Professional Documents
Culture Documents
Customer Value
By:UMANG MEHRA
JAYANT PRATAP SINGH
BISHWAJIT BARICK
ARTI DAGUR
REFERRAL PROGRAM
Referral marketingis a method of
promoting products or services to
new customers through referrals,
usuallyword of mouth. Such referrals
often happen spontaneously but
businesses can influence this through
appropriate strategies.
BIG QUESTION
MARK ????????
But is such company-stimulated
WOM effective?
Are customers who are referred by
other customers really worth the
effort?
CONTINUE....
TWO GROUPS
OF
CUSTOMERS
AQUIRED
THROUGH BANKS
REFEERAL
PROGRAM
Random sample of
customers
acquired through
other means such
as direct mail or
advertising.
CONTINUE...
The reason for this is that the customers who
make referrals are essentially matchmakers,
and good ones:
They bring in people who like the banks
products, services, location, hours, and fees
because these new customers are good
matches, they quickly find features they want
and are willing to pay for.
They require fewer marketing efforts than
nonreferred new customers, so they generate
more revenue at a lower cost.
value
90
80
70
60
50
value
40
30
20
10
0
26-35
36-55
above 55
Continue....
The basic reason behind this was
that the young customers have short
credit histories and financial track
records, data-mining techniques are
not very effective at identifying the
best prospects among them.
Referrals appear to generate
customers for whom the bank is a
good fit regardless of age.
Continue...
People prefer to keep an even balance in their social exchanges. Because referring
customers receive a reward, customers are likely to feel obliged to bring in new
customers who they think may be valuable to the company.
Most people would recommend a product or a service to a friend or family member
only if they believe it to be relevant and useful for the other person.
Having a person close to oneself who is a customer of the same company should
increase ones trust in the company and strengthens the emotional bond they have
with it. This effect implies that referred customers are less likely to churn than nonreferred customers, provided that their referrer does not churn either.
Acquisition through referral can also result in informational advantages, making
referred customers more profitable than other customers. Referred customers are
likely to have discussed the companys offerings with their referrer. As a result,
they are likely to use its products more extensively than novice customers who
take a more cautious approach in building involvement.
Referral programs should be most beneficial for products and services that
customers might not appreciate immediately. Products and services that imply
some sort of risk should also benefit more than average from referrals because
prospects are likely to feel the risk is lower when a trusted person has positive
experiences.