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A customer referral program Ally Bank launched last year has become a “foundational part” of its marketing strategy, said David Hixon, head of product and lifecycle marketing at the bank.
The program accounts for about 15% of the Detroit-based lender’s account volume, Hixon said.
“A referral program is really hard. It’s hard to do,” Hixon said, clarifying that while the marketing part may be relatively easy, building the back end in a way that customers get paid appropriately can present a challenge.
After a small test to about 250,000 customers in early 2024 proved successful – “we didn’t break anything,” Hixon said – the bank played around with offers and new customer requirements and conducted a second test before a full launch in August.
Under the program, an existing deposit customer receives $50 when the referred customer opens a spending or savings account with Ally (up to five referrals). The new customer receives $100 once they take actions “that we deem skewing that account toward a more quality account,” like setting up direct deposit in a spending account, or a recurring transfer in a savings account, Hixon said.
Making Ally customers aware of the referral perk is crucial. Hixon’s team has been working on more ways to get the program in the hands of customers, since having to dig through an inbox for an email with a referral code is “a point of friction.”
Last week, Ally added a card that can sit in a customer’s mobile wallet and features a QR code that can be scanned by a friend, to initiate the account application process. The bank, which has digital savings buckets for its customers, is also working on a way to have payment from the referral program go directly into its own savings bucket, he said. Ally also plans to start using “moments of delight” to trigger communication promoting the program, such as when a customer isn’t charged an overdraft fee, he said.
Gen Z customers, by far, have the highest referral rate, Hixon said. “That group’s just more willing to engage with influencers, and that’s basically what the referral program is,” he said.
The $193 billion-asset bank is also seeing higher engagement rates with Ally employees who are also customers, and people who themselves are referred, pointing to a kind of snowball effect.
The next goal, Hixon said, is figuring out how to limit the number of people gaming the program to get free money. The bank wants to make sure it’s bringing in quality accounts, so it’s working to find a balance.