A bank referral program provides a way for customers to refer their family, friends, and co-workers to the bank through specific channels. Some estimates show that about 30% of banks and credit unions in North America are already using some kind of referral program. In some cases, these are automated systems with all the bells and whistles. In other cases, they might be a simple paper form that someone hands over to a buddy.
While these systems, and those in between, all work – the design of the program does matter when it comes to return on investment. A huge banking network across the United States might make better use of an automated system, while a credit union with two branches might need something much simpler.
Common Mistakes with Referral Programs
There are a number of things to consider when instituting a program. We’ve determined what the most common mistakes are and would like to pass them on to you. This will help you ensure you start off on the right foot with whatever system you choose.
- Providing one option for referrals – Some customers may prefer specific methods over others. If you only choose one channel, you’re going to miss out. Use many channels so people feel they have more choice, making them more likely to sign up.
- Bad rewards or a long path to rewards – Either of these things will make for fewer referrals. People want to see something for their efforts, so give them just that. Lots of banks and credit unions offer these referral rewards, so you want to stand out.
- Not being available for every customer – Some banks choose to exclude particular product lines or types of accounts, but this is not a great way to go. Instead, use variable rewards for different accounts. For instance, a checking account might have a lower referral reward for a customer with more revenue.
- Limited time promotions – People refer when they know someone who needs your service. Having a program that runs a short time only captures a small group of people and may not be worth the effort of the system. Instead, make it a long-term offering.
- Limited awareness – If your customers don’t know there is a referral program, they won’t be referring people. Make sure everyone is aware you offer the program. Advertise it in newsletters, social media, and on your website.
What to Do
While there are many examples of what not to do, you must also know what you should do. That’s just as important. One thing you should do is to make sure the system is easy to use. You should also ensure the reward is worthwhile, as that will bring in more customers. In addition, do what you can to promote the program and automate its use. This will all give you a better chance at hooking new customers who will use your services for years to come.
If you are looking for a referral system that is simple to set up and offers great features, one option is FinancialRefer. You can find a free demo and learn more here.