In today’s volatile political and economic climate, financial institutions are under more pressure than ever to grow responsibly and retain their customers. As advertising costs rise and consumer trust continues to erode, traditional acquisition channels have become less effective—and far more expensive. For banks, credit unions, and fintech brands alike, referral marketing has emerged as a powerful, high-ROI customer acquisition strategy that builds on the most valuable commodity in uncertain times: trust.
Financial Organizations Are Facing Unprecedented Uncertainty
The financial services industry has long been sensitive to macroeconomic shifts, but recent years have brought a new level of unpredictability. Aggressive rate hikes in 2023 introduced new risks to the financial landscape, while the regulatory changes and increased scrutiny that followed have created friction for banks when it comes to loan and deposit growth.
Add to that, consumers are more discerning than ever about where they put their money–and they have plenty of options. Earning their business in the crowded banking landscape has become largely a matter of earning their trust.
Stability Starts with Customer Stability
All institutions — from mega-banks to credit unions — face the same equation: your customer’s lifetime value must exceed their acquisition cost. When you consider the long-term impact of maintaining a loyal and profitable customer base, customer retention is no longer just a measure of satisfaction—it’s a hedge against risk.
In unpredictable times, loyal customers form the foundation of operational stability and long-term profitability. They’re more likely to stick with your institution during uncertainty—and more likely to bring others with them when confidence returns.
To build a solid foundation for resilient growth, start by identifying your most loyal, profitable customers. Then, set a goal to acquire more of them.
Strategies for Customer Acquisition in Times of Economic Turmoil
The Power of Trust and Loyalty in Driving Financial Decisions
In the banking industry, trust is everything. When consumers feel uncertain about the economy, they tend to be much more conservative when it comes to financial decision-making. In these low-trust environments, traditional marketing messaging holds less weight; consumers instead rely heavily on recommendations from people they know and trust. That’s why referral marketing, rooted in loyalty and personal advocacy, outperforms traditional acquisition strategies.
Driving “Earned Growth” Through Word-of-Mouth Advocacy
Instead of paying more ad dollars for the attention of consumers who are already hesitant, earned growth focuses on building off the foundation of your existing loyal customers. According to Bain & Company, businesses that prioritize earned growth—growth driven by referrals and repeat behavior as opposed to paid acquisition channels—outperform their peers in profitability and retention.
The financial institutions that thrive in the coming years will be those that foster genuine loyalty and word-of-mouth advocacy, driving high levels of earned growth.
Three Steps to Increase Earned Growth Through Referral Marketing
The power of earned growth lies in its self-sustaining nature—once you’ve acquired a base of high-quality, loyal customers, they become an autonomous growth engine, bringing in new customers organically and reducing your reliance on paid acquisition. Here’s how you can get to that point by designing a referral program that leverages the advocacy of your most loyal customers to generate a powerful source of new business.
1. Quality: Start with the Right Customers
Stable customers come from stable customers. You will always be able to attract a high volume of customers in the short-term when they are merely chasing perks like high interest rates. But those unstable customers have low retention rates, and end up costing you more in acquisition than they will ever be worth.
Research shows that referred customers are 115% more profitable over their lifetime and have a 67% qualification rate, with 90-day retention significantly higher than those acquired through other channels. In short, a strong referral strategy compounds value.
To ensure that your referral program is bringing in the most qualified customers, focus your spend on events that correlate with quality. Tie your referral rewards to qualified behaviors like making a deposit, or applying for a credit card–not just sign-up. This can actually increase conversion by 10-20 percentage points.
2. Onboarding: Remove Friction, Add Motivation
Even when referrals succeed, the onboarding experience can derail new customers. 40% of fintech signups abandon accounts, with the top reason being difficulties setting up direct deposit. Streamlining the onboarding process makes it more likely that new customers will begin engaging with products and services sooner.
Engagement is not always enough, so adding a clear onboarding incentive can help maintain the motivation that brought a referred user in the first place. Offering an additional bonus of $10 or $20 to users who sign up and make a deposit by a certain date can add that final push to users who may be more hesitant or disengaged.
3. Advocacy: Make Sharing Natural and Rewarding
Earned growth isn’t just about the initial acquisition—it’s a self-sustaining growth engine. Once you acquire a new customer, your next goal should be to nurture that relationship, fostering loyalty so referred customers can become brand advocates themselves.
Encouraging advocacy increases retention as well as acquisition; consumers like being rewarded for their loyalty, and doing so will strengthen their relationship to your brand. That’s the magic of relational commerce: when sharing is incentivized, growth and trust compound.
How to Know If Your Growth Will Be Resilient
What gets measured gets managed. To assess the strength of your acquisition strategy, track the following metrics:
- What percent of your new customers are coming from referrals?
- What percent of your referred customers activate accounts?
- What is the 90-day retention rate of referred customers vs. traditional customers?
- How many products do referred customers engage with?
- What is the average initial deposit value of referred customers vs. traditional ones?
These KPIs go beyond cost-per-acquisition—they measure the quality and longevity of your growth. Make sure you’re consistently comparing the quality of your referred customers with traditional customers. You’ll find where referrals are boosting your bottom line–or where your program might be falling short.
Referral Marketing Delivers Deeper Loyalty and Long-Term Resilience
In a market where paid channels are unpredictable and consumer trust is fragile, referral marketing offers something rare: sustainable, scalable growth rooted in relationships. It not only drives high-value customer acquisition—it strengthens loyalty across your base.
Launch and Scale with Extole
With Extole’s enterprise-grade referral marketing platform, financial institutions can create automated, scalable advocacy programs that deliver measurable ROI and deepen loyalty at every stage of the customer lifecycle. Schedule a demo to see how Extole can improve your bank’s referral program performance.
