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How to secure borrowers with a CRM: Develop a referral program

Joseph Lowe
Posted by Joseph Lowe
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Are you more likely to trust an advertisement or a friend’s advice?

According to Nielsen’s Global Trust in Advertising Report, you’re more likely to trust people you know over advertising formats; 84 percent of respondents prefer recommendations from peers.

While it’s no secret that consumers seek input from friends when researching products and services, it’s important to understand why and how to leverage this trend in your financial institution’s relationship management efforts. Everyone has one friend or family member to run to and ask financial advice – even if it’s to ask where to get advice. In fact, over 60 percent of financial advisers are hired through referrals according to a Washington Post article.

Personal referrals similarly hold strong sway when people seek advice on borrowing money. A referral program is a marketing method in which customers are encouraged to tell others about a product or service. When financial institutions can develop referral programs that attract borrowers via loyal, existing account holders they not only win new clients, they also solidify the relationship with the existing client.

A customer relationship manager (CRM) is a great tool to grow your community institution’s business through a referral program as well as improve offerings and make borrowers happier through customer service. Here are three tips for using a CRM to increase referrals to your financial institution.

Recognize connections through global cash flow

First, tap into the power of understanding a client’s global cash flow situation through your CRM. In doing so, lenders gain insights into a borrower’s relationships within the community and how those friends and family might benefit from banking with your institution. Take this scenario, for example. Perhaps Anne, who owns a home with her husband Bob, runs a flower shop downtown. Anne has partnered with your financial institution for 10 years. Her husband Bob also owns a small business, and, through the financial statements provided to your institution, you can see both businesses are thriving. However, Bob’s business banks with a rival institution down the road. Through a custom-built CRM, lenders can recognize the potential opportunities in banking with Bob’s business and capitalize on its relationship with Anne.

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Identify the state of the relationship and capitalize on it

Second, the institution can identify whether the banking relationship is a positive one and ask for a recommendation. During the loan review process, banks can survey the customer to identify ways to improve the lending process and whether or not the customer is happy with service. Institutions can create an easy-to-use email template to send to borrowers that identifies potential pain points during the lending process. It’s important to distinguish what communication method the borrower prefers to maintain a good customer experience, whether it’s by phone, email or text message. According to Salesforce’s State of the Connected Customer report, 72 percent of people expect vendors to personalize engagement to their needs.friend-referring-bank-in-office

After identifying the borrower has had a positive experience, banks or credit unions can send a personalized email to the happy borrower that asks about any friends that might be interested in partnering with your institution. For Anne and Bob, a CRM would allow lenders to recognize that Anne prefers email communication, so the institution can send an email asking for a referral based on her positive experience. Since the lender knows of Bob’s business, the email can specifically speak to how the institution can aid Bob in his future endeavors.

Collaborate with the borrower and track communication

Once the referral has been confirmed with the happy borrower, monitoring a referral request is a critical part of the process, as many borrowers are just too busy to provide a good referral. It’s important to be mindful of this and make the referral process as painless as possible. An easy way of doing so is being proactive and providing an email template for existing borrowers to send along to friends that might be a good fit for your community institution.

It’s important to track the progress of communications during the referral process. A sufficient CRM allows for ticklers to be sent to designated users when a response is necessary. In the case of Anne and Bob, institutions can send a unique message through their choice email provider and have all inbound emails assigned to a specific group to track all communications with its CRM.

For borrowers who are hesitant to offer a referral, a CRM allows for communications that can potentially encourage referrals and bolster the relationship. Through a CRM, financial professionals can fortify themselves as thought leaders in banking by sending valuable content in the form of newsletters, whitepapers or blogs. According to Google’s Zero Moment of Truth study, the average buyer now engages with 10 pieces of content before making a purchasing decision. Sending valuable content to existing customers can extend content’s reach to include potential borrowers within their network. While the referral may not be as direct as a personalized email from a friend, it can still lead to more business for the bank or credit union down the road.

Developing a referral program for community banks can be challenging, but it can also be a valuable method of gaining loyal and highly-profitable borrowers. Customer acquisition through referrals can be another way for community banks to increase revenue. A CRM built especially for banks and credit unions can help make developing a referral program easier.

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tags: CRM, relationship manager