Referrals are an effective way for businesses to attract new customers. In fact, they often work better than other marketing strategies. So it’s certainly a good idea for startups to use them. And a growing number of FinTechs are doing so.
It’s not hard to see why referrals work so well. People may take the claims that businesses make about their products with a pinch of salt. But they’ll be more open to trying those same products if their family and friends recommend them.
If you’re building a FinTech, you’ll want to take advantage of this tendency. Here are four ways to leverage referral programs to expand your customer base.
Offer Varying Rewards
You will need to reward customers who invite their contacts to use your product or service. That’s standard procedure for referral programs. But if you have a diverse customer base, it might be a good idea to vary the rewards accordingly. Offer gifts that will appeal to people in each of the different demographics that your customers belong to.
But you could also prepare varying rewards for a more homogenous customer base. Let them know that they could win any one of the gift types available. This will raise their excitement and expectation about what gift they could end up with. And this excitement will make more customers eager to join the program and refer their friends to you.
The rewards you’ll give may be discounts, free products or services, souvenirs, or branded gift items.
Gamify The Referral Program
Another way to build a sense of excitement around your referral program is to gamify it. There are many ways to do this. For example, you could create a sense of competition by promising more gifts for customers who refer more people to your platform. You might even introduce a leaderboard, which will rank the top performers by the number of referrals they’ve made.
For this to work, you’ll need a way to track the source of referrals coming into your platform. You can do this with unique links which you’ll generate for each current user. A user can share a referral link with their contact. When any of those contacts sign up with you via those links, your platform automatically credits the person who referred them.
Several FinTechs in Nigeria pays commissions to customers who refer users to them. Some of them offer a fixed reward, e.g. ₦1,000 per referral. Others pay a percentage of the funds that the persons referred to them have deposited on the platform.
This approach to referrals is often quite effective. That’s because people like the idea of being paid for simply getting their contacts to sign up for a product or service. It spurs them to bring in more people to the platform. They get paid more, and the platform gains more customers—a win for all involved.
The commissions’ approach to referrals works particularly well for InvestTech and digital banking startups.
They manage funds for profit and are able to share portions of the profits with their existing users.
Make Referrals Easy
If your referral system is complicated, it could discourage many of your customers from going through it. Even if your rewards are attractive, they may not have the patience to figure the process out. Make your referral program as simple and accessible as possible, so you can capture a high number of new customers.
Publicize the program across all your channels, including social media, your website, and your mobile app. You should make information about it easy to find. Let people who use your platform see details about how to participate in it (even if they are repeat customers).
When you get the word out to the public, you’ll attract both existing customers and prospective users. Persons in the latter category may be eager to sign up with you just for a chance to reap the benefits of your referral program.
FinTechs can leverage referrals to significantly expand their customer base. But they need to know the best ways to deploy this strategy to their advantage. We have discussed four ways they can make referrals work for them. If you’re building a FinTech, you can follow the steps we’ve talked about here to gain more customers.Featured Image Source: Sandler Trianing
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