As a bank or credit union, it is much easier to maintain existing customers than it is to attract new ones. In fact, many financial institutions quickly discover that going after cold leads is both expensive and ineffective.
With the right approach, however, you can use the existing merchants in your network to attract more business. By implementing a referral program, you're no longer chasing cold leads — your clients do all of the marketing and outreach on your behalf.
The advantages of setting up a merchant referral program don't stop there.
Additional Benefits of Merchant Referral Programs
When you leverage the power of satisfied customers to bring in more business, you benefit from:
- Higher conversion rates, since referrals add important "trust" signals. After all, you're not doing the selling — your satisfied customers are.
- Referral programs can dramatically reduce your customer acquisition costs. You don't have to spend as many resources on sales calls or direct mail.
- Such programs can also increase customer retention. All things being equal, Merchant A is more likely to stick with your bank if he/she has already helped bring Merchant B in.
- According to the Wharton School of Business, referred customers have a 16 percent higher lifetime value than their non-referred counterparts.
Your merchant clients also benefit in the form of rewards and perks that make your services more valuable. In addition, people naturally like to share positive experiences and information with others. This is why we recommend everything from movies to physicians to recipes whenever we socialize with friends. A well-structured referral program allows your merchants to share the benefits and spread the wealth.
Setting up Your Merchant Referrals the Right Way
Many organizations use affiliates to bring in new business. Each referral translates to a monetary commission. However, we recommend using actual customers instead. Doing so amplifies the aforementioned trust signals, and you're also able to maintain much greater control over the messaging.
Besides, affiliates usually expect compensation in cash. According to the University of Chicago though, non-cash perks are nearly 25 percent more effective than money.
Additional benefits of using rewards and perks include:
- Cost. Providing value-added services is often cheaper than paying actual money.
- Loyalty. If those perks are only redeemable within your network, customers are likely to stick around longer.
This is precisely what Dropbox did when it grew its user base from 100,000 to 4 million in only 15 months. Both referrers and referees received extra storage — an inexpensive, non-monetary benefit that could only be used within Dropbox itself.
For your own customers, you could provide similar perks such as:
- Reduced fees
- Higher quotas and thresholds
- Overdraft protection
- Redeemable points
- Free gifts
- Better interest rates
You can promote these benefits on your website, in addition to social media, direct mail and electronic newsletters.
How Our Financial Institution Merchant Services Can Help
At BluePay, we specialize in helping financial institutions grow their merchant customer bases. In addition to PCI-compliant payment processing, we also provide numerous partnership opportunities to help make your referral program succeed. Important benefits include:
- Co-branded marketing campaigns
- Payment integration and automation
- Dedicated account specialists
- Ongoing sales training
- Exclusive webinars
- Revenue sharing