The Inequity of Some TAF Programs
A customer Tell A Friend program, also called Refer A Friend, is a proven technique that opens many additional checking accounts. In essence, it turns your customers/members into a sales force for your bank or credit union and the only compensation it costs you is a few dollars for each gift.
But some financial institutions turned the idea into an inequitable program that can’t be as successful as they hope.
Briefly, the Tell A Friend (TAF) program works like this. The customer gets a coupon during a banking transaction. She gives the coupon to someone and recommends your checking accounts. When the friend opens an account and presents the coupon, both the original customer and the new customer get the premium you’re currently offering with your acquisition campaign.
The inequity comes when the financial institution changes this basic TAF idea. For example, the original customer gets a gift, but there’s nothing for the new customer. Another angle on this gives a big gift that’s part of the acquisition campaign to one of the participants, but gives the other individual a much smaller gift.
The headline we use on the TAFs we create says, “It’s all about sharing.” Sharing implies equal amounts. If the gifts, cash, or whatever the reward, isn’t equal for both new and old customers, there’s a disincentive to use the TAF program.
Therefore, the program fails to open as many accounts. Management, who probably initiated the inequity to save money, complains the program is faulty and it’s time to drop it. Then you lose the account openings the program produces, and the goodwill and loyalty it generates among customers.
If your bank or credit union is running an inequitable TAF campaign, stop and rethink what you’re doing. At least test the equal-share version for a few months to see if it improves response.
If you’re not using a Tell A Friend promotion, start. Track openings and you’ll be surprised by how many new accounts result from the program.
Also remember, educate your staff if you expect a TAF program to work. It starts with them.
For a description of various types of Tell A Friend formats and ideas, read these posts.