Referral campaigns could help small financial institutions combat their ‘age problem’

The strategy: Referral campaigns can help financial institutions (FIs) attract and retain customers, per The Financial Brand. And since 47.6% of Gen Zers prioritize word-of-mouth recommendations when researching financial products, referrals can help build relationships between young customers and their banks—something especially smaller FIs have struggled with.

Best practices: To run successful referral campaigns, The Financial Brand recommends that banks:

• Calculate costs: Customer acquisition costs usually range from $150 to $780 per customer in the financial industry. It’s important for FIs to calculate these numbers to determine whether it’s worth running the campaign.
• Design campaigns carefully: Marketers must ensure campaigns reward loyalty and prevent misuse by participants who might meet minimum criteria without meaningful account activity.
• Leverage social influence: Social media is another popular source of financial information for Gen Zers. Focus on social platforms where Gen Z is active, and monitor emerging alternatives if platforms like TikTok face bans or changes.
• Tailor campaigns to Gen Z’s preferences: Offer financial products that resonate with their habits, such as high-yield savings accounts, since their top financial goal is saving money. Align campaigns with young customers’ values, including transparency and authenticity, to build trust and loyalty.
• Track and adapt: Monitor the performance of the referral program, including metrics such as participation rates, conversion, and customer lifetime value. Stay agile by adapting strategies to new trends and platforms, ensuring the campaign remains relevant and impactful.

Our marketing take: Credit unions and community banks are grappling with an aging customer base, creating an existential need to attract younger generations. A well-executed referral campaign highlighting products Gen Zers want the most, on platforms they frequent most, could go a long way in building relationships with younger customers.

Dig deeper: To get a sense of the type of marketing content that resonates most with Gen Z, read “To create content for Gen Zers, bank marketers must first consume it” next.

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