By: Patrick Grosserode- Chief Innovation Officer
I remember my first day of travel at my first real job. I was going to a bank in New York City to work with a team on implementing a large-scale customer acquisition program. About half way through the seminar we started working on the Refer-A-Friend part of our program. We talked about branch participation, passing out paper sign up forms and trying to create some buzz with the customers. This training occurred in the spring of 2004. Almost 13 years later, many of the Refer-A-Friend programs in existence today still function in the same way as the program that was invented in the mid-90’s. Let’s get real, the reason why it is in existence is because it works. When the program (the 90’s version) is executed properly, it is able to drive new accounts at a fraction of the cost of new customer acquisition programs. Pretty much every FI in the country has some sort of Refer-A-Friend Program in place today, but almost all are from the past. Here are a few ways to give your current program a much-needed update.
Get out of the branch and go mobile
One of the most telling qualities of a traditional Refer-A-Friend Program is the reliance on the branch for success. The branch was the main source of distribution of the referral mechanism (typically a card of some sort) and the branch personnel were the main drivers of the strategy. According to almost every article from the past 6 years, there seems to have been a decline in branch traffic and a large increase in mobile adoption (see this study and this one too). The key to success for any user platform is to create a system that can be accessed and used in the mobile environment. Not just distributed online, but able to be used and redeemed within the same platform. A platform that includes text, social, e-mail, gamification, and a user experience that is modern and accepted. The branch referrals will never go away, but the concentration of customers has migrated, let’s give them a way to participate.
Manual processes stopped in 1993
There are very few processes in the banking industry that are still done by hand. Even in the late 2000’s there were still a few but they have since been replaced with systems or software to create lean process. These processes not only improve operational efficiency, but also create more accurate and real time output. The Refer-A-Friend program is one of the last remaining dinosaurs from the past. Because the programs are primarily paper based, both the referrer and referee need to be looked up and processed by hand in order to reconcile the referral. When one or two referrals come in per month, this process is easily managed, but when executed at scale, this program becomes a monster for the back office. The only way to operate at scale is to automate the referral data processing.
Paper, QR code, account number, seriously?
Paper, pen and a friend were the only necessary items to execute the traditional Refer-A-Friend program. There have been a few innovators that have tried to bring the program out from the 90’s but didn’t quite have the success they were hoping for. The primary reason previous efforts fell short of the traditional pen and paper is that the programs were designed for ease of use for the bank and not for the end user. Here are a few examples:
I was at a credit union site a couple of months ago and a drive by pop up flashed across the screen inviting me to refer a friend and earn a reward. I clicked on the link and it brought me to a landing page that explained the program. I was then prompted to “Click Here” to get started. Upon clicking the link I was taken to a PDF of a paper Refer a Friend card. The instructions were to print, fill out, and give to your friend. Part of the magic of the 90’s program was the branch had to support the program by handing out the paper. Putting the paper online may check the digital box but certainly did not change the experience for the user.
Please insert your account number
I was doing some browsing on a bank site and noticed they had a refer a friend link. Upon clicking I was pulled into a registration portal that asked for information such as my name, address, and account number. One of the first rules of fighting phishing is to never give your account number to anyone. If the bank is really calling you, they have your account number and should be able to read it to you. I have also seen an iteration of this method using your debit card number (without an SSL key). As a product designer, I understand why a bank would require you to enter information like your account number or debit card number. It is because they need some way to flag you as the referrer within their systems and an air-tight way to do it is using the account number. As a potential user of the product, I have no clue why you think I know my account number or debit card number or why I need to enter it on a site that already has it. These examples had the right intent to bring their programs out of the 90’s but forgot about the user experience.
Bring in a QR code
I was visiting a bank last year and noticed that each of the branches was outfitted with a QR code reader. I asked what these were used for and they said they were used for their Refer-A-Friend program (shortly after they laughed and said they had only used it once). The first step in the program is for the user to request a QR code and then e mail it to their friends. Once the friend had the code they could print it or pull it up on their phone when they came in and opened the account. Although this process was good for the bank from a data management perspective, the user experience was not much different than the paper version and the mechanism (QR code) is really designed for instant use and alternative media.
Track it, measure it, own it
It has been said that traditional Refer-A-Friend programs, when executed correctly, can provide up to 20% lift on top of business as usual traffic. While this metric can be easily proven by looking at redeemed coupons, more telling metrics are virtually impossible. For instance, it is impossible to measure the amount of your customers who are actively trying to refer, or see how many referred people have the information and have not opened an account. These metrics can show where opportunities lie and show the true value of the referral program. The new accounts are one benefit but customer engagement and viral marketing also need to be included in the ROI equation.
Imagine a world where Refer-A-Friend Programs were digital, processes were automated, user statistics were available and pen and paper were a thing of the past. If you would like more information on the Royal Digital Referral Program please click here or contact us.