incentivizing referrals, the more referrals you’ll get. And then, boom. It’s like a waterfall of new business.
So we’re not going to be losing money on these incentives?
Absolutely not. Well, maybe on the first one. But after that, the returns pay dividends.
Companies like Airbnb and Starbucks see huge results by incentivizing referrals. But you have to go about it correctly. A lot of banks and credit unions view referrals on a small scale — typically implementing them as short referral campaigns and then shelving them.
We think we know why. The process needs to be easy for the customer. We’ve seen a lot of referral programs advertised on a website or email, which is fine — until the customer is required to take an extra step like printing out a PDF to make the referral. This one extra step can lose you a referral. People want to be rewarded — but with the minimum amount of work. The easier you make it, the more effective you’ll become.
Okay, what’s the right way to do it?
Look into using a digital referral platform. But not your old stand-by. In fact, we’ve seen that the typical digital referral platforms aren’t as effective as a few new things out there. Let’s take a look at some examples of companies that are using new digital referral techniques and seeing success:
- Several neo-banks including Simple and Coin are making digital referrals an integral part of their lead generation and acquisition strategy.
- Outside of our industry, services like Uber, Airbnb and Clear use these programs and continue to gain customers — and market share.
- Banking institutions who are using referral programs correctly — like Simple, view it as not just a once-a-year campaign but as a key piece of their digital marketing and lead generation strategy. Especially when it comes to onboarding and cross-selling. Simple even has a referral function within their online banking platform to make it easy for their customers to do this. But they don’t stop there. They follow through with referral call to actions across onboarding emails once someone has applied for an account with them. They make the process (you guessed it) simple.
Not totally convinced?
It can be scary to change the way you approach referrals, but it doesn’t have to be. Talk to the people behind the scenes of your digital marketing and ask about testing a new referral system.
Sometimes, taking a small step in the right direction is the right place to start. Once you begin to see positive results, look into implementing the new strategy across multiple channels. You won’t be disappointed by the results you see; chances are you’ll experience exactly the opposite.
You must understand what your customers need and want – and what would be the right way to incentivize them. No one wants an incentive they don’t need. So spend some time on the front-end doing research. Find out what’s working in similar institutions. And then, sit back and watch the referrals flow.
Just don’t forget …
The single most important part of this puzzle is to track your referrals — and follow up. Say thank you. It creates a positive reinforcement loop that sends a message your institution is all about action and accountability. People aren’t required to refer you to anyone. The fact they did so is a big deal — an extra step. Sure, you’ve made it easier for them by digitizing it, but it’s still something they did because they believe in you. Prove to them that you believe in them, too.