Before the days of social media – before viral videos and sponsored ads – was the natural social interaction between consumers: the recommendation of a product or service from one person to the next.
Word of mouth marketing (WOMM) is the organic communication of information from one person to another about a brand, product or service. It is most often influenced and driven by a positive interaction that an individual has had with a brand. WOMM is nothing new, and has been reviewed and discussed in a number of articles. More recently, there has been strong evidence for WOMM to succeed in the credit union space. With customer satisfaction levels at an all-time high for credit unions, and with 82% of credit union marketers believing that referrals are the most effective customer acquisition method, customer referral programs just make sense.
Why Does It Work?
WOMM’s success can be attributed to its source: a friend or family member whose opinion you trust. Businesses can spend millions of dollars building a creditable reputation, however what can more likely influence a purchase decision is a simple recommendation from a peer.
The evidence is overwhelming: 92% of consumers around the world say that they trust recommendations from friends more than all other forms of advertising. 84% of global consumers say that word of mouth is the most trustworthy source of product recommendations, and 77% of consumers say they are more likely to buy a new product when they learn about it from friends or family.
Because it stems from a reliable source, word of mouth taps into principles that are at the core of credit unions and their members: credibility, community and dependability. Word of mouth referrals break through the traditional marketing messages used by financial institutions distributed via their paid advertising. Banner ads, billboards and commercials can’t engage the same way a personal conversation can.
Moreover, the customers that get referred to your brand are going to be more valuable for you long-term. A study from Deloitte shows that new customers referred by existing loyal customers will have a 37% higher retention rate.
The facts are laid out, but how can a credit union encourage word of mouth for their branch?
Try these three tips when considering a boost to your WOMM strategy:
- Give Your Members Something To Talk About
A visit to a financial institution of any kind can be considered a mundane chore for consumers. To generate word of mouth about your institution, consider creating a unique brand experience that your members will find value in. Identify what it is that makes your company unique and capitalize on that.
Credit unions leading the charge in customer experience are the ones that are showing growth and high loyalty. Hint: It’s more than free coffee.
At Envision Credit Union in Cloverdale, BC, the credit union team greets you at the branch door and lets you know how long the wait will be. They encourage you to sit comfortably and surf the web instead of standing in line. If you need to take a call while waiting, they will try to find you a room for privacy. Everyone – including the branch manager – makes time to greet you by name – or introduce themselves if they don’t yet know you.
This kind of personalized service leads to customer retention and motivates overall customer satisfaction to get people spreading the word about your CU.
- Be Social
A stellar social media presence is a necessity for businesses today and plays an important role in the success of your word of mouth campaign. Social media platforms like Facebook, Twitter and Instagram give you a space to share your latest news and initiatives and broadcast straight to your audience. It also gives your members a platform to learn more about your credit union and post about their experiences. The more likes, followers and pins you have, the larger your reach.
Millennials now almost exclusively rely on social referrals and reviews when making purchase decisions – 60% of millennials indicate that online reviews are important – so having high social currency is crucial to getting business from younger demographics.
Hint: It’s not all about you.
Instead of posting about deals, offers and products, spend some time talking about what’s going on in the community and engaging with your followers to see what they’re involving themselves in. Most credit unions engage in some local neighbourhood activities, from sponsoring events to hosting local charity drives. Elevations Credit Union In Boulder Colorado focuses their social media presence on highlighting positive community action, like sponsoring bike-to-work days, celebrating local farmers markets, and promoting community giving. They recently won a CUNA marketing award for their social media focus.
Involvement in the community and consistent interaction on your social channels increases your chances of getting referred online.
People like free stuff. Consumers are accustomed to getting perks, loyalty discounts and rewards from the brands they interact with, so it stands to reason that their credit union should be no different. However, deciding on whether or not to reward members for their loyalty, or for their referrals, is something that credit union marketers can struggle with. Determining the amount or quantity of the reward adds more complexity. There’s no question that rewards can influence referral activity. Statistically speaking, 1/3 of your customers are likely willing to refer their friends and family members to your credit union without needing any kind of incentive to do so. However almost 30% of your customers would refer more if rewards were made available to them.
Hint: It doesn’t have to be costly.
If your member acquisition strategies require you to keep marketing costs to a minimum, remember that you don’t always have to reward with account credits or prepaid credit cards. Some credit unions like UECU in Pennsylvania combine their referral and loyalty programs together, and issue loyalty points when a referral is made. UECU is one of the top 15 Credit Unions in their state, and have a sophisticated points program in which earned rewards can be aggregated and redeemed at hundreds of local and national businesses.
Consumers are more likely to recommend your credit union if a reward program is in place.
Marketing managers at credit unions today are facing the combined challenges of lack of budget and staff availability, but your marketing strategy doesn’t need to suffer. Word of mouth is proven to be one of the lowest cost methods of customer acquisition and retention and being that credit union customer satisfaction is presently so high, you have a set of highly engaged and loyal customers to draw upon to drive your word of mouth referrals.
You can see more facts and figures on the current success of word of mouth marketing for credit unions from RewardStream’s 2016 Credit Union Marketing Report.