The holidays are prime time for face time and earning referrals. Family and friends gather, catch up on life and share experiences and advice, including recommendations. For community banks and credit unions, friends-and-family referrals are often high-value leads that go on to become loyal account holders. However, many financial institutions miss out on this organic growth simply because they don’t have an effective and sustainable referral program in place.
Look at what the data says about personal referrals and learn how to tap into this valuable, cost-effective and often overlooked growth channel.
The Value of Personal Referrals
Not all new accounts are created equal. Sign-up bonus seekers often open an account, collect the incentive and then move on. There are entire TikTok and YouTube channels dedicated to teaching others how to game the system. For community banks and credit unions, every account that churns means wasted marketing dollars and a lost opportunity to build a lasting connection. It’s undoubtedly part of why acquiring an account now exceeds $1,000, according to Deloitte Research.
Referred members, though, come to your financial institution from a trusted contact and likely with better intentions. That makes them more inclined to stay, use your other financial products and services and, eventually, refer others in turn. In fact, they’re up to 5x more likely to use the referral program themselves. It’s unlikely you could replicate this ripple effect with a free blender or a $150 bonus.
How valuable is a referred account holder? Very, according to recent research. Harvard Business Review found that referred consumers generate 30-57% more referrals than non-referred consumers and have a 25% higher lifetime value. Nielsen reports that 92% of people trust recommendations from friends and family more than any form of advertising.
Personal referrals beat quick-win signups—bringing community banks and credit unions long-term value.
Why People Value Referrals
Surveys show that recommendations from friends and family consistently rank among the most trusted sources of information, far above ads and online reviews from strangers. Behavioral science shows that several key factors make personal referrals more trustworthy:
- Cognitive Biases: Our brains trust what’s familiar. When information comes from people we know, it feels more credible than generic marketing.
- Emotional Connections: We naturally believe our friends and family. Shared experiences and values create a trusting foundation that makes their advice feel safer and more genuine.
- Social Influence: We take cues from others. When we see friends or peers endorse something, it reinforces and supports the idea that it’s worth trying.
Personal referrals cut through skepticism because they come from someone you already trust, which leads to action.
During the holiday season, referrals can be even more powerful. When family and friends gather, stories and recommendations flow naturally. It’s likely that these suggestions shared in person make a bigger impact than an email blast or online ad, due to the personal and emotional connection.
Generational Referral Trends
While every generation values referrals, they differ in how they give and receive them. Email is a favorite of all generations, though less so with younger consumers. Older adults (Baby Boomers and Gen X) also rely on phone and in-person conversations, while younger groups (Millennials and Gen Z) prefer texting and social media.
Regardless of age, satisfied existing account holders are your best source of referrals. They’re most likely to become advocates and sing your praises, be it in a one-on-one conversation or a shared link to their entire social network. Your job is simply to provide the right tools for them to do so as easily as possible.
No matter the referral channel, satisfied customers are your strongest advocates.
Strategies for an Effective, Sustainable Referral Program
A successful account holder referral program will typically be:
- Well-Communicated. If account holders don’t know about your referral program, they can’t use it. Ensure the program is promoted in a number of ways, including in-branch, online via social media, by email and through targeted in-app messaging.
- Easy & Seamless. Nobody wants to jump through hoops to make a referral, so your program should be as simple and straightforward as possible. One-click links, pre-written messages and clear eligibility rules remove friction from the experience.
- Accessible Through Multiple Channels. Meet your account holders where they are. That means offering online referrals (links, social sharing in-app invites) as well as in-branch or phone referrals for members who prefer personal interaction.
- Rewarding for Both Parties. “Double-sided” rewards (incentives for both referrer and referred) provide the motivation to act.
- Don’t just count how many accounts are opened. Track acquisition cost, deposit balances, product adoption, retention and how many referrals the referred account holder makes. These KPIs can show the true value of your referral program.
- Make disclosures clear and coordinate with your legal/compliance expert. A simple terms and conditions page plus an internal process for verifying referrals can help keep the program safe and sustainable.
- Fully Automated. The right referral program can run like a well-oiled machine when backed by a proven system and data intelligence. If your financial institution doesn’t have the resources in-house, this is the perfect instance to bring in a third-party partner.
With these features in place and backed by satisfied account holders who advocate for your financial institution, referrals become an engine for long-term account and deposit growth.
Investing in a Turnkey Referral Program
Referred members are more loyal, more likely to spend and more likely to refer others. Building a user-friendly program that fits your account holders’ communication habits and rewards them accordingly lets you grow lasting relationships with bottom-line impact.
To discover the ease of implementing a profitable, fully automated referral program without the need for additional staff, contact CSI’s Velocity Solutions team today.
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Cindy Draper, Director of Account Acquisition and Training
Cindy manages CSI’s account acquisition solution, advises financial institutions on retail strategies, and leads the vision, curriculum development, and execution of all facets of client training. She has over 30 years of experience in the banking industry, which she began as a community banker, working her way up through the ranks from teller to vice president of retail banking and marketing. Before joining Velocity Solutions 14 years ago, she served as Senior Director of Sales and Marketing for a bank holding company overseeing 14 banks. She was also a member of the Treasury team, assisting ALCO teams with customer profitability and deposit pricing strategies. Cindy earned a bachelor’s degree from Doane University and is a certified trainer in Sales, Adult Learning, and Corporate Training.