Combining targeted online marketing with social media, Discover Financial Services will begin paying a $50 bounty during the first week of May for each referral who becomes a cardholder, according to a company executive.
Discover will pay for the rewards in the online “Refer-A-Friend” scheme through the Cashback Bonus credit card rewards program, Sanjay Gosalia, Discover director of online acquisitions, told attendees April 29 at the 23rd Annual Card Forum & Expo in Miami Beach, Fla.
Discover cardholders can earn up to $500 in Cashback Rewards if 10 friends are approved as cardholders, Gosalia said. The new cardholders, in turn, receive $50 rewards with their first purchase, he added.
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.
It is not the first time card issuers have paid cardholders for referring other customers; American Express Co. and Citigroup Inc., among others, have previously sent e-mail messages and direct mail offers to customers promising rewards of $25 to $50 for successfully referring friends as cardholders, industry observers say. But by leveraging targeted online ads and social media, Discover’s effort is broader and more integrated than any other competitors’ peer-referral efforts, Gosalia contends.
With its latest effort Discover is also building on earlier social-media marketing strategies that involved listening more closely to consumers through online forums.
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 Discover through e-mail, Facebook or Twitter, Gosalia said. The referral-bonuses will appear on cardholders’ statements during the following billing cycle, Gosalia said.
Initially, Discover will offer its friend-referral program online to cardholders when they are routinely redeeming their own Cashback Bonus points, Gosalia said, which is a key element of the strategy.
“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” in May, 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.
“The goal is to give the customer the opportunity to refer a friend for a Discover card when they are in the midst of doing something positive with their account or our brand,” he said. Cardholders could also receive the offer via e-mail, he added.
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 site, Gosalia said.
Visitors to Discover’s Web site 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 website 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.”
The company 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, and it involved taking some calculated risks.
“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.
