From apathetic to engaged: How can social media work for financial service providers?
The recent mass proliferation of social media tools including networking sites, blogs, social bookmarking, review and opinion sites are now offering individuals the opportunity to interact with potentially vast audiences – radically transforming the way that people communicate, with each other and, increasingly, with businesses. Widespread consumer preference for social media offers businesses the opportunity to not only connect instantly with large audiences but also, uniquely, to target individuals and communicate with them on a one-on-one basis.
The habits that consumers have adopted on mass peer-to-peer networking sites such as Facebook, YouTube, MySpace and Twitter are spilling over into their business interactions. Consumers can now use review sites to leave product feedback, blogs and micro blogs to praise or critique products, networking sites to join product fan clubs, forums to discuss products or services with other consumers and video sharing sites to share promotional clips. And with 48 percent of Generation Y and 25 percent of Baby Boomers already having social networking profiles (The New Conversation: Taking Social Media from Talk to Action, A Harvard Business Review Analytic Services Report), it’s not just younger audiences that are aficionados.
This offers two important opportunities for businesses (including financial providers): as part of an integrated communications strategy and as channel for delivering customer service.
Social media as a marketing channel
As a marketing channel, social media can draw in and engage new audiences – a radical departure from traditional online marketing strategies that typically involved ‘pushing’ information at audiences through search engine optimisation and advertising. Instead, social media offers the tools to help engage consumers and influential individuals in dialogue and provides them with impartial advice and guidance – and at relatively low cost compared to traditional marketing channels.
Tools such as blogs, independent thought leader contributions and impartial advice sites and forums can help organisations position themselves as experts, gaining consumer trust and earning word of mouth ‘promotion’ rather than paying for it. Information and advice is provided in an ‘impartial’ voice with the objective of generating positive user generated content – critical, as the vast majority of consumers now trust information coming from independent experts or their peers more than directly from organisations.
In addition, social channels can be used as a form of market research to help better understand customers’ needs and find out what they are saying about a brand. Some businesses do this by monitoring, collating and analysing conversations taking place about them or their products and services across social media sites, using sentiment analysis tools to gauge how positive or negative the conversations taking place are. Other organisations get customers involved in product design blogs, getting input from consumers about how to design a product that really meets their needs without having to commission dedicated and often costly market research.
In addition to the role it can play in a pre-sales environment, social channels are also important in communicating with existing consumers. With 70 percent of consumers in the US now claiming to want access to company experts and support via social media channels (a trend that is likely to be replicated globally), social media is no longer considered an ‘alternative’ customer service channel but an essential one for businesses that want to benefit from communicating with customers on their own terms.
Social media for customer service
Adopting social media as part of a customer service strategy may initially involve reactively responding to comments, queries or complaints on third party sites where audiences are already congregating. By responding quickly, providing answers and preventing negative feedback escalating into bad PR, this can be a significant contributor to building brand equity. With only the internal resource to manage the channels required, it is also relatively simple and cost effective to carry out. The New Zealand bank ASB, for example, has broken new ground by setting up an online Facebook branch that allows users to chat in private with an advisor just by logging in to their Facebook account, rendering a phone call or visit to the ABS website redundant.
The alternative to this – creating completely new social networks – is significantly more difficult and the challenge of attracting visitors is great. New networks require substantial investment to establish and build up, though can also be rewarding – some businesses build forums that let customers speak to each other and to company advisers, others offer new industry related networking or advice sites targeted at their prospective customers.
Web enabled mobile devices
Web enabled mobile devices such as smart phones and tablet computers are also changing the way that customers expect their service to be delivered. These effectively ‘tether’ users into their social networks by letting them access the internet and social media content whenever and wherever they are. There are now 650 million people globally (eMarketer) who are now using web enabled mobile devices,43 percent of whom access social networks via these devices (ComScore) – a trend set to continue as it is predicted that more users will likely connect to the Internet via mobile devices than desktop computers within five years.
This rapidly growing mobile channel needs to be taken seriously. First, published content needs to be compatible with mobile devices as users will quickly dismiss anything that doesn’t display or function properly. Next, mobile devices mean messages that are sent to customers via multiple channels such as email, micro-blogging sites, networking sites, SMS messages or forum updates and can be received and responded to immediately.
An example of this is Bravura Solutions’ mobile device (i.e. smartphone or tablet) enabled customer front end, ePASS. ePASS allows customers to receive messages log in to their superannuation accounts and perform action on their accounts via the web, whilst on the move.
Mobile devices also enhance the ‘word of mouth’ power of a message as well having a significant impact on the instantaneous nature of the channel. Customers can communicate with others and content received can be shared almost instantly with others via Tweeting, posting on a blog or forwarding by email. Innovative financial providers looking to gain a competitive edge should certainly be exploring ways to engage directly with customers via this phenomenally important mobile internet channel.
How to make social media work for your business
There is broad consensus that, as a marketing and customer service tool, social media can promise tantalising rewards, despite a lack of concrete results. Recent Celent research with insurance companies (Digital Marketing in Insurance, April 2010) shows that 85 percent of respondents said that ‘spending in social networks would increase in the next three years’ – a definite stamp of approval for the perceived effectiveness of the channel.
However, as with any marketing communications tool, for social media to work, defining both internal and external strategy is critical. Benchmark and agree on what you’re trying to achieve from external strategy and set up measures to track your success. Guidelines for use of social media by employees should also be set – it’s hard to be serious about a social media strategy if key individuals have no access to the tools.
Once established, resources to manage the channel must be made available. Businesses who don’t take this requirement seriously and who subsequently fail to be involved fully in conversations that are taking place about them will see criticism quickly escalate (and a dissatisfied customer has the potential to tell significantly more people than they would do offline). As a channel, social media is widely underfunded. This is because of a combination of two things: a difficulty in measuring return on investment, and a mistaken belief that, because publishing costs are comparatively low, social channels require little ongoing investment.
Instead, it is important to be realistic about the real cost of the essential and ongoing monitoring, updating and tracking efforts required. Investment in social media must be viewed as part of an extended pre-sales conversation rather than a direct sales tool. As such, more sophisticated analysis is needed to measure its success, from tracking how many conversations with prospective customers it facilitates to using sophisticated customer sentiment analysis tools that can measure how positive or negative the conversations taking place are.
Social media has fundamentally changed the rules of online interaction and marketing for good. Consumers are still mostly tolerant of antiquated communications channels, but quite soon they won’t be. Providers that haven’t successfully adopted and integrated social and mobile channels into their marketing and customer service strategies can be sure their competitors will have and, as a result, they will be engaging in conversations with their target audiences and ultimately winning new business.