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The Power of Consumer-to-Consumer Recommendations in the Financial Services Sector
About RewardStream
RewardStream is an emerging leader in consumer-to-consumer (C2C) marketing solutions for brands targeting the socially connected customer.
We help clients to energize consumers to recommend & refer to their
trusted networks, and then to evolve them into loyal, high value relationships.
Since 1999, we have delivered customer referral, loyalty and engagement
solutions for some of the world’s most esteemed brands.
Speakers
Bryan Mavrow SVP Marketing
First West Credit Union
Alexandra Best VP Marketing
RewardStream
Agenda
• Quick Look: Marketing in the Financial Services Sector • Overview of Research: Keller Fay & WOM for the
Financial Services Sector • Case Study: Using Customer Referrals to Perk Up a
Growing Family of Credit Unions • Q&A
Have a question?
• Use the chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar
• If we don’t get to your question during the session, please send questions directly to [email protected]
Dynamics Facing Financial Services Marketers
• Search was once the stalwart of the web marketing world
• The growth of social networking sites and non-PC devices like mobile has encouraged retailers to shift focus
• Search is predicted to lose share from 55% to 44% of all interactive spend in 2016
*Forrester, US Interactive Marketing Forecast 2011 – 2016 (published August 2011)
“We do on the order of a billion queries a day, and we’re not even trying. Most of it is people trying to find people, but a bunch does link to commercial behavior like trying to find brand pages. You get these search engines where you type in keywords and it runs some magic to tell you what it thinks you want. But I think search is evolving to provide specific answers. Facebook is pretty uniquely positioned to answer most of the questions people want to ask. Like “What restaurants do my friends like?”
- Mark Zuckerberg At Techcrunch Disrupt
September 11, 2012
Deliver great service. Give customers something to talk about.
The importance of brand is not entirely going to disappear; but your value as a brand is going to be
about service performance and delivery capability. The brands that will have high advocacy are those that
deliver on the promise. The brands that suffer will be those brands that say, “We’re fantastic”, and then show
by their actions that they’re not. - Brett King
Listen to what customers are saying.
“We are happy to take recommendations from friends, so as long as it’s not overt.”
- Brett King
“The role of banks as the financial expert has been
replaced by ‘word of mouth’ peer conversations…the rapid emergence of social media in parallel with the
rise of mobility has seen customers increasingly turn to their peers for information and advice, rather than to
financial experts in banks.”
- PricewaterhouseCoopers (2011)
How valuable Is word of mouth?
• The value of any one customer does not reside solely in what that person buys
• How your customers feel about you and what they are prepared to tell others can influence your revenue and profit just as much
“How Valuable is Word of Mouth,” Kumar, Petersen, Leone: Harvard Business Review, 2011
• Ideally, a company that wants to know a customer’s full value will include a measure of that person’s ability to bring in profitable new customers
• Nearest most companies get to establishing the value of a customer’s referral power is some gauge of the individual’s willingness to make referrals (e.g. Bain & Co., Fred Reichheld “Net Promoter” Score)
How valuable Is word of mouth?
Method
• Polled 9900 Telco customers, 6700 Financial Services customers about referral intentions
• Then tracked customers’ actual behavior and behavior of the referred customers over time
Results
“Marketers spend millions of dollars on elaborately conceived advertising campaigns, yet often what
really makes up a consumer’s mind is not only simple but also free: a Word of Mouth
recommendation from a trusted source. A Word of Mouth recommendation is the primary factor behind 20 to 50% of all purchasing decisions.“
- McKinsey Quarterly, April 2010
Word of Mouth: The Keller Fay Report General Findings
Research goals
• What is the influence of word-of-mouth recommendations in the retail category?
• Are word-of-mouth recommendations more or less influential at different points during the consideration and purchase lifecycle?
• Is there a difference in the impact of solicited vs. unsolicited recommendations?
Who is The Keller Fay Group?
• The first research-based marketing consultancy focused exclusively on word of mouth
• A few nuggets from The Face-to-Face Book: • It’s an invaluable tool for marketers who want to spread
the word about their products and brands faster than the speed of Facebook and with far greater impact.
• In-person social networking, not online marketing, is the secret to soaring revenues.
• 90% of recommendations that lead to consumer action happen offline.
Methodology
• RewardStream commissioned Keller Fay to study how recommendations affect purchases in Banking, Vacation Travel, Communications, Subscription Entertainment, and Financial Services categories.
• The survey was conducted among a total sample of 1,274 adults ages 18-59 who had purchased, applied to, or subscribed to a new product or service in the past 12 months.
THE OVERALL IMPORTANCE OF PERSONAL RECOMMENDATIONS
Recommendations are frequent
Very Often 16%
Often 43%
Sometimes 33%
Rarely 7%
Never 1%
Recommended a product or service to someone
Very Often 11%
Often 40%
Sometimes 42%
Rarely 6%
Never 1%
Made a purchase based on a recommendation
Recommendations impact more purchases than any other source
40% 32%
19% 17% 17%
15% 14%
10% 9%
6% 5%
4% 3%
2% 22%
A personal recommendationPast experience
Something I saw in a store/officeOnline consumer review websites
An advertisement in a magazine, newspaper, or onlinePrice comparison websites
A commercial on TV or the radioSomething on a package, flyer, or brochure
An article in a magazine, newspaper, or onlineA TV or radio program
Another type of websiteOnline blog
Another type of adSocial media site
Something else
% of purchases influenced at any purchase stage, all categories
Over 20% of responses of “Something Else” include a reference
to price, cost, an offer, or sale.
Other items include convenience or need, or general references to family
and friends.
Face-to-face communication is the predominant way to make a recommendation
82%
15%
5%
1%
1%
1%
1%
6%
% of purchases influenced by recommendations by mode at any stage, all categories
Face-to-face
Over the phone
Via e-mail
Via SMS/text
Via IM/chat (e.g. AIM, GChat)
Via Facebook or Twitter
Via another social media site (e.g. Google+, Tumblr)
Some other way
Recommendations are evenly divided between solicited and unsolicited
44% 46%
55% 47% 44%
37%
While becoming aware of aspecific brand
While researching variousoptions
While preparing to purchase
Solicited Recommendations Unsolicited Recommendations
% of solicited and unsolicited recommendations for specific purchases by purchase stage, all categories
Across all stages, recommendations are most influential in purchases
26% 28% 26%
23%
17% 8% 14%
23% 19%
17% 18%
13%
0%5%
10%15%20%25%30%35%40%
While becoming awareof a specific brand
While researchingvarious options
While preparing topurchase
% of purchases influenced by purchase stage, all categories
Recommendations Advertisements (Net) Online (Net) In a Store (Net) Nets defined as follows:
Online (Net) • Online consumer review websites
• Price comparison websites • Another type of website
• Online blog • Social media site
Advertisements (Net)
• A commercial on TV or the radio • An ad in a magazine, newspaper, or
online • Another type of ad
In a Store (Net)
• Something I saw in a store/office • Something on a package, flyer, or
brochure
WORD OF MOUTH: FINDINGS FOR THE FINANCIAL SECTOR
Financial sector highlights
1. For financial products and services, recommendations have a far greater influence than advertisements across all stages of the purchase lifecycle.
2. Rewards are effective drivers for financial services and products, both for customers making the recommendation and for those receiving the recommendation.
3. People are more likely to seek expert advice for financial services and products than for any other category.
Purchase are influenced by recommendations much more than advertisements
Rewards are effective drivers for both referrers and referees
More people seek expert advice for financial products and services than any other category.
38%
10%
52%
A financial purchase/service (e.g. bank accounts, mortgages)
Somebody Close (Family/Friends) Distant Friend with Experience in Category
% of people likely to look for advice from different types of people for specific types of purchases
Percentage of purchases influenced by recommendations
Research takeaways
• Word-of-mouth recommendations are a strong driver of consumer purchase behavior at all stages of the purchase lifecycle, regardless of purchase category.
• More people seek informed recommendations for financial services products than in any other purchase category.
• For financial products and services recommendations are far more influential than advertisements across all stages of the purchase lifecycle.
• Verbal referrals are significant driver of new customers.
• Your most valuable customers might be ones who refer you. Do you know who they are?
Case Study: First West Credit Union’s “Referral Perks” with Bryan Mavrow
First West Credit Union’s story
Scope: multi-brands, Envision Financial, Valley First, Bank.Borrow.Insure.Invest Size: 3rd largest Credit Union in BC, 170,000 members, 1,400 staff, 37 branches, $6.7B assets under management Mission: To make a meaningful difference in the financial lives of our members
Problem: it’s tough to get new credit union members
• Banking is competitive
• Products are ubiquitous
• Customers are loyal | Loyalty is Habitual | Pain points cause switching
Therein, is the opportunity
• We’re not a bank: Act Local
• We’re differentiating ourselves: Keeping it Simple™
• We rate very high on intention to recommend…
So let’s make it simple to recommend
• SPARK™: stand alone, low maintenance, simple
• Social Media based: our demographic market focus
• Easily scalable across the brands
Ready, set, launch
• Figuring out our customer key
• What to reward with?
• Get the brand right first!
What’s next
• Results will be?
• Testing rewards: cash versus community giving
• Internal platform for staff
• Drive member awareness
Have a question?
• Use the chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar
• If we don’t get to your question during the session, please send questions directly to [email protected]
Contact
Alexandra Best VP Marketing RewardStream [email protected] 604.282.7549
Bryan Mavrow SVP Marketing First West Credit Union [email protected]
Connect with us! Facebook.com/RewardStream Twitter.com/RewardStream
