Today’s Social Network Is Yesterday’s

Dateline: April 2008, Toronto, Canada

Scotiabank announced that it is using technology from Microsoft to introduce an internal Web 2.0 social networking platform aimed at encouraging information sharing and collaboration among its staff. Robert Fournier, SVP, Enterprise Architecture and Methodology, Scotiabank, said: “By leveraging the knowledge and experience of the Scotiabank team with a business focused social networking platform we are enabling staff to better serve customers by sharing best practices and identifying experts and skill sets regardless of geographic and organizational boundaries.”

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Dateline: April 2003, Toronto, Canada

The Bank of Nova Scotia announced that it has implemented a new Intranet Portal using Microsoft technology aimed at encouraging information sharing and collaboration among its staff. Rachel Threemont, VP, Internet Technologies at the bank said: “By leveraging the knowledge and experience of the Bank of Nova Scotia team with a business focused intranet portal platform we are enabling staff to better serve customers by sharing best practices and identifying experts and skill sets regardless of geographic and organizational boundaries.”

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Dateline: April 1998, Toronto, Canada

The First National Bank of Nova Scotia announced that it has implemented a new knowledge management application using Microsoft technology aimed at encouraging information sharing and collaboration among its staff. Richard Toofer, VP, Knowledge Management at the bank said: “By leveraging the knowledge and experience of the First National Bank of Nova Scotia team with a business focused knowledge management application we are enabling staff to better serve customers by sharing best practices and identifying experts and skill sets regardless of geographic and organizational boundaries.”

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Dateline: April 1993, Toronto, Canada

The First National Bank of Halifax announced that it has reengineered its information sharing and collaboration processes using Microsoft technology. Rose Oneoff, the bank’s reengineering czar said: “By leveraging the knowledge and experience of the First National Bank of Halifax team with a reengineered business process, we are enabling staff to better serve customers by sharing best practices and identifying experts and skill sets regardless of geographic and organizational boundaries.”

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Dateline: April 1987, Toronto, Canada

Halifax Community Bank announced that it has implemented a local area network (LAN) using client/server technology from Microsoft aimed at encouraging information sharing and collaboration among its staff. Ralph Zeroe, VP Networking Technologies at the bank, said: “By leveraging the knowledge and experience of the Halifax Community Bank team with a LAN, we are enabling staff to better serve customers by sharing best practices and identifying experts and skill sets regardless of geographic and organizational boundaries.”

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Now what was that new thing you wanted to tell me about?

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UPDATE: Apr 2 10:17 PM EST. Before leaving a comment, go back and read the names of the people quoted. Thanks.

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Why Developing Customer Relationships Is So Hard

The Harvard Business Review recently interviewed psychologist John Gottman, the executive director of the Relationship Research Institute in Seattle. Although Gottman’s work focuses mostly on interpersonal relationship (in contrast to business-customer relationships), many of his comments are pertinent to marketers. According to Gottman:

“Good relationships aren’t about clear communication — they’re about small moments of attachment and intimacy.”

My take: I’ve tried to convey the same sentiment when writing about the stories loyal customers tell. The stories loyal customers tell come from experience — and those experiences are often not planned and/or orchestrated. This has huge implications for marketers striving to build strong customer relationships. It implies that the best you can do is establish an environment that enables these “small moments of attachment” to happen, but that consciously trying to create them may seem forced or unauthentic.

Gottman also says that:

“Successful couples look for ways to accentuate the positive. They try to say ‘yes’ as often as possible.”

My take: I wrote a while back, in a post titled Trust Is A Two-Way Street, about the experience a fellow blogger had with her bank, in which her bank didn’t believe her when she said she had called to file a claim. Gottman’s comment echoes my sentiment that building a relationship isn’t simply about saying “trust us” but saying (and demonstrating) “we trust you.”

For many marketers, the notions of “small moments of intimacy” and “mutual trust” are foreign concepts. The result: While marketers talk about customer relationships, few (if any) really have an underlying sense and understanding for what that really means. And few have developed effective metrics to capture the strength of their customer relationships.

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The Disingenuous Marketing Of P2P Lending Sites

Ponder the following question:

Entity A lends $10,000 to Johnny Jones at a rate of 6%. Entity B lends $10,000 to Johnny Jones at a rate of 6%. Which entity made the socially rewarding loan?

Well, if Entity A was Johnny’s neighbor Billy Smith, and Entity B was the bank down the street — let’s say Bank of America — then there are some who would have you believe that only Entity A made the socially rewarding contribution.

These are quotes from two P2P lending sites:

  • “Prosper…was created to make consumer lending more financially and socially rewarding for everyone.”
  • “When you lend through Fynanz you also perform a social good.”

My take: Hogwash. And that wasn’t my first choice of words.

According to Javelin Research (reported here):

Higher-income and younger consumers are the most active users (of P2P lending sites). In Javelin’s survey, 36% of borrowers said they used the service for the better interest rate. Some (33%) turned to P2P to avoid using credit cards. Others (27%) go that route because they do not qualify for a loan from a bank or credit union.”

Since when did lending to high-income consumers become a social good?

Oh, I’m sure defenders of the claims will tell that me that, surely, some borrowers at these sites are economically disadvantaged and can’t get loans at large banks and credit unions.

But let’s not forget that Prosper charges a one to three percent loan closing fee, and earns money servicing the loans for lenders. It’s not a charity.

The type of marketing that some P2P lending sites practice — playing up the social good — is an interesting and new trend. Historically, financial services marketing played on two emotions: fear and greed. The fear of losing money, and the greed of making a lot of money.

Now there’s a new tactic: Play to the desire to contribute to the overall social good. There’s nothing wrong with this — on the contrary, it’s a welcome and needed development. In fact, it might be one of the baby boomers’ biggest failures that the desire to make social contributions hasn’t been more prevalent, and more inculcated into marketing practices over the past 20 to 30 years.

But to think that P2P lending is a major contributor to this social good is naive, and for these sites to market themselves that way is disingenuous.

Javelin predicts that demand for P2P lending will quadruple over the next five years. Is it reasonable to think that the desire to lend to the economically disadvantaged will drive that growth? Or that the majority of borrowers will even be the economically disadvantaged? No, on both counts.

P2P lending sites will succeed because they’ll deliver on the greed factor, not the social contribution factor. Their ability to match people with money to invest with others who need it — and to offer those lenders (investors?) better returns than they would get otherwise will drive the growth.

Javelin also believes that the desire to pay off credit card debt will P2P lending demand. As a potential lender (investor?), I think that’s pretty risky.

But that’s exactly what the P2P lending sites should be capitalizing on. Helping potential lenders (investors?) understand how participating in P2P lending can and should be part of their portfolio of investments. Help me understand which investments in my portfolio have a similar risk/return profile as P2P loans, and could potentially be reallocated to P2P lending.

Is it lending or investing?

My questioning the substitution of the term investor for lender above is important here.

Is lending the same as investing? (For that matter is saving the same as investing? That’s something I think credit unions should be contemplating). My parents were encouraged to save. My generation was encouraged to save and invest. The notion of lending isn’t part of the language for many potential participants — i.e. suppliers — of P2P lending sites.

So while we typically think of marketing as an effort to create product demand, for P2P lending sites, marketing will be critical to procure the supply side of the equation, as well.

Relying on the desire to contribute the social good won’t be sufficient.

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What’s Wrong With This Video?

If you haven’t already seen this, please watch. It’s only 1:47 long.

Q. What’s wrong with this video?

A. It’s brilliant. And that is what makes it so horribly wrong.

How is it, that in the 100 or so years that credit unions have existed, no CU executive, no ad agency creative genius, no anybody for that matter, has been able to articulate the difference between CUs and banks as well, as artistically, and as entertainingly as the 19-year old Canadian that did this video?

It took me a couple of Twitter tweets and an email to confirm that Larissa had indeed written the script herself, in addition to doing the stick figures and voice over. Not that it would have been a crime if Common Wealth’s agency had written the script. To be honest, I would have felt better had they written it.

Here are my take aways from this:

Marketing better learn how to communicate better. All this talk about “should we blog or shouldn’t we?” is moot if you what you’re blogging about isn’t meaningful and well communicated to the intended audience. Marshall McLuhan was wrong. The medium isn’t the message. The message is the message. Having said that, I’d be the first to admit that Larissa’s message would not be as powerful in a brochure. So the medium isn’t unimportant. But although marketers have learned that they can’t simply take brochures and put them online, simply slapping videos online isn’t effective just because it’s interactive.

Agencies better understand the concept of strategic enablement.
Where the agency earned its keep here is in bridging the gap between the strategy and the execution. After all, they didn’t do the execution (write the script, draw the stick figures, do the voice over) and it didn’t take a genius to come up with the strategy (just read a few of the thousand blogs out there all preaching about how marketers should be doing social media). There may be a better term for it, but I think of what the agency did here as strategic enablement.

Every CU marketer in North America should be looking at this video and yelling at their agency “Find me a Larissa!” Good luck to those agencies. I don’t think that many of them are going to find her. What’s worse, few of them understand that they add the most value to the marketing equation today not by preaching the need for new strategies, nor by doing the dirty work at the other end, but by creating the capability that enables the new strategy to happen.

I know this concept is fuzzy. I’ll keep working on it.

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The Devolution Of Social Networking?

Hundreds of years ago, the key to economic success was land ownership. Today’s it’s idea ownership (sometimes called intellectual capital). That’s why thought leadership is so important (side note: I’ve only received one request for membership to ITCH so far — not a good sign).

It’s in this context that I found this comment from Gene on Tim McAlpine’s Currency Marketing site intriguing:

One does have to remember that social networking takes on different forms. One is the web, the other is talking to members, regularly, all the time, everyday.”

There’s a growing number of people in banks and credit unions who are trying to introduce new technologies and — more importantly — new ways to interact with and engage customers/members. But what’s a skeptical senior executive to think if the term social networking applies to not just the application of new technologies and new approaches to communication, but to the same old ways of talking to customers, all the time, everyday?

A recent discussion on Bankwatch helps to highlight the potential danger here. Regarding the Social Networking portion of the recent Net Finance conference, William Azaroff commented that “many people came up to me, but many more had gone home.” Ted Josephson opined that “a reason the traditional bankers left was due to general ignorance of the Social Media phenomenom’s impact.”

If social networking is “talking to members, regularly, all the time, everyday”, can you blame them for leaving early?

It’s too soon in the evolution of social networking for its definition to become diluted and co-opted (click here for a brief description on the predictable cycles of management concepts). Proponents need to work to distinguish the approach (not just the technologies) from traditional ways of interacting and communicating with customers.

How to do this? One idea: When making conference presentations, include what I call the “Stuart Dopey Graphic”. This type of slide is [affectionately] named after a former boss (named Stuart, duh) who always encouraged (translation: required) me to include a graphic in my reports and presentations that had two columns and anywhere from four to six rows. The two columns were labeled “today” and “future”, and the rows were attributes that helped to distinguish how the future I was describing was clearly different from the past. Putting together this slide is not as easy as it sounds.

But you’ve got to help Gene see how social networking is different from what banks and credit unions have done in the past.

Update: For an excellent follow-up on this at Tinfoiling, click here.

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