People like to share. We share in many different ways, across many different mediums, about a variety of topics. Ideas and information spread from one person to another, and along the way we often add our opinions and make a message uniquely our own.
This type of “word-of-mouth” communication has existed since our earliest days. Whether it was the best place to hunt for a boar, the best fishing hole, or the best credit union to use, we all love to share ideas, information and advice.
For marketers, the transmission of a brand message via word of mouth is tied closely with our use of social media today. The impact and power of word of mouth can be shown in the effectiveness of a good referral marketing program. However, most credit unions do not get the benefit they expect from a referral marketing program. Why?
For the answer, we can turn to the psychology behind word of mouth communication: why do people share? With whom do they choose to share? How do they share?
The Psychology of Word of Mouth
I recently read an article from the Journal of Consumer Psychology on word of mouth communication and was reminded of most important psychological reasons behind how we share. (I won’t go through all of these functions in this article, but will break down different pieces in future articles and blog posts. You can check out the article here for an in depth review: http://www.sciencedirect.com/science/article/pii/S1057740814000369)
For any individual, sharing content or information serves one (or more) of 5 key functions: impression management, emotion regulation, information acquisition, social bonding and persuasion. These functions tend to serve the individual sender, rather than the receiver of the message. The audience, as well as the method of transmission, can also significantly impact the effectiveness of the message.
The researchers found that the stronger the tie with our audience, the more emotive and persuasive we can be. The weaker the tie, the more time we spend carefully crafting our message in attempt to control how we are perceived by that audience. This is particularly true when sharing with individuals we know only casually, as we do not have a lengthy life history to fall back on should the audience disagree with what we are saying. In addition, the brands we associate ourselves with are critically important in shaping our online and offline persona, making us careful about what we share publicly on a site like Facebook where we typically foster a larger number of relationships with weaker ties.
Another significant factor in information-transmission is whether this is shared online or offline. As we often tell our clients, the majority (80%+) of referrals still happen via an in-person, word of mouth exchange. But this is changing rapidly. As social media tools and real time communications continue to permeate our lives, more and more people are communicating and sharing online. Case in point, my 76 year old dad just got an iPad and is using it to FaceTime with my 4 month old niece. Who said you can’t teach an old dog new tricks!
In addition, there are definitely some interesting differences in online vs offline communications:
- Online, and therefore “written” communication drives people to talk about more interesting products and brands, receiving more online discussion, with messages in a more positive tone. Written communications often enable people to transmit a deeper level of knowledge that can be more permanent, referenced and can seem more important or serious in tone.
- Offline, or “verbal” communication encourages people to discuss topics that are top of mind, requiring the information to be accessible. Verbal communications also tend to drive more social bonding, reinforcing a more shared view of the world. This enables two or more people in an in-depth conversation to get on the same page faster, and often more persuasively.
So what does this all mean for your referral program?
Referral marketing programs, when done right, are tremendously successful, and a very low cost method of acquiring new, highly loyal members. Yet most credit union referral programs struggle for a few key reasons:
- The programs only run for short periods of time as campaigns
- The program is difficult to find, or buried deep on a website
- The program is not communicated consistently to members
- Few social media channels are available for referrals
- No method of recording “offline” or true word-of-mouth referrals
Consistent and Persistent
The most successful referral programs have a holistic approach to capturing referral behaviors, running consistently and persistently. This means that the program is straightforward, easily understood by members and consistently marketed to the member across a variety of channels (web, social, email and in-branch). The program must also be persistent: the program should not simply be a short-term campaign designed to quickly boost member acquisition. Rather, the tenure of the program will lead to better results.
Why? Your members may not always be in a position to refer your credit union “right now”. Without trust that the program is persistently up and running, they will lack the confidence required to make that referral when the time is right for them. Plus, reminding them of the program on a regular basis keeps it top of mind.
Regular communication of your referral program reminds your members that the program exists, that there are rewards available to them, and they can give back to their credit union by participating. After all, they are with you for your community.
Accessibility – Online and Offline
Having the program be accessible, and easy to find on your website thus makes it easier for members to make a quick referral. Even better, a mobile-optimized referral system enables your members to make referrals instantly and easily in any situation. Having the program equipped to share via many social channels also increases the reach of the referral message, while exposing your credit union’s brand to your member’s friends and family – a tacit recommendation that has value all its own.
Finally, the Referral Holy Grail is ensuring your program can capture and record verbal referrals in branch, or even through your call center reps.
Now when you consider strong ties and weak ties, combined with online and offline communication differences, it becomes clear how a holistic approach to referrals can capture the majority of situations where referrals occur. And most importantly, this approach actually influences and drives referrals to happen.
A consistently marketed program will drive individuals to make referrals on a more regular basis. In many situations, a simple touch point from your credit union can notably impact direct online referral behavior. This is particularly true when a member has made a successful referral and received an award, significantly driving their motivation to refer again.
Offline – aka in the “real world” – a program that is top of mind and persistently available gives members confidence they can provide a referral instantly when they are having that conversation with a colleague about how much they hate their big bank. After singing the virtues of your credit union, all they have to do is pull out their Android or iPhone, and quickly make a referral.
As the level of marketing noise in the market place has gone up dramatically, consumers increasingly turn to friends and family for personal recommendations. In fact, Nielsen reports that consumers are four times more likely to make a purchase when recommended by a friend. This proves word of mouth marketing and referrals are here to stay, continuing to provide more value as our inboxes and Facebook feeds are cluttered with news, posts, ads and photos of cats. Not that anyone can resist a cute cat photo now and then!
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