The power of social media will have a significant impact on the way financial services companies conduct business. The retail industry is rapidly demonstrating that from connecting directly with end customers to engaging with employees and collaborating with partners, social media provides a significant value proposition that companies ignore at their peril. As penetration of social media increases exponentially, the potential for companies to foster customer loyalty and accelerate growth using social media increases rapidly. Banks have dipped their toes in the water with Facebook pages and Twitter accounts, but they also need to think beyond these applications. This article looks at what steps the financial services industry can take to help shape successful social media strategies.
Engaging Consumers in Financial Services
Today’s consumers demand high quality, consistent service across channels and low-cost tailored products. With banking products becoming commoditised and consumer trust in financial institutions at an all-time low, buying behaviour has changed and consumers have become effective at filtering out marketing messages. In fact, in Paul Gillin’s book, The New Influencers, he says that “young people are so convinced of the value of peer networks that they will trust the advice of a total stranger over that of a professional marketer.” As such, organisations now have to earn the right to get consumer attention.
Social media is at the centre of these changes. The social web is buzzing with conversations about companies, their products and services, their branding and their ability to meet customer expectations. Therefore, to get messages across and engage with customers, it is essential that companies become a part of these conversations. Only by doing so will they be able to listen to consumer views, work to change and shape opinion, address issues, and foster customer loyalty.
The regulated nature and sensitivity of the information that the financial services industry deals with adds to the complexity of engaging with consumers. This is more than the community accidentally coming to know that you just bought bright orange shoes or ‘like’ one of the reality show TV stars. Banks can’t afford to have a client’s payment transaction or account balance details being revealed accidentally or otherwise.
How Should We Engage on the Social Web?
Social media is changing the engagement process for consumers to the point where satisfaction levels are being influenced by other customers and opinion leaders. Retailers actively seek feedback through ratings and comments. Amazon’s product pages are filled with customer discussions on the pros and cons of the product. Some of them seem to be sponsored comments to counter the negative comments, but on the whole the buyer gets a wealth of information to consider before taking a decision and this acts as an incentive to contribute back to the community. Clearly financial services firms are far from this level of maturity, but if they don’t participate in the conversation with customers, third party mediators will step in and capture the mindshare of their customers. This is what firms such as mint.com are doing.
Given these challenges banks need to keep their first steps simple and focused. According to your firm’s market position and strategy, determine a couple of key benefits you would like to realise from engaging with customer using social media. Some leading objectives are:
- Brand building: social media will play a significant role in establishing trust in your institution especially in crisis management interactions. For example, if a bank wants to announce discounted rates to transfer money to a disaster affected country or donations, they can request the bank’s community to spread the word. Such requests are a great way to win the community’s love and respect.
New service launches: social media can create an infectious buzz before launching a new financial service. Blogs and video interviews on the launch create awareness and generate targeted interest. Discussions around these media assets can be monitored to influence the early stage opinions and also take steps to dispel concerns arising due to lack of understanding of the product/service.
Marketing campaigns: social media campaigns can encourage customer participation that is inclusive and delivers increased sales. The key is to stop thinking in terms of pushing a message. Executives need to think of ways to get the target audience to engage with the bank. Your campaign is a natural outcome of that interaction. In an effort to reach out to a younger target audience between 17 and 25, Young & Free Alberta, a credit union, created a ‘community’ to connect with consumers and discuss their priorities. The result was a US$4m increase in new deposits across 2,000 new accounts.
Customer service: Facebook and Twitter are being used successfully by Citigroup, Bank of America and USAA as a customer service channel. By solving customer problems in a social forum others see an institution’s customer care effort in action. Customer service is a great starting point for banks because it provides low cost of entry and a direct engagement mechanism.
Regulatory bodies such as the Financial Industry Regulatory Authority’s (FIRA) guidelines on use of social media are definitely helping bring a lot of clarity from a regulatory perspective. There is also the emerging concept of closed communities to ensure that the identity of community members is validated by the community anchors and mediators. These changes will help financial services expand the scope of their customer engagement through social media objectives and drive innovation.
Critical Success Factors of a Social Media Strategy
Successful banks strive to engage consumers and convert them from being spectators, who browse content and consume products and services as individuals, to active participants who become brand advocates and encourage their networks to follow their choices. Unlike retailers, Banks are struggling to determine the use of social media to promote boosterism. Financial institutions need to consider the following factors as they build social buzz strategies:
Uncover mutual sources of value: engage in a dialogue with customers around common concerns where mutual value can be created. For example, American Express has a successful small business community and Citigroup has created specific investment communities for women to encourage engagement from this specific demographic. Use such forums to enhance quality and reduce customer service costs. Nurture the forum to encourage sharing of ideas with and among the community members.
Educate and empower employees: social media takes transparency to a whole new level. There is very limited control over the information that an employee could share with a customer during a social media interaction. Similarly a client comment on the bank’s service could become visible to all community members and even ‘go viral’. Hence, it is critical that you make employees aware of corporate policies and guidelines on use of social media. At the same time, adoption and effectiveness will be limited if employees are not empowered and have to go through multiple time consuming approval processes for their social media interactions.
Think multi-channel: social media shouldn’t become a standalone channel. Banks invested time and effort to integrate online, branch, and call centre channels. Creating a standalone social media channel could take you back to ‘square-one’ in the multichannel integration efforts. Invariably, customer specific interactions will have to move from social media to a more secure and private channel: online, branch, phone, etc. But this shouldn’t mean that the customer has to repeat everything all over again.
Actively monitor, measure and respond: analyse activity, key words and nature of dialogue to identify members active in the social media forums. Look for ideas to improve service or create new product gain momentum. Take visible action on suggestions and feedback so that the community feels that their bank cares for them and is listening to them.
There are a number of technologies available to enable these steps. The selection of a specific platform should be determined by the bank’s existing technology portfolio. There might be opportunities to extend existing content management and workflow tools. Social media-specific tools like social media analytics will be incremental investments. More than the tools the challenge is around clearly defining the objectives and associated strategy.
USAA monitored their social media effort and found that it drove sales, product and service strategies. From its initial implementation in March 2009 through December 2009, USAA received 16,275 reviews across various line-of-business areas. Members gave average product ratings of 4.4 out of a possible five stars. Among these reviews, USAA ultimately approved and posted 14,159 on USAA.com – an approval rate of 86%. USAA saw a significant uptick in its online applications and quotes that resulted from its ratings and reviews.
Clearly there is value to be unlocked from this fast growing channel.
With customers rapidly adopting social media and expecting similar interaction channels from their banks, financial service firms find themselves in unfamiliar territory. They are unsure of where to take their next step. There is no escape from social media’s ever growing popularity. Firms wanting to attain leadership should take iterative steps to incrementally prepare their organisations to effectively use this new channel. It will be a continuous process: ‘listening’ to stakeholders, ‘engaging’ them in mutually beneficially conversations, and taking visible ‘actions’ on their feedback.
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