Article

Peter Cunningham
Peter Cunningham 16 October 2017

Bravo, Nationwide. Bravo

If you open a newspaper or watch TV you will see Nationwide's excellent refer-a-friend programme, where their 15 million existing members can share the love and invite their friends to switch their current accounts. They get £100 if their friend signs up, the friend gets £100. Everyone - including Nationwide - is a winner.

Nationwide refer-a-friend newspaper advert

I opened up a newspaper today. The usual procession of sensationalised nonsense, global tragedy and 14-year-old celebrities frantically trying to rewind their educations. It took about 30 seconds to read, but then the very last page - the back cover, in fact - caught my eye.

There it is, up there in the picture. A full page advert for the Nationwide Building Society. Nothing out of the ordinary there, right? People need financial services, banks and building societies need to tell 'em where to get 'em. But this ad wasn't selling current accounts. Or mortgages. Or even Smart Junior ISAs (guess what my five-year-old's getting for Christmas!).

It was for Nationwide's excellent refer-a-friend programme, where their 15 million existing members can share the love and invite their friends to switch their current accounts. They get £100 if their friend signs up, the friend gets £100. Everyone - including Nationwide - is a winner.

But wait. There's more. I get home, pour myself a large Lemsip & tonic and turn on the TV. And look what's on: an advert for Nationwide's refer-a-friend programme. Right there. On my telly.

Nationwide refer-a-friend TV advert

Full page adverts, TV campaigns: Nationwide are going BIG on this whole referral thing - and that's no surprise. Back in 2015, AOL and the global consulting firm, Oliver Wyman, issued their research detailing the paths customers take before switching their bank account. Of the 1,743 people surveyed, 44% cited personal recommendations from friends, family and co-workers as playing a significant role in helping them choose a new current account provider - by far more than any other factor, including advertising.

That was nearly three years ago. Since then, FinTech disruptors like Monzo, Starling and Tandem have taken their cue from the daddy of all FinTech disruptors, PayPal, putting referral front and centre in their customer acquisition strategies. Suddenly, it's impossible to open up a shiny, new money app without being encouraged to invite your friends. And, unsurprisingly, that approach has attracted the interest of the high street banking giants, as they look to muscle up and protect their territory.

But those traditional banks and building societies aren't just trying to keep up with the Millennial Joneses; they're also doing what FSIs do best: they're counting the beans. According to The Financial Brand, the cost-per-acquisition for financial institutions is anywhere from $250-$400. However, even once you factor in rewards for referrers and incentives for their friends, the average CPA drops to $110-$175 when the acquisition comes via referral. Now, I'm no banker, but the back of my envelope says that referral can net you $140-$225 per customer. Which pays for a whole lot of pens on chains.

And referred-in customers are more loyal and more profitable, too. According to the Harvard Business Review, "referred customers are, on average, about 18% more likely than others to stay with their bank... [and] generate 16% more in profits". So, customers acquired via referral are cheaper to acquire, generate bigger returns and stick around longer. Little wonder, then, that Nationwide are by no means alone when it comes to arming their marketing department with a powerful referral programme. See that scrolling list below, flashing by at a million miles an hour but seeming to take forever to get to the end? That's just some of the hundreds and hundreds of banks and credit unions running refer-a-friend schemes in the US alone, including big hitters like Charles Schwab, HSBC, Citibank and Capital One:

When will it end?

But let's get back to what brought us here: Nationwide's huge advertising campaign celebrating their referral programme. It's not just that Nationwide have a programme; it's that they're using it as the backbone of their consumer marketing. And that's a smart move in a sector that's now so mature, with so many players offering identical services, it's essentially become commoditised.

For a while, banks tried to one-up each other by shouting about how many ATMs they had, their super-convenient opening hours, the lovely smiles on the faces of their staff. But these weren't differentiators; they were just the basic stuff you needed to offer if you were going to run a bank in the 21st century.

So, just like Coke markets happiness instead of fizzy, brown sugar-water, the banking sector started to implement a classic branding strategy for commoditised markets: target the heart, not the head. Barclays stopped getting a super-sinister Sir Anthony Hopkins to big up bigness and started featuring shirtless dads hugging babies in their ads instead. More recently, Natwest have tapped directly into the anger people have felt since the 2008 financial crisis, issuing their emotionally overwhelming 'We are what we do' campaign, featuring "stupid" football hooligans, melting icebergs and a bank worker whose expression seemingly reads: "Today, I absolutely will not issue any sub-prime mortgages, plunging hard-working people into unmanageable debt".

Barclays

But Nationwide's campaign is something altogether new. It's an acknowledgment that it's not just the message that needs to change; it's the medium. By using traditional media to support word of mouth - and not the other way around - they stand a significantly better chance of reaching, and activating, potential new customers. Their newspapers might not get those potential customers to switch their current accounts. Their TVs might not persuade them to make the jump. But their friends? That's some clever thinking, right there.

So bravo, Nationwide. Bravo.

Now, who's next?

Please login or register to add a comment.

Contribute Now!

Loving our articles? Do you have an insightful post that you want to shout about? Well, you've come to the right place! We are always looking for fresh Doughnuts to be a part of our community.

Popular Articles

See all
Digital Marketing Vs. Traditional Marketing: Which One Is Better?

Digital Marketing Vs. Traditional Marketing: Which One Is Better?

What's the difference between digital marketing and traditional marketing, and why does it matter? The answers may surprise you.

Julie Cave
Julie Cave 14 July 2016
Read more
3 Social Media Trends to Follow in 2018

3 Social Media Trends to Follow in 2018

Discover three big trends that will have the impact on social media in 2018 - from ephemeral content, to influencer marketing and augmented reality.

John Siebert
John Siebert 15 November 2017
Read more
4 Important Digital Marketing Channels You Should Know About

4 Important Digital Marketing Channels You Should Know About

It goes without saying that a company can't do without digital marketing in today's world.

Digital Doughnut Contributor
Digital Doughnut Contributor 5 November 2014
Read more
Amazon is the new Google for Product Search

Amazon is the new Google for Product Search

Amazon has become the top place consumers go on the Internet to search for products. In a Raymond James study published in early 2017, 52% of people said that Amazon is now their first choice for product searches. Here’s how you can get to the top of Amazon’s results and stay relevant

Brian Beck
Brian Beck 21 November 2017
Read more
Top 10 B2B Platforms to Help your Business Grow Worldwide

Top 10 B2B Platforms to Help your Business Grow Worldwide

Although the trend of a Business to Business portal is not new but the evolution of technology has indeed changed the way they function. Additional digital trading features and branding has taken the place of traditional outreach methods to get in touch with targeted buyers or sellers.Here are some of the best and fastest growing global B2B platforms that are helping thousands of businesses in the world to grow and reach their international and local clients.

Salman Sharif
Salman Sharif 7 July 2017
Read more