What makes a good banker is the ability to think in linear fashion. What makes a bad marketer is the ability to think in linear fashion. For hundreds of years, banks think about acquiring customers in methodical progression – one client at a time. While a commendable and stable process, that thinking is in part why many banks are running in place gaining two customers and losing one. It doesn’t have to be that way and, in fact, it might be time to take a lesson from technology companies because they have been growth hacking for decades. While growth hacking is uncommon in banking, it is the standard operating procedure if you are three hipsters and a banjo trying to start the next billion dollar company out of a Palo Alto coffee house. As any start-up will attest, getting your name out with no budget, track record or brand not only takes hard work but creativity. Here, we look at some techniques that banks can use to spur not only arithmetic but geometric growth.
Set Up a Referral Program
While your bank undoubtedly has some sort of referral program, it is probably time to revisit it. New technology from companies like Ambassador, RewardStream, ReferralCandy and Amplifinity (some of our digital referral platform favorites) now bring scalability to the effort. This means more efficient tracking, better communication, and a structured methodology to leverage the effort. One of the best growth hacks of all time was in the early days of the cloud storage company Dropbox that offered an additional 500MB of storage for free to both the referral and the referee. This single idea alone was responsible for Dropbox going from 100,000 users to over four million in a little more than a year.
If you say to yourself, great but we don’t have storage to give away, we would retort that you actually do. For example, it would be easy to offer free storage of financial documents with a guarantee of the document’s safety and security or you can also leverage a VIP-style account, free services such as person-to-person transfers, or even a fee waiver. Northrim Bank ($1.6B, AK) does it (above) by giving away 5,000 Alaska Airline miles (HERE). The key is to create a structured referral program and then reward all parties for opening an account and/or utilizing a product.
Create a Free Viral Product
Similar to above, banks can take that free product and instead of using it for referrals, can give it away for all to use. Here, the goal is to give away a basic service, while charging for upgrades or ancillary services. When the email service Hotmail launched in 1996, it leveraged a free account to acquire new customers. On the bottom of every free email was the call to action, "Get Your Free Email at Hotmail." The advertising and product usage spread the word so their user base went from 20,000 to an impressive one million users over six months’ time.
While a bank doesn’t have email to give away, it can provide a free invoicing application, customer relationship management system, payment transfer application, credit rating application for business customers to use on their downstream vendors or personal financial application. There is an unlimited number of ideas and partnerships that a bank can create in order to speed a new product or service to market in order to acquire new customers. The goal here is to have a fixed cost that the bank can leverage and scale in order to acquire customers.
The next time you launch a new product, restrict supply. Customers always want to feel that they are part of something exclusive which is why special invitations, targeted marketing, and segmented branding works extraordinarily well as a growth hacking tactic. The social media platform Pinterest, when it first started, was invitation-only, but allowed users to request an invitation and allowed current customers to invite a limited number of friends. Once registered, Pinterest sent an email apologizing for the long wait and telling all that they are building something special and so are restricting the number of users to ensure a fantastic customer experience. This, of course, created a buzz and made users feel like they needed to be a part of the brand. From August 2010 to October 2013, the social media site went from 100k users to 70mm using the concept of exclusivity to drive growth.
While maybe not as viral as Pinterest, banks can offer a specialty branded warehousing line to selected developers for commercial or residential building. By creating a separate product brand and bestowing the line, developers can be recognized as being in the top 5% in their state. With each account receivable or payment that goes out through the cash management system, vendors will know that the quality of the developer is gold and backed by the bank. Soon other developers will want the ratings and prestige that come with the specialty line and cash management platform.
One of the best ideas in banking is to capitalize on the network of a partner in order to mutually grow your respective customer bases. This concept was behind YouTube’s success when it partnered with the then growing MySpace social network. YouTube made it easy for the 25mm MySpace users to share video by embedding video functionality within MySpace pages. Similar to our point above, YouTube absorbed the fixed cost of hosting the servers and developing the functionality. Meanwhile, the video application created more usage for MySpace users. It was a good marriage and YouTube gained more than a billion fans as a result.
Banks can create exclusive product offerings with viral features as above and then partner with a variety of community entities to help these partners provide more financial services. Maybe it’s partnering with an equipment manufacturer to offer a unique financing option or it’s providing unique checking accounts that help a cause in the community and then partnering with a church or business to jointly promote the cause. It also could be the bank creating an online financial educational series and then making that content available for a local university to use.
As we have shown above, these ideas can be combined and experimented with to help banks grow in exponential ways. The level of your budget doesn’t really matter and at times can even be a hindrance. What matters is the level of your creativity and energy as new ideas abound and new technologies are emerging. In one of the best marketing moves ever, startup WePay once froze dollar bills in large blocks of ice and left them outside a Paypal conference. Their point was to introduce a new payment network and underscore the fact that WePay allows access to your money sooner and cheaper. The stunt worked like a charm as not only did the press report the frenzy that took place as conference goers chopped frantically with keys and rocks to get the dollar bills, but WePay introduced a new and cheaper platform to a customer base that was already using online payments. Banks shouldn’t let start-ups have all the fun.
Submitted by Chris Nichols on May 26, 2018