1. Unique Acquisition Methods –
Customized Customer Referral
Programs
November |2010

2. Unique Acquisition Methods – Customized Customer Referral
Programs
While customer referral programs are abound, few are conducted below the line,
aimed at one single individual, a strategy that can uplift acquisition rates
significantly vs. traditional referral programs.
Referral programs are nothing new. They’ve been around for decades in one form
or another, used by sales and marketing teams in various sectors to drive up
acquisition or to drive cross-sales of a given product or service.
As consumers, we’ve seen them in the telecommunications sector (with AT&T one
of the early pioneers), in banking (where Citibank has embraced the concept
heavily), in broadcast (where Time Warner Cable has turned its customers into an
effective sales force), among other sectors.
While above-the-line customer referral programs are an excellent way to reach
the masses and have proven themselves effective, it’s a variation on this approach
– customized customer referral programs – that should be the trend in the coming
years.
Thanks to business intelligence efforts, companies now know more than ever
about their customers – who they are, what they like and dislike, what products
or services they have an affinity to, how, when, and in what frequency they use
those products and services, how they prefer being contacted, etc. With this
wealth of information on hand, it warrants that referral programs can be bettered
– bettered to cater to each and every individual’s needs.
Just as business intelligence is being used to tailor one-to-one propositions aimed
at winning over an existing customer to deepen their relationship, so too should it
be used in customized customer referral programs. The goal here is to move away
from a mass offering to the entire consumer base, and to shift to customized
offerings to every individual.
We recommend a five-step approach be observed in developing and launching
customized customer referral programs:
1. Analyze Customers to Determine Product / Service Propositions – The first
step is to determine what it is that will be offered to the customer to win them
over. Traditional referral programs have just offered one basic proposition to the
masses (i.e. a month of free cable for you and your friend, one month free gym
membership for each person you bring in, etc.). The goal here is to really
understand what each customer appreciates and would be motivated by on an
individual level. By conducting analysis to see usage and spend patterns around
the entire product and service base, several if not dozens of offerings can be
developed. In a telecom, for example, this could be free local / international

3. minutes, free local / international SMS, free data, free value-added-services, free
loyalty program points, etc. What’s critical here is that companies go way beyond
one single mass offering and create many variations to cater to what their
consumer base truly desire.
2. Analyze Customers to Determine Amount to Offer – Based on the estimated
additional profits that may be generated from the referred lead, the amount to
offer must then be designed in the second step. An assumption must be made
here around additional revenues and profits, such that higher value customers are
more likely to refer similar customers – beyond that, higher value customers
would expect more to be motivated to refer a lead. As such, tiers of offers need to
be prepared around each product / service proposition (i.e. for a bank, 1 month
wire fee waivers, 3 month wire fee waivers, 6 month wire fee waivers, etc.), then
assigned to each customer in terms of what should be offered to them for
bringing in leads. Secondary offers should also be prepared, in case the primary
offer is not attractive enough for the customer.
3. Design Overall Program Rules – The rules around how the prizes should be
rewarded, and most importantly, when they should be rewarded should then be
defined. Most important here is that a reward not be given to a customer until the
referred lead becomes a customer and conducts a certain transaction. For
example, in one case from the telecom sector, a reward is given to the referrer
once and only once the referred customer makes a top up over a certain amount.
In another example from the banking sector, the referrer is given the reward after
the referred customer has kept a minimum balance in the opened account for at
least 1 month.
Based on the rules as well as planned offerings and some sound assumptions, a
business case should then be built to ensure the program makes sense from a
financial perspective. A revisit of what is rewarded to the customers may be
required based on the findings.
4. Prioritize Customers to Contact – The next step is to determine the approach
strategy, both in terms of who to contact in what order, and how to contact them.
Some lower-end customers, for example, should be approached with an SMS
offer. Others (VIPs, very high value customers) shouldn’t be contacted at all, as
such an approach / offer may offend them. Those deemed appropriate to call
should be prioritized based not just on value, but also on the potential they may
hold – in some sectors such as banking and telecom, the social circle of a
customer can be estimated, based on the wires and calls they receive – each of
those interactions represents a possible lead.
5. Pilot, Revise, and Go Live – A pilot should then be conducted with a small
sample of the base, so as to determine the effectiveness of the channels used, the
messages delivered, the timing of the messages, and the propositions themselves.
Findings from the pilot should then be used to revise the overall plan down to the
customer level, changing what is offered, when it’s offered, how it’s offered, etc.

4. The pilot should also be used to determine if the rules, processes, and back-office
operations are designed in an effective manner, able to seamlessly handle all
aspects of the program. Receiving a lead but not being able to follow through on it
would be the biggest failure possible of such an effort.

5. About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term
impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases –
intelligence, design and implementation.
For more information, please contact
info@forteconsultancy.com
Forte Consultancy Group | Istanbul Office
www.forteconsultancy.com