Ever since people started flocking to Facebook and Twitter, marketers have been trying to find ways to leverage social media channels to acquire new customers and convince existing ones to buy more. The charge was led by giants in the retail space like Best Buy, Dell, and Starbucks, offering up exclusive coupons on Twitter and Facebook. Soon, every major company had a Facebook page and Twitter feed, and email marketers began adding share links to their emails.
It has become common place for consumers to “like” and “follow” popular brands in search of offers and other information to tighten the consumer-brand relationship. And now brands are looking at ways to tap the social networks of their biggest fans to acquire new customers. This has played out most obviously in the daily deal sector, with companies like Groupon, LivingSocial, and HauteLook offering to reward their members for successful attempts at converting friends in their social networks into fellow customers. As a result, the member base for these companies has grown like wildfire. However, convincing a friend to join a company that can get them 70 percent off their favorite brand doesn’t seem like such a difficult proposition. The real question is how this strategy plays out with more traditional companies without a sexy business model or the promise of deep discounts.
When asked to describe their favorite brands, it’s not very often that consumers offer up their bank, credit card company, or broker – and even less so after the financial bailout. So, how successful could an established financial institution be at leveraging its customers to acquire new customers? The answer, it turns out, is “very.” Last month, Discover Card launched a social media-powered referral marketing campaign that offered card holders $50 for each friend that they could entice to become a card member via a reciprocal $50 incentive. The targeted online ad is introduced to cardholders when they are redeeming their points. The friend can deliver the offer via email, as well as their Twitter and Facebook pages. Discover seems to have gotten “refer-a-friend” right. It is introducing the offer within the positive context of getting value from using the credit card, and it’s allowing the customer a choice in sharing methods.
In case you’re thinking that one successful example doesn’t validate the power of referral marketing for financial services (and other vertical markets in general), how about two case studies? Zecco Trading, a popular online investing site, also sought to motivate its members to recruit new ones. The company was smart and realized that its most passionate and loyal customers were likely hanging out in the customer community that it set up for members to ask questions and exchange information with each. After testing a number of incentives, Zecco standardized its offer on $75 cash back for every friend who opened and funded a new Zecco Trading account. As a result, the company saw a 14 percent increase in new account acquisition. Even better, 9 percent of those who reviewed the campaign became influencers, resulting in one new member for every 2.2 referrers.
The point is that if financial services firms can be successful with word-of-mouth customer acquisition, then nearly any company with a subset of passionate customers can take advantage of this powerful tactic. The trick is to target the right audience and offer the right incentive. When done right, customers will respond. And while social media channels like Twitter and Facebook are important for getting the word out to your customers – and for empowering them to share – email also plays a critical role.
Email should not be overlooked when executing a word-of-mouth referral marketing campaign. While announcing your new referral program on banners or a purchase or form confirmation page is a good way to get the attention of an engaged user, welcome emails can also be an effective way to target new customers and clearly explain the benefits of your program. It should also be noted that when people do reach out to their friends, they choose to share the offer via email 80 percent of the time.
Social is not killing email. They are not natural foes, but rather complementary channels with their own strengths. Email allows marketers to more specifically target loyal customers at the right time, including those not currently active on social networks. Giving targeted recipients the opportunity to share via email also allows them to be more targeted, rather than extending a referral marketing offer to every one of their friends on Facebook. Social media has made us all more connected, and with the right incentive, you can motivate your brand advocates to tap their social networks to acquire new customers in a way that makes both parties look good – regardless of what business you’re in.
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