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.

More Likely To Purchase: Quantipulation In Action

How many times this week have you heard about some research study that found that one consumer segment is XX% more likely to purchase your products than another segment?

These studies and claims come out every day. And every one of them is a shining example of Quantipulation: The art and act of using unverifiable math and statistics to convince people of what you believe to be true.

The problem with these “more likely to purchase” claims is that they’re leading you to make bad marketing decisions.

For example, it’s popular these days to claim that Facebook fans are an important segment of your customer base because they’re “more likely to purchase” than other customers are. DDB (a very reputable advertising and marketing services firm) conducted a study last year and found that:

“Facebook users who like a brand’s page on the site are thirty-three percent more likely to buy a product, and 92 percent more likely to recommend a product to others. “Fan status is indicative of high purchase intent, especially when compared to any traditional form of advertising, and is an even greater predictor of advocacy with over 90% noting that being a fan has a positive impact on recommending a brand to friends,” said Catherine Lautier, Director of Business Intelligence at DDB.”

The implication of this is that: 1) If marketers can drive up their brands’ Facebook fan count, then more customers will become more likely to buy, and 2) Marketers should focus their marketing efforts on Facebook fans because of higher purchase likelihood.

But there are a few problems here:

1. What does “more likely to purchase” mean? If in a survey Customer A (Facebook fan) says he’s “very likely to purchase” and Customer B (non-Facebook fan) says he’s “somewhat likely to purchase”, what does this really tell you? How much more likely is “very likely” than “somewhat likely”? Isn’t timeframe important? Is that very likely to buy in the next 2 weeks or very likely to buy at some point in the future? Even if Customer B says “not likely”, does that mean we should give up on marketing to him? Really? People don’t change their opinions? After all, he’s already a customer — and isn’t the cost of acquisition 5x higher than the cost of retention?

2. The absolute numbers might not be compelling. In the DDB study, only 36% of Facebook fans said that they were very likely to purchase. Which means that 27% of non-Facebook fans were very likely to purchase (you do the math). Assume that your company has 10 million customers, of which 1 million are Facebook fans. That means you’ve got 360,00 Facebook fans who are very likely to purchase, and 2, 430,000 non-Facebook fans that are very likely to purchase. Which group do you want to market to?

3. Causation versus correlation. Do Facebook fans become “more likely to purchase” after becoming Facebook fans, or did the fact that they were already “more likely to purchase” lead them to become Facebook fans? Granted, their act of becoming a Facebook fan helps marketers better identify them out of the pack. But if — as the numbers above indicate — the differences in likelihood to purchase aren’t that compelling, then it’s simply not a very helpful segmentation tool.

Bottom line: Don’t be quantipulated into believing these “more likely to purchase” claims.

Facebook Versus Google

No, this is not a review of Google+, and how it’s features are better or worse than Facebook’s. Nor is it a post on what Google+ means to marketers, etc.

Instead, it’s a rebuttal to a blog post published on the Customer Collective. According to the author of a blog post on that site, the author concludes that “This boxing match is over before it gets started: Facebook wins.” 

Here are reasons the Customer Collective (CC) gives for calling a TKO, with my take on the points.

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CC: Facebook is about staying connected with friends. Google is about making the world’s data searchable. Google is therefore not on solid ground.

My take: Facebook is about “staying connected with friends”? You must be joking. For thousands (if not millions) of companies, Facebook is about finding new customers, and connecting (or at least trying to connect) with existing customers. For Facebook, Facebook is about figuring how to monetize the vast traffic and engagement it has.

Google is about “making the world’s data searchable”? Ha. Google is about connecting advertisers to prospects. The common thread between FB and Google? Advertising. Both are on very solid ground when it comes to generating advertising revenue.

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CC: Google is already pervasive in our lives due to its dominance in search, email, collaboration, smartphone integration, and more. People are going to resent or ignore the company’s attempt to elbow out Facebook just like we resent it when one close friend tries to eliminate another one from our lives.

My take: A misinterpretation here. Facebook users’ connections are with other FB users — not with Facebook. Yes, Google is looking to elbow out Facebook. But the rest of the world doesn’t care about that.

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CC: Face it, Google: Social networking is not your thing.

My take: Oh, come on. PCs weren’t IBM’s thing, but (after some fumbling) it became very successful in the personal computing world. The web wasn’t Microsoft’s thing, but they adjusted. Writing off Google from social networking because of Wave and Buzz failures is a bit short-sighted.

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CC: Facebook stays focused on its core business for a reason – they really know what they’re doing.

My take: You’ve got to be kidding me. Facebook knows what it’s doing? It’s taken so many missteps (especially regarding data usage and privacy) that it’s to back up an argument that there’s a grand plan (other than “world dominance”) at Facebook. Forays into Facebook Credits (which is a damn good idea) is hardly about their “core” business of advertising, which accounts for, what, 95% of their revenue? And even if it were true that FB is “focused” on it core, and “knows what its’ doing” is hardly an argument for why the “boxing match is over before it begins.”

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CC: Last but not least, Google doesn’t seem to get that people actually care about privacy and worry about being tracked online, especially when it comes to their personal email.

My take: If the implication here is that Facebook does get that people care about privacy, then there is little that I’ve seen from Facebook that supports that contention.

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Bottom line: The boxing match is far from over. But it does seem that Google has a big task in front of it, if it wants to avoid getting Pownced.

I wonder if people even remember Pownce. Not long after I started using Twitter in 2007, Pownce was launched. It was a Twitter- like tool, with some additional features. While many of the people I followed (and who followed me back) registered with Pownce, it quickly became a game of Alphonse and Gaston: “Who’s ready to give up Twitter? You go first, Alphonse.  No, no, no — after you, Gaston. 

Nobody left, and and Pownce got bounced. 

The social media gurus have already jumped on Google + and conferred upon us their wisdom regarding the new networks’ features and implications for marketers and businesses. 

But the acid test is whether or not the masses change their behavior. And changing behavior is not easy, nor does it usually happen very fast. And it doesn’t matter if Google+ is better or not. We’re lazy. We don’t like to change. Unless we get paid to, or if the convenience we gain by changing is very noticeable.

A sample size of two isn’t very representative, I admit, but when I asked a 16 year-old and a 21-year old that I happen to know (for 16 years and 21 years, respectively) if they would switch to Google+, their response was identical: “Not unless all my friends do.”

The wildcard here is what businesses will do. If Google can entice businesses to launch brand pages, and if businesses can lure customers and prospects, then maybe the balance of power can be tipped. But it would seem to me that Google needs data to lure businesses, and without 100s of millions of users, won’t have the data. Chicken-and-egg problem. 

So, it’ll be a tough road for Google, but it’s way too early to call the winner.