Getting your customers to talk about you
If you are a bank or an insurance company you may feel that being seen as ‘safe and trustworthy (and perhaps a little boring)’ is not a bad place to be. After all, your customers want to trust their savings, bank balances and insurance cover to someone who is sober, reliable and who they believe will be there when they need them, not someone seen as risqué, daring or amusing who might not be around very long.
But the problem with being ‘safe and trustworthy (and perhaps a little boring)’ is that it does not make for a product that people instinctively want to tell their friends about. Can you imagine a bank customer interrupting his friends discussion of ‘Making a Murderer’ or the latest ‘Star Wars’ epic to announce ‘I have just gotta tell you all just how much I love my bank’?
No, well neither can I.
So if you don’t remind your customers to refer their friends and family and give them the right tools and incentives to do so, then chances are they won’t tell anyone about you. In fact, let’s say that the chances are that they will tell anyone are probably close to zero! And that is a shame because by far the best customer acquisition channel for you is, yes you’ve guessed it, your existing customers.
Not only will customer referrals bring you new customers at a fraction of the costs of any other channel, such as paid search, affiliates or banners, but it will also typically bring you better customers with higher lifetime customer values. This is simply because your best customers are likely to know other people like them who are also potentially good customers.
So why would you ignore referral marketing and pour money into expensive acquisition channels that bring a lower quality of customer?
But surely you already have a referral program?
Referral marketing is nothing new for banks and insurance companies, and I am sure your company already has some kind of refer-a-friend program in place. A quick Google search for ‘refer-a-friend’ plus any of the leading brands for banks and insurance companies (say Bank of America, Wells Fargo, Amex, Barclaycard, Nationwide, Aviva, etc.) will throw up some kind of webpage offering your customer and his/her friend hard cash or a reward in kind if they would kindly recommend that the friend signs up for a current or checking account, credit card, or even pet or household insurance.
And the rewards you offer are probably not bad either. A quick perusal of some of those brands mentioned above shows rewards ranging from £/$ 25-100 for each referred friend. These are higher referral rewards than you see in a lot of other industries, because of course the customer lifetime value of bank and insurance company customers tends to be higher, and you and your competitors will bid up acquisition costs in paid search and from affiliates. Of course, when you are paying so much for other acquisition channels it makes sense to be generous with your referral scheme, as if you are not, you can be sure your competitors are.
But if you put your hand on your heart could you say that you are happy with your referral program? Is it delivering all it should? Is it one of your largest sources of new customers? I would bet your answer to those questions is ‘no’.
That is because, when you look at your program, like most of the bank and insurance referral marketing schemes, with a few exceptions like Transferwise, it is probably not very sophisticated. Maybe you require the referrer to fill in an exhaustive form about their friend or maybe you only allow referrals via email or even require the referrer and friend to visit your local branch! Chances are that the rewards you offer are unimaginative and as a boring as the public’s perception of your brand!
But, the plain truth is that while being boring and safe can be a virtue when deciding where to put your savings, it is not necessarily the case for a referral program. And all that is a shame. Because you probably deserve more than that. You probably spent ages obsessing about customer satisfaction and net promoter scores, train your tellers and customer support staff to be extra nice and spend a small fortune on User Experience (‘UX’) to make the experience of your online and mobile customers as pleasant as possible.
What is more, you probably resent the fact that your industry has come to be dominated by Price Comparison engines that ignore the investment you make in ensuring customer satisfaction and make the focus on ‘price, price and price’. Not only do they dominate paid and organic search and charge you a fortune to get new customers, they also encourage those customers to jump ship at the first occasion. That is often as harmful to your customers as it is to you, as your customer is often trading a lower price for a much lower quality of service and is losing the accumulated benefits of staying with the same bank or insurer over many years, such as building up a credit or claims history or relationship with the bank manager etc.
So what a shame you aren’t making your customers your main acquisition channel instead!
That is all going to change!
This is the year when ‘customer get customer’ will finally change the game for banks and insurers, just as it is for countless other verticals.
With just about any online marketing technology you can think of, whether email, affiliates and paid search, the technology only really took off and fulfilled its potential when enterprise level technology platforms like Exact Target, Marin and Affiliate Window arrived on the scene. Referral Marketing is no different. But now that we finally have enterprise level referral marketing technologies, like Buyapowa, that is about to change.
Now you have a robust and secure means of incentivising and enabling your customers to refer their friends and family, with each referral accurately recorded and identified. And what is more, those referrals can start on your own website, rather than on affiliate sites, so you can control and record the incentives and messaging used. And when more of your customers are moving online and to mobile banking and insurance, your customers can refer right after each ‘moment of truth’ and by any means they want to including email, instant messaging, SMS, social posts old fashioned word of mouth.
Also rather than the boring old ‘same as everyone else’s’ rewards, you can address each of the different referral profiles among your customers using advanced incentives like tiered rewards, gamification and communal rewards and get as many of your customers referring as possible.
Why you can’t afford not to do this?
If I was to remind you that Forrester Research found that 70% of consumers trust recommendations from friends but only 10% of consumers trust advertising. And then I told you that your competitor bank or insurer sees 70% of referral emails opened by the friend of the sender compared to the, say, 20% open rate you typically see. And that your competitor’s referral emails get clicked 25% of the time compared to maybe 5% for your emails, and that meant that not only are your competitor’s messages more likely to be seen and read that, due to a friend’s recommendation, they are much more likely to be acted upon. And so as a result your competitor’s emails perform up to 54 times better than yours. And that your competitor bank or insurer’s referred customers have a 25% higher lifetime value than yours?
Can you let your competitor get away with that, for long and survive?
Well if you want to know more, just drop us a line and let’s chat about how you can avoid being left behind.