These days, the 2008 Global Financial Crisis is a thing of the past for many North Americans. For most consumers the only reminders are recent news stories about the ongoing financial crisis in Greece. It’s a different story for financial institutions who are still dealing with a Financial Crisis Hangover. During the summer of 2008, as the crisis was in its outset, consumer confidence in financial institutions was at a near all-time low. People didn’t know who to trust or what to believe anymore.
However, reports released earlier in 2015 suggest that things are on an upswing. Research from the UK suggests that customer satisfaction levels with financial institutions have doubled since 2012. Closer to home, a report released by the University of Michigan indicates that consumer confidence in financial institutions is rising though consumer confidence levels were not quite back at pre-Financial Crisis levels.
On a more powerful note, the University of Michigan report also reveals that consumer confidence with credit unions has actually risen steadily over the past 25 years. Even when consumer confidence levels with other FIs dipped during 2008 and 2011, confidence in credit unions continued to rise! As consumers became increasingly distrustful of big banks and institutions, their faith in the sense of community and familiarity they received from credit unions grew.
Credit union marketers have always needed to foster meaningful connections with their member base. They must nurture existing members while also finding ways to add to their member base. In this post–Financial Crisis, there’s never been a better time for credit unions to ramp up their customer acquisition marketing.
Credit Unions and Referral Marketing: A Perfect Match!
Marketers at credit unions must respond to the ways consumers now determine what a financial institution is for them. There has been a shift in social and cultural perceptions; large banks and FIs no longer have the upper hand. Consumers have shown they do not want to be treated like an anonymous account number. They also want more visibility in to who they are trusting with their hard earned dollars. This is a win for credit unions! The idea that CUs are small fish in a big pond no longer holds true. Credit unions have exactly what today’s consumer wants from their financial institution: a sense of community and service tailored to their individual needs: something they would feel good about sharing with friends and family.
Referral marketing is quite possibly the most successful and cost-efficient way for businesses to acquire new customers. However, only 39% of marketers use referral marketing on a regular basis. Of the companies that do, 45% consistently acquire upwards of 35% of their new customers from referrals. A referral marketing program allows credit unions to provide members with a more personalized and involved marketing experience by inviting existing members to promote their brand to potential new members. This is perfect for targeting a consumer base that is slowly starting to rebuild their financial confidence. A referral program also allows credit unions to reward their members for successful referrals.
Aside from being a perfect fit for consumers who want to engage with a financial institution on an individual and more meaningful level, there are numerous other benefits to referral marketing for credit unions including:
- People trust referrals from those they know seven times more than traditional advertising
- A referred customer has a 16% higher lifetime value than a non-referred customer
- Credit union referral programs have been shown to reduce the average cost per acquisition by half or more
Unlike traditional marketing, referral marketing allows members to be active participants in their credit union’s marketing campaigns. This illustrates to members that they are valuable and important to a credit union and their wider community. Consumer sentiment is in a sweet spot for credit unions right now and combined with referral marketing, a credit union can grow their member base while increasing consumers’ financial confidence and satisfaction.