The $50 bounty that Discover Financial Services recently began giving its customers for referrals is hardly unusual.
But what sets this marketing effort apart from so many others is the way Discover is delivering the offer, says Sanjay Gosalia, the director of online acquisitions for the company.
By combining targeted online marketing with social media, Discover aims to get more participation than it might with an email or direct mail campaign.
Initially, Discover will pitch its Refer-A-Friend program to customers when they are redeeming their Cashback Bonus points online.
They will be presented with a screen explaining how they can earn $50 for each friend who becomes a cardholder. They also will be able to click on links enabling them to invite friends to apply for a card through email, Facebook or Twitter.
The referral bonuses will appear on cardholders' statements during the following billing cycle, in the form of a Cashback Bonus.
Gosalia says targeting cardholders as they redeem rewards makes the offer more relevant. "It's taking place within that positive context of actually getting that value earned from using their card."
Discover also intends to experiment with presenting the offer to customers engaged in actions besides redeeming points, which could include talking to a customer service representative or resolving a problem, Gosalia says.
Dennis Moroney, a research director at TowerGroup, says he expects to see a lot more initiatives like the one at Discover, as card issuers rev up their marketing again.
But one challenge with tying in social media is the speed needed in determining whether an applicant is creditworthy. "If that doesn't get done quickly, you're going to lose that customer," Moroney says. "The reaction time that people expect is different than with a direct mail offer."
In another move that is also 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 the company's website.
Visitors to the website who click on any credit card offer can see the reviews. Several dozen reviews also appear on Discover's blog.
So far the customer feedback in the reviews is "80 percent positive," according to Gosalia. While Discover "monitors" posted reviews for appropriate content, it does not filter out all negative comments, he says.
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 says. "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.
Gosalia says Discover spent months planning its newest initiatives, which required broad support from the company's marketing and management teams.
"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," he says.
Under the referral program, Discover cardholders can earn up to $500 in Cashback Bonus rewards if 10 friends are approved as cardholders. The new cardholders also receive a $50 reward 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. The points can be used for merchandise or gift cards, or the value can be deposited into a bank account or applied toward balances on cardholders' credit card statements.
