For various reasons, financial services firms are being seen as laggards when it comes to the adoption of social media marketing practices.
But experts on both sides of the Atlantic agree that to be a successful financial services company going forward, there must be some sort of social media presence.
The British firm VRL Financial News, London, declares that financial services companies need to emulate such players in the “nonfinancial” sector such as Apple and eBay when it comes to their social media customer engagement techniques.
On the other hand, VRL also has the same concerns for financial services firms over there that many observers have over here as well. The social media presents “a minefield of risks,” especially as it comes to dealing with rules and regulations. Plus, it said, “The tangible benefits can be difficult to measure.”
Still, said Evelyne Letawe, the author of a report for VRL, the social media can be an effective investment for financial services firms “and a foil to the current trend of disintermediation.”
There has been a paradigm shift, added customer service expert Brett King, who noted that it is no longer true that customers needed their bank more than their bank needed them. “This epoch of control on the customer is now over.”
San Mateo, Calif.-based Motista is suggesting its own solution to this issue: those banks that want to target the consumer that is most likely to become a brand advocate on its behalf should be focusing their efforts on mothers who are users of social media.
Motista said in looking at its data, it finds that “social media moms” are far more likely to try new products or services from their bank.
This group feels a stronger connection with their bank which has turned them into brand advocates. Motista said marketers should consider the following:
• Social media moms are twice as likely as nonsocial media moms to feel they belong with other customers of their bank (37% vs. 16%).
• Social media moms are two times more likely to feel that their bank gives them a sense of accomplishment (41% vs. 21%) and to feel their bank helps them achieve their personal goals (46% vs. 26%).
• Social media moms are more than twice as likely to say their bank actually helps them express who they are (35% vs. 14%) and say their bank improves family life (40% vs. 21%). They are also three times more likely to say their bank helps them be a better parent (32% vs. 11%).
As a result, the social media moms are five times more likely than other customers to forward information about their financial institution to a friend.
“While satisfaction levels with their banks are amazingly similar across all moms, social media moms definitely feel a connection to their banks their nonsocial media counterparts don’t,” said Alan Zorfas, chief product and marketing officer at Motista. “Social media moms are not only better customers, they are more likely to advocate for their bank and more willing to try new products—ultimately what every brand strives for. As financial institutions are upgrading their online and mobile presences, banks need to realize that social media moms are a key segment that they should target.”
Speaking about companies across all industries, Toronto-based social media expert Randall Craig commented organizations look at social media in one of two ways: they feel they need to block social media because it destroys productivity, or that they need to spend significantly on social media because they feel the need to “join the conversation.” Both of these views are overly simplistic, he said.
The position on destroying productivity makes the assumption that people, if left alone, will no longer meet deadlines, nor strive to improve in the eyes of their managers and clients. The truth is that the vast majority of people care deeply about doing a good job. Those that don’t care would simply abuse something else if social media weren’t around. Adds Craig, “Social media doesn’t destroy productivity; people destroy productivity.”
On the other hand, any social media marketing campaign must fit within the company’s overall marketing strategy and not be bolted on after the fact. “In both of these cases, social media success boils down to management,” says Craig, “It’s not new technology that creates productivity issues—it’s poor management that does.”
Managing social media may be easier than management thinks. “Developing social media strategies and internal policies is a good idea for many organizations,” he said. To develop a policy, management should sit down with the information technology staff, the human resources staff as well as marketing, legal and line managers “to help address the balance between productivity and market connection.”
Karin M. McGinnis, an attorney with Moore & Van Allen, Charlotte, N.C., said that in addition to the policies employers have on the use of company telephones, cell phones, email and computers, they need to put one in place regarding social media. And it must be periodically revised to deal with the changing technology.
She said social media is an easy way for employees to inadvertently disclose confidential client information.
An employee may be connected to a client on LinkedIn. That relationship is a public acknowledgement that they are doing business together. Companies allowing the use of social media in this way need to consider whether they are inadvertently allowing employees to make their customer lists public knowledge, destroying a potential trade secrets argument.
“Employers concerned about such use can take steps, such as requiring supervisor approval, imposing stringent privacy settings on customer connections, and requiring the employee to remove the connection upon termination,” McGinnis said.
Further backing up the “minefield of risks” feeling is data cited by business ethics expert Christopher Bauer. “Here are just a few of the frightening figures from Deloitte’s 2009 Ethics & Workplace survey:
• Only 22% of executives in their sample said they had formal policies regarding employee use of social networking.
• 24% of their employee sample did not know if their company has a policy for social networking use on the job and another 11% believed that their company has a policy but did not know what it was.
• Although 74% of employees surveyed believed that a company’s reputation could be damaged by social media posting, 53% still felt that their posts were none of their bosses business.”
Bauer agrees the answer is to have a written social media policy in place. “The stakes are simply too high given the significant ethical and legal risks that social networks and social media so easily provide. And, remember that a well-developed policy will also go a long ways towards supporting the very significant benefits that social media and social networking can and should be providing to your business.”
