As more financial services companies see an increase in digital adoption, there is a natural spike in customer referrals also occurring. In fact, many of the most successful financial companies are combining traditional marketing strategies, like print ads and direct mail, with digital acquisition channels, like referral marketing, to boost sales.
When it comes to driving sales, the growing number of referral marketing benefits must be considered. In fact, 92% of people trust recommendations from friends and family more than all other forms of marketing.
The ways in which brands engage with their customers are quickly changing in both tone and strategy. As consumers, just think about how we bank and manage our finances today versus 20 years ago before the rise of mobile applications, secure online networks, and access to digital platforms.
Now as marketers who can leverage the many benefits of the digital referral business, it's important to see the digital shifts in the finance industry. With the ability to reach a wider audience via powerful tools like websites and apps, generating customer referrals becomes much more attainable. Not only that, but a recent study shows that referral marketing is actually a natural fit for financial services businesses.
3 Tips for Financial Services Companies Leveraging Referral Marketing
The ease - and convenience - of recommending your business digitally means your referral program is no longer a short-term promotion or a seasonal campaign. Instead, your referral program can be a permanent button on your website's navigation bar. Or you can create a simple pop-up that appears once your customer signs on to your online banking platform.
Let's take a closer look at a few highly successful referral programs in the financial services industry and why they work:
Tip #1: Make your referral program flow transparent
When it comes to referral marketing success, transparency is a critical component. For a program to be successful, it has to be incredibly easy to use. To achieve this ideal state, you need to structure your program in a way that makes it super simple for customers and brand ambassadors to seamlessly refer and promote your business across multiple platforms and channels, and for each party involved to see immediate value. When you can do that, you remove most of the roadblocks that tend to hinder engagement.
For example, data shows that optimized landing pages are worth the effort. Instead of having a handful of generic landing pages that are used for all campaigns, marketers that customize the page content and experience for their specific target audience have better conversion rates for their referral program. Oportun clearly outlines the program details on a dedicated landing page. By communicating the offer and program structure, website visitors are motivated to join their referral program.
Tip #2: Automate your referral program
From enrolling brand ambassadors and tracking share links to managing rewards, there are many moving parts when it comes to running a successful referral program. It would be difficult to harness the sheer volume of strategic relationships, loyal customers, and top referrers without a system that facilitates and streamlines the referral marketing process. To truly scale your efforts, partner with a referral software vendor or digital referral business that offers tools to maximize your engagement and revenue every step of the way.
For example, Ria utilizes their dashboard to promote their referral program in-app. Automating manual processes enables the company to proactively provide their customers with the assets, insights, and reporting they need to optimize engagement. This also eliminates constant requests and streamlines the referral flow.
Tip #3: Optimize based on results
As mentioned before, referral marketing programs don’t have to be one-off campaigns - in fact, having a refer-a-friend program or a sharing hashtag can churn out slow and steady buzz that continuously engages with brand ambassadors.
When PayPal started, the brand attributed much of its quick growth to word-of-mouth marketing, especially their referral program. Originally, the company offered new users $20 if they opened an account and $20 if they referred someone. At one point, PayPal was offering $100 for new users. And most recently, the company offered $5 for every new account created via referral. However, PayPal became so popular that they’ve now shifted away from rewarding referrals, but the brand is still leveraging referral programs.
While each of these three companies above have leveraged referrals to drive sustainable and scalable growth, referral marketing success isn’t limited to certain types of businesses. In fact, the approaches deployed by these brands to drive incredible user growth are, for the most part, replicable for most financial services companies.
And in an industry like financial services, trust is a difficult thing to attain. Whether you are a banking institution or a money management app, referral marketing increases the odds that your customers will rely on you for all of their financial needs.
More so, people that have been referred by a peer typically stay loyal to a business longer than those that found the company by other means.
In fact, according to Forbes, customers recommended to a business are 18% more likely to stay with the organization than other customers. The article reiterates, “People tend to have a stronger attachment to an organization if their friends or acquaintances share a bond to the same establishment.”
And from our own experience, this rings true.
We studied the results of our clients in the financial services industry and the data revealed that referral marketing is one of the primary channels for customer acquisition.
In fact, we dug even further to unveil that these clients see an average 15X ROI over a 12-month period.
And there's even more! Check out our latest report on referral marketing in the financial services industry.
Here's what's inside:
- ROI for financial services referral programs is higher than retail and eCommerce programs
- 3 factors that make referral marketing a natural fit for financial services businesses
- Why customers want to participate and the customer profile type they usually refer
Learn how other financial services companies are combining traditional marketing strategies with an efficient customer acquisition channel, like referral marketing.