Use direct mail to stimulate customer referrals.

• Author: Turner, Jim
• Position: Direct Mail: Essentials

A personal reference is the strongest advertising there is. So, among your marketing plans for the year, have you allocated any of your budget dollars toward generating referrals?

First, ask yourself if you are confident that your customer service is up to the level you want it to be. Then, if your products also are competitive, why not invite customers to tell their friends about you and reward them for it?

Requests for referrals can take several forms, but they can be especially effective when by direct mail. You can make them a stand-alone effort or a secondary offer in a larger campaign. Referrals fit many products, but area bit more practical on deposit products than on some loans because of restrictions on certain types of loans.

Adding a referral incentive to your mail campaign has two advantages. First, it may bring you another account, and second, it may actually increase the response.

For example, consider a campaign for a certificate of deposit. Certificates, of course, are typically used by customers in the 50-plus age range, and especially among those over age 60. This age demographic is especially receptive to advice from friends, and your older customers often will have a circle of close friends with a similar interest in certificates of deposit.

Therefore, you can boost response to your primary offer by rewarding the referring party with either a cash payment or a rate bonus on their own certificate. The same can be done with premium interest products such as money market accounts or high-rate checking products.

Certain products may be worth testing by mailing a stand-alone referral offer to current users. For example, try offering an incentive to existing online banking and online bill-pay customers who refer a friend. Online services are ideal candidates for referrals because, due to their nature, they generate security concerns among some prospects. A...