The Opinion piece is reproduced below. The full text is available here.

Social Referring Marketing in the Financial Services Industry

Vijay Sundaram

At SocialTwist, we’ve worked with many financial institutions (FIs) to drive new referrals for brokerage accounts, insurance and credit card businesses. The programs have been highly successful with clear and measureable results in lead generation and new customer enrollment. Our oldest client has been using our customer acquisition platform for 30 straight months.

So, what makes social referral marketing work for financial services?

Let’s start with the nature of the customer relationship. FIs tend to be relationship, rather than transaction businesses. They seek to establish long-term relationships with clients, at times extending across generations. Referrals work best in this context. FIs customers also tend to have a high lifetime value (LTV) and they also cross-sell products and services to them to match their lifecycle needs.

All this allows FIs to invest more in relationships, starting from the customer acquisition stage.  High acquisition costs and high LTV make referral-driven acquisition highly valuable.

FIs have other unique concerns as well. Issues around consumer privacy and security are deal-breakers. As a regulated industry, they are constrained in ways they can set up consumer incentives and rewards. For example, insurance products cannot be discounted. Cash incentives are permissible in some sectors, not in others. Marketing incentives must be accessible to customers and non-customers alike.

FIs have custom requirements for referral marketing that must be tied to delayed outcomes like new enrollment and account tenure.  This may happen months after the referral, making tracking and attribution a challenge.

A social referral platform serving this industry must be highly flexible and customizable to address these issues, and other unanticipated ones. Results must be measured and clearly attributed. A cut-and-paste turnkey approach will just not work.