Referred borrowers tend to be better known to the community and easier to qualify, which is why referral is one of the most valuable channels an MFI or SACCO has. But a poorly designed referral scheme can cost money and produce names that never convert.
Decide what you are rewarding
Reward outcomes, not introductions. Common definitions of a successful referral:
- The new member has paid membership fees and minimum share capital.
- The new borrower has received and made the first repayments on a loan.
- The new saver has kept a minimum balance for three months.
Choose rewards members value
Cash through mobile money is simple and transparent. Alternatives include airtime, a reduced interest rate on the next loan, a dividend bonus, or entry into a draw. Whatever you choose, publish the rules clearly.
Get consent from the person being referred
A member giving you their neighbour’s number is not that neighbour’s consent to receive marketing. Treat referred names as warm introductions: make the first contact a personal call or visit, explain how you got their number, and ask whether they want to hear more. Record their answer.
Track every referral to the end
Link each new prospect to the member who referred them, and track the prospect through to conversion. This is what lets you pay rewards accurately and see which members are your best ambassadors.
Prevent abuse
- Pay only once a referral meets your outcome definition.
- Do not pay staff and members for the same referral.
- Watch for unusual patterns, such as many referrals from one member that never repay.
Celebrate your top referrers
Publish a monthly leaderboard at branch meetings and AGMs (with permission). Recognition is often as motivating as the reward itself.