Banks’ Social Media Challenges

I had the chance to participate on a SMB Boston panel last week on Driving Business Value Through Social within Financial and Regulated Environments, which I think was just a fancy way of saying “social media in financial services.”

The main message of my presentation:

Financial institutions should integrate social media approaches into their marketing and customer service processes.

As I see it, banks (and credit unions) are wrestling with — or perhaps, simply failing to address — challenges regarding social media. And you don’t even need to be a journalist to know where these challenges came from:

  1. What: Banks don’t know what to say in social media.
  2. When: Banks don’t know when to say it.
  3. How: Banks don’t know how to say it.

There are, of course, a couple of other potential challenges, but I think that “Who to say it to” is less of a challenge, and that “Why they’re saying it” is better understood. Regarding “why”, the research that Aite Group has done on social media in banking, bears this out: Most FIs are fairly clear that engaging customers, building brand awareness, and building brand affinity are why they’re involved with social media.

Engagement may be the objective, but I’m not sure, based on what I’ve seen FIs tweet and post, that they know how to achieve that objective.

I saw one FI recently tweet:

Have a new business that needs to grow quickly? Add credit card processing to increase revenues and cash flow. #smallbiz

Here’s another from a credit union:

We are listening. We are not like the BIG Banks. Check us out!

Do people really turn to Twitter or Facebook to see shameless marketing messages, re-purposed from other marketing channels? Are these tweets effectively engaging customers/members/prospects? I don’t know. But I bet the FIs that tweeted those messages don’t know either.

Another thing that struck me reading those tweets, was thinking about why the FIs chose to tweet those messages when they did. Was some marketing person sitting around with nothing to do, and suddenly realize that ts was 30 minutes since the last tweet, so s/he might as well tweet something else? Did something trigger the need for a credit card processing tweet at that particular time? I can tell you this: The credit union’s tweet came 11 days after Bank Transfer Day, so I doubt there was some pressing need to send out that tweet when it was sent.

The tone of these tweets doesn’t sit well with me, either. How many times have you heard the phrase “join the conversation?” Look again at those tweets above — do you know anybody who talks like that in the course of a normal conversation? (If you do, I bet you don’t engage in too many conversations with that person).

This gets at a big issue that marketers (not just in financial services) have to face: They don’t know how to have (or start) a conversation with consumers. Here’s the problem:

Marketing has, to date, been driven by the need and desire to persuade consumers.

But “engagement” isn’t accomplished through persuasion. (Well, persuasion can be a part of it, but it can’t be the only part of it).

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So what should FIs do to address these challenges? There’s a tactical response and a strategic response.

The tactical response: Categorize and test.

A couple of months ago, Michael Pace from Constant Contact wrote an interesting blog post, advocating that Twitter users should periodically do a self-analysis of their tweets. Honestly, I thought that was a pretty self-indulgent thing for an individual to do. But at the company level, the idea has a lot of merit.

A high-level analysis of your company’s Twitter stream can help you understand how well you’re balancing various types of tweets. And the same could be done with Facebook posts. The challenge, of course, is understanding what impact those messages are having, and if shaking up the mix would improve the impact (i.e., engagement).

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But even if you do this, I doubt that you’ll make more than just a minor impact on your firm’s bottom line. To have a more meaningful impact, you need the strategic response:  Integrate social media approaches into marketing and customer service processes.

In my presentation at the breakfast, I highlighted three ways to do this:

1. Influence preferences. I like what America First Credit Union does on its site (as does @itsjustbrent,  since he either borrowed this example from me, or I stole it from him). The CU incorporates members’ product reviews on the product pages. By doing this, the CU accomplishes:

  • Customer advocacy. Not just in the net promoter sense of the word — but in the more important sense of the word: Doing what’s right for the customer and not just your own bottom line. Helping consumers make better choices — that are right for them — by enabling them to access other customers’ opinions is a demonstration of customer advocacy.
  • Active engagement. I guess that, if a customer follows you on Twitter and reads your tweets, or likes you on Facebook in order to enter a contest to win a prize, you could call that engagement. But I would call it passive engagement. Customers who take the time to post a review are more actively engaged, in my book.
  • Continuous market research. I doubt many firms could capture the richness of information America First is capturing through satisfaction or net promoter surveys. And I know that they can’t capture it in as timely a basis as America First does.

2. Provide collaborative support. I’ve been holding up Mint.com as an example of a firm with collaborative support, but it recently discontinued its Mint Answers page. No worries, Summit Credit Union is doing the same thing, and hopefully, they can become my poster child for this. Collaborative support is giving customers the opportunity to answer other customers’ questions. Dell has been doing it for years. Why provide collaborative support?

  • Reduced call volume. I’m not going to say that you’re going to see a huge volume of deflected calls, but over time, if you market the collaborative capability, it can help.
  • Expanded knowledge base. This is where the bigger value comes in. Customer service reps leverage internal knowledge bases to answer customer questions. Collaborative support helps grow that knowledge base, and helps figure out which answers and responses are more valuable than others. This expanded knowledge base will also prove valuable in training new employees.
  • Active engagement. Similar to the product reviews, customers who participate in collaborative support sites are demonstrating active engagement.

3. Instill financial discipline. This is about using social concepts to get people to change the way they manage their financial lives. Take a look at the research that Peter Tufano has done regarding what motivates people to save.  There are some good examples of this in practice — see Members Credit Union’s What Are You Saving For?. I recently chatted with the CEO of Bobber Interactive, and like what they’re doing about bringing social gamification to how people manage their finances.

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Bottom line: Your firm can putz around with Facebook and Twitter until you’re blue in the face. For financial institutions, this is probably not going to have much of an immediate impact on the bottom line. It will likely take years of experimentation to figure out what to say, when to say it, and how to say it on social media channels.

If you want to engage customers, you have to give them a reason to engage. Mindless, idle chatter on Twitter and Facebook isn’t sustainable.

The path to making social media an important contributor to bottom line improvement — and sooner rather than later — will come from integration social media concepts and approaches into everyday marketing and customer service processes.

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New Business Idea: Custom Twitter Avatars

I told a friend (@chaztoo, if you must know) that I thought he should start a business creating custom Twitter avatars. I know that there are online services like FaceYourManga, but those don’t produce anything of really high quality, nor are they very unique. 

@chaztoo is a great artist. Take a look at this picture he posted on his Tumblr:

Wouldn’t you pay something to have him create a custom Twitter avatar for you?

Or maybe, would you pay to have him to do this as a gift for someone else?

Maybe your company, who’s trying to create/support your brand using Twitter, could benefit by having custom avatars — that had a graphic element consistent in each of the avatars — for the people most active on the channel?

Favor, please: Leave a comment letting me know what you think of this idea. Your input will probably determine if @chaztoo does this or not. 

Breaking The News On Twitter

I honestly and truly wonder what it is that motivates many of you to be the 7,657,423,012th person to tweet a news item.

Do you really think that you’re the first to tell your friends and social network that Steve Jobs resigned? Or that Google acquired a Motorola division?

Do you not scan at least a few tweets in your Twitter stream to see if anybody else tweeted the “breaking” news you’re itching to share with the world?

Does being redundant and useless not bother you?

It would be one thing if you were linking to a source that maybe not everybody read (I linked to Josh Bernoff’s blog post, so maybe I’m guilty as charged as well). But when you link to a HuffPo or TechCrunch article, you’re providing a link to the same story that 7,173,147,882 people before you did.

I have a theory that addresses the wonder I expressed above: Attention-deficit disorder.

No, not like the medical community defines it. Not “the co-existence of attentional problems and hyperactivity.”

No, I mean attention-deficit as in: Doesn’t get enough attention, and needs to call attention to oneself.

If you’ve got other theories explaining this behavior, let me know. I really do want to hear them. Because I honestly believe that if I better understand this behavior, maybe it won’t drive me as crazy as it does.

Quantipulation

A guy named John Wanamaker is famous for something he said 100 years ago. He said:

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Unfortunately, he’s wrong. I mean, if he didn’t know which half was wasted, how did he know it was half and not three-quarters or one-quarter of it?

He’s also wrong because it’s conceivable that 100% of his advertising dollars were wasted.

A century ago there were no ad ratings or measurement services. So how he could possibly know if ANY of his advertising spend was effective? It’s quite possible that any increase he saw in sales was due to exogenous factors like the weather, the economy, the competition raising prices or going out of business, or word of mouth among customers.

Ah, but hold on here a second. I guess it’s possible that 100% of his advertising spend was effective – or at least, not wasted – depending on what measure of success you use. If you don’t believe me, ask DeBeers.

Is it likely that the advertising he did had absolutely NO effect at all? Probably not. Just because someone didn’t make a bee line for the department store after seeing an ad, doesn’t mean the ad had no effect and should be considered wasted dollars. Some might have seen the ad and learned about the store, or the ad might have left others with a positive impression of the store.

Wanamaker thought half his advertising spend was wasted because he had no way to measure its effectiveness and didn’t even know what to measure.

Today’s advertisers have some measurement tools and services available to them, but none can claim to be totally accurate. And marketers are dreaming up new metrics every day, so you can be sure that no one measure is perfect, nor can we safely assume that even a group of commonly used metrics can truly give us a reliable picture of the effectiveness of advertising.

Bottom line: Any claim on what percentage of your advertising is wasted and what isn’t is just a random guess. We simply don’t know – and can’t know.

Here’s another claim to consider: Have you heard that its costs five times more to acquire a customer than to keep or retain one? How did they figure that? You could double the number of insurance, credit card, or mortgage customers you have by simply tweaking your underwriting guidelines, risk guidelines, or interest rates. No big cost associated with that.

But to retain those customers, you have to incur some big costs to keep branches open, provide call center support, and deliver service in an ever-growing number of channels. Many of the costs you incur to keep the business running are costs that help keep your customers  satisfied – and, hence, keeping them as customers. There’s simply no way the cost of acquisition is five times greater than the cost of retention.

But, wait, that’s not right either. Because all those costs you incur to retain your customers help to make your company the great company that it is. It’s what you’ve built your reputation upon. And without that reputation you couldn’t retain OR attract customers.

Bottom line: There’s simply no way to accurately calculate the cost of acquisition or retention. It involves making too many judgments and decisions on which activities contribute to acquisition and retention. It can’t be done.

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These claims – that half of advertising is wasted, or that acquisition costs are five times greater than retention costs – are examples of what I call Quantipulation:

The art and act of using unverifiable math and statistics to convince people of what you believe to be true.

The examples I just gave are just two examples of this widespread practice. In fact, the incidence of quantipulation has grown by 1273% compounded annually since 2003. And I have the math to prove it:

What’s driving this growth in quantipulative activity?

The false legitimacy that quantipulation provides gives quantipulators confirmation that the things they WANT to believe are really true.

In addition, there are many people who want to lay claim to having the secret sauce for marketing success, and sadly, many people who want that special sauce. Quantipulation provides the “scientific” proof that their sauce tastes best.

There are at a lot different flavors of this special sauce that people quantipulate about, especially about customer loyalty, influence, performance metrics and ROI.

I’ll be discussing those things in more detail during the conference. Hope you’ll be there.

Oh, and in the mean time, if I catch you doing anything quantipulative, I’ll be sure to call you out on it. 

Twitter Vs. Facebook: Which Is Better For Driving Purchase Activity?

Compete recently published a blog post called Four Things You Might Not Know About Twitter. Based on its consumer data, Compete concluded that:

“Twitter is more effective at driving purchase activity than Facebook. 56% of those who follow a brand on Twitter indicated they are “more likely” to make a purchase of that brand’s products compared to a 47% lift for those who “Like” a brand on Facebook. This is further evidence that marketers can drive ROI with Twitter by engaging followers through compelling content.”

My take: Nonsense.

Compete is off-base concluding that Twitter “drove” purchase behavior simply because a larger percentage of Twitter users are “more likely” to purchase from a brand than Facebook followers do. The only way to conclude that a source is a more effective driver is by comparing actual purchase activity resulting from specific messages or offers.

In addition, without a measure of what consumers’ purchase intention was before following a brand on Twitter or liking it on Facebook, it’s impossible to determine if Twitter or Facebook is having any impact on the customer relationship (Compete’s use of the term “lift” is inappropriate in the context it was used in).

Even if Compete had that benchmark, a change in purchase intention could not be attributed to Twitter or Facebook unless the messages, content, and offers were identical.

Bottom line: This is just one example of many that claim the “superiority” of one social media platform over another. Sadly, all of them are based on flawed data and assumptions, and misses the important point:

Different platforms are better suited for different types of messages/interactions.

It’s blindingly obvious how Facebook and Twitter differ in terms of the types of messages, interactions, and content each are suited to. As a result, the only way to determine which is more “effective” is in terms of an individual company’s objectives and needs regarding engaging with customers and prospects. And that means that “effectiveness” is based on the message or content — not the platform.

In other words, neither Twitter nor Facebook is “better” for driving purchase activity.

p.s. Note to bloggers/researchers/consultants/pundits: When publishing data that purports to claim that one social network is superior to another for driving purchase activity, ROI, or whatever metric you’re talking about, it would be very helpful if you talked about WHY one platform is better than another. I don’t think I’m asking for too much, here.

Banks: Don't Use Twitter For Fraud Notifications

From a Bank Technology News article titled Westpac, Other Banks Use Twitter to Warn of Fraud:

“When Westpac was recently targeted by web crooks, the Australian bank used another online venue to warn consumers, sending a Tweet warning consumers of the crime. The alert was part of a new trend—using social media to publicly expose online fraud attacks in real time—that Anti-Phishing Workgroup Chairman Dave Jevans says can be an effective way to spread security warnings, if it’s done right. Jevans says that if phishing and other attacks are corrupting trust in the email channel, it makes sense that banks would look to Twitter and other social media to alert their customers. By using Twitter, he says banks can warn customers instantaneously, without sending emails that could be construed as a malicious phishing attempt.”

Interestingly, Mr. Jevans is quoted later on in the article as saying that using Twitter “requires banks to be aware of how the Twitter, Facebook and other sites can be used by crooks themselves. Tweets could be used to spread false security alerts, similar to how email is used by fraudsters.” (I love that: “the” Twitter). 

My take: It makes little sense to use Twitter for fraud notifications.

It’s not so much a security issue as it is a numbers game. 

Pew Research Center reported in December 2010 that 8% of Americans use Twitter, and — more importantly — that just 2% of online adults used Twitter on an average day. 

I haven’t seen any studies on this, but I would bet that the average Twitter user sees less than 10% of the messages that come through their Twitter stream. 

More numbers: As reported on TheFinancialBrand.com:

“Less than one quarter-percent (0.021%) of all big bank customers follow their bank on Twitter. That translates to an average of 208 followers for every one million customers. BofA, the largest bank in the study, had 12,315 followers out of its 55 million customers. Wells Fargo averaged one follower for every 8,635 customers.”

For credit unions, “0.65% of members are connected to their credit union on Twitter. That’s one follower for every 155 members.”

Bottom line: Your response rate on direct mail credit card offers is probably higher than the hit rate of reaching customers on Twitter with important messages.

One potential solution to this could be a centralized Twitter account (maybe the CFPB could do something useful, here) that would be verified by Twitter. Banks could notify the CFPB who would then tweet the fraud notification. In this scenario, consumers would only have to follow one account, and would be assured of the legitimacy of the message.