Acquiring new customers through referrals is less expensive than other methods — but it could still be much cheaper.

Retail banks have frequently run campaigns that ask existing customers to refer new customers to open accounts. For their trouble, both are rewarded with a cash bonus, typically $25 to $30.

But the back end of such campaigns is far from simple: In many cases, customers must print PDF forms, fill them out and submit them to banks, which in turn have to process the information and track consumer responses before they distribute the signing bonuses.

The bank technology vendor Geezeo Inc. of Tolland, Conn., plans to change all this.

Its Referral Engine, launched this month, is an attempt to automate the process, as well as improve the efficiency and reach of such campaigns.

"The whole idea is to get more volume" of new customers, Jim Craig, vice president of marketing at 1st Advantage Federal Credit Union, said of the Geezeo referral engine. "If I can get an increased number of members, it is a way to lower my acquisition costs overall."

1st Advantage Federal Credit Union, of Yorktown, Va., says it costs between $50 and $75 per customer to manage a referral campaign, for which it typically pays $25 for the new customer as well as to the referring customer. (By contrast, it pays about $300 — near the industry average — to acquire customers by other methods, such as through direct mail promotions.)

The credit union, which uses both Geezeo's personal financial management platform, offered via core processor Fiserv Inc., of Brookfield, Wis., and the cross-sell marketing engine associated with it, began testing the referral engine in early April.

1st Advantage, which has 60,000 members and $550 million in assets, gets up to 70% of its members from referrals.

Craig described the credit union's earlier referral campaign process as inefficient and time-consuming.

The credit union had referral cards in the branches. Members had to visit a branch, pick up the cards and give them to friends, who would then have to visit a branch themselves to sign up for an account. Credit union associates then had to enter the promotion information into the credit union's computer system and track activity.

"We are shifting away from printed forms, flyers, newsletters, printed ads and emails," said Peter Glyman, chief executive and co-founder of Geezeo.

The engine lets financial institutions cut down on the time of creating the campaigns by reducing the steps to about six screens.

The product sets the parameters of the campaign, keeps track of customer inputs and collects metrics on the back end about performance.

On the front end, it lets customers post to Twitter and Facebook with an embedded link about the offer. The engine can be used for accounts opened online and at branches.

The product may be making an appearance at the right time, industry experts said.

"Banks are desperately searching for ways to steal share from competitors," said Sherief Meleis, senior partner at Novantas LLC in New York.

Meleis said the issue was not so much the efficiency of referral programs but how to increase the number of customers that such programs sign up.

"The lifetime value of customers is around $3,000, so you will pay $250 for a customer that sticks around," Meleis said. "The real issue is, how do you get more of them?"

Referral campaigns have other tangible benefits as well, experts said. For example, good customers tend to attract other good customers.

And by including a social media component, the referral engine can expand a financial institution's base of followers to even larger audiences of good prospects.

Craig says 1st Advantage has about 400 friends on Facebook, but an individual Facebook user "may have another 100 friends we don't talk to ever. This expands our reach on Facebook by another 100 people, many of whom will be local."

Mark Schwanhausser, a senior analyst for Javelin Strategy and Research, said that while customers are generally uneasy about having a relationship with their financial institutions on social networks, his research indicates that customers are more willing to receive marketing communications through such channels.

According to a March survey of 5,000 consumers, 15% of respondents said they were either likely or extremely likely to receive updates on promotions or discounts from their primary financial institution over a social network, Schwanhausser said.

Consumers are much more resistant to other kinds of communications from their primary financial institution on social networks, such as alerts or transactional information.

"It will be an easier place for banks to go, rather than anything that involves financial transactions," Schwanhausser said.

Bryan Clagett, chief marketing officer for Geezeo, said he foresees tying the PFM engine's data mining and cross-marketing capabilities to the company's referral engine.

Generally speaking, banks' PFM users have more relationships with their primary financial institution, including deposit accounts and online banking and bill payment relationships, which in turn might make many customers more comfortable about making referrals.

"You could use this to target customers," Clagett said. "We can serve up banner ads or tile ads with the referral engine offer."

One analyst said the referral engine was a good first step, but customers also have to be matched with suitable products that keep them at the financial institution.

"Customer acquisition is the most difficult part, but how will you manage this relationship over time?" said Jacob Jegher, senior analyst at the research firm Celent, of Boston.