MIAMI BEACH, FLA. — Combining targeted online marketing with social media, Discover Financial Services is paying a $50 bounty this week for each referral who becomes a cardholder.
Discover will pay the bonuses for its online "Refer-A-Friend" program as Cashback Bonus credit card rewards, Sanjay Gosalia, Discover director of online acquisitions, said Friday at the 23rd Annual Card Forum and Expo here.
It is not the first time a card issuer has paid for referring other customers; American Express Co. and Citigroup Inc., among others, have sent emails and direct mail offers to customers promising rewards of $25 to $50 for successfully referring friends as cardholders. But by leveraging targeted online ads and social media, Discover's effort is broader and more integrated than its competitors' peer-referral efforts, Gosalia said.
Through Discover's Refer-A-Friend program, cardholders who receive the online offer can click on links enabling them to invite friends to apply for a Discover card through email, Facebook or Twitter, Gosalia said. The referral bonuses will appear on cardholders' statements during the following billing cycle, Gosalia said.
Initially, Discover will pitch its friend-referral program online to cardholders when they are routinely redeeming their own Cashback Bonus points, Gosalia said. This process is a key element of the strategy, he said.
"Consumers redeeming points online will be presented with a screen telling them how they can earn $50 for each friend they refer who becomes a cardholder, which we think makes the offer more relevant because it's taking place within that positive context of actually getting that value earned from using their card," he said.
During the program's soft launch this month, Discover also will experiment with presenting the "Refer-A-Friend" offer to customers engaged in actions besides redeeming points, which could include talking to a customer service representative or resolving a problem, Gosalia said.
In another move that also is part of Discover's growing emphasis on social media marketing, the company in late March began inviting customers to write reviews of their experiences as cardholders, which appear on Discover's website, Gosalia said.
Visitors to Discover's website who click on any credit card offer can also see customer reviews; several dozen cardholder reviews also appear on Discover's blog, which is touted on the brand's home page.
Customer feedback on reviews posted to Discover's page is "80% positive," Gosalia said, and while Discover "monitors" posted reviews for appropriate content, it does not filter out all negative comments.
"We're letting customers tell about their experiences and speak to other prospective cardholders," Gosalia said. If Discover staff members see cardholders writing about a negative experience, "we take the opportunity to reach out to that customer and see if we can resolve the problem," he said. "It lets us see what we're doing well and what's not working, and allows us to provide service to individual customers who reach out to us."
Discover does not provide incentives to customers who write reviews in its online blog sections, Gosalia said.
Discover spent months planning its newest initiatives, which required broad support at the company's highest levels of marketing and management, Gosalia said.
"We had to decide to let go of the brand to some extent as we moved into social media, and it is working. There is an authenticity about it that can only come from real customers talking about real experiences," Gosalia said.
Discover cardholders can earn up to $500 in Cashback Bonus rewards if 10 friends are approved as cardholders, Gosalia said. The new cardholders, in turn, receive $50 rewards with their first purchase.
Discover cardholders can redeem the Cashback Bonus points they earn for referring a friend in the same way they cash in typical rewards points. Customers may redeem the points for merchandise or gift cards, or the value can be deposited into a bank account or applied toward balances on cardholders' credit card statements.
