Learning from Customers in Social Media

Retail bankers are monitoring comments in social media to gauge customer sentiment, as well as to broadly predict consumer behavior. In the process, they are learning more about their customers than they have been able to through surveys, focus groups and one-to-one interactions.

And, while the practice is in its infancy, banks are also beginning to apply what they have learned from searches of comments on such sites as Facebook, Twitter, YouTube, LinkedIn, blogs, internet forum discussions and banks’ own sponsored sites, to influence decisions and strategies around retail products and services.

“Any place where the consumer is talking, they are providing information; whether it’s in the branch with our own employees, on the phones, via email and chat and also online – that information is extremely valuable. That’s where I see social media’s return on investment,” says Frank Eliason, senior vice president of social for Citibank in New York.

“It can be a game changer for an organization,” Eliason adds. “The quantities of comments are greater than you can ever get in a focus group.”

Eliason elaborated on this topic during an October 9 panel discussion at the BAI Retail Delivery 2012 conference entitled “How to Monetize Social Media,” where he was joined by J.P. Nicols, founder and chief executive officer of Seattle-based Clientific LLC and Steven J. Ramirez, chief executive officer of Beyond the Arc, a consulting firm in San Francisco.

Social media has already helped Citibank avoid one potentially costly mistake, according to Eliason, referencing recent regulations requiring banks to cap their debit card interchange. Last year, to make up for anticipated losses under the so-called Durbin Amendment, a number of banks announced that they would charge monthly fees to customers with checking accounts who used their debit card. Bank of America Corp. had to back down from its $5 monthly charge after a well-publicized backlash from customers.

Eliason says Citibank had already learned from its social media monitoring that customers would not tolerate such a fee and therefore held back. “We knew that because we were listening to our customers,” he says, adding that this view was reinforced by the bank’s own customer surveys.

Nicols, a former executive with Minneapolis-based U.S. Bancorp, agrees that social media can warn financial institutions of potential problems. “You ought to be happy when a client is complaining because you’re learning something,” he says.

Young customers are more likely to be influenced by what their peers do than older customers, which, in turn, highlights the potential for social media, Nicols says. He cited the example of a customer who had a problem with his bank that was successfully resolved, which led to an enthusiastic recommendation of the bank to other consumers in social media. “There are whole businesses built on peer recommendations, such as Yelp,” which posts online customer reviews of businesses, from restaurants to bank branches, Nicols says.

Banks also have to use the right channels to respond to customer inquiries, Nicols adds, citing an occasion when a CEO of a technology company tweeted the bank that he wanted to talk to someone about a mortgage. The marketing department, which received the tweet and didn’t know how to respond, sent an email to Nicols, who immediately tweeted the executive. “Customers are giving you signals about how they want to interact and you need to pick up on those signals – or lose business,” he says.

Consultant Ramirez says banks that have been engaged with social media for several years are moving from simply gathering customer sentiment to actually using the data for predictive analysis in the areas of customer service, customer retention/loyalty and new business opportunities. For example, if a bank is alerted by social media interaction that customers need more online or email support, “then that affects the staffing model the bank may need in the future in the call center,” Ramirez says.

For the past three-and-a-half years, Citibank has relied on social media monitor Salesforce Radian6 to obtain information from all Internet sites where consumers discuss the Citibank brand, 10 competing brands and banking-related topics in general. This information is then displayed on computer screens in the offices of top executives such as Eliason. “We can slice and dice as we see fit” to provide focused data to Citibank marketers and product managers of all consumer offerings, he says.

So far, however, the effort to utilize social media for predictive analytics has not been as sophisticated as banks’ use of data from other sources, according Brad Leimer, vice president of online/mobile strategy for Mechanics Bank in San Francisco. “The majority of institutions are still dipping their toes into what data they get out of social channels,” he says.

“People are really still listening to that data and they are not applying it for marketing automation or for sentiment analysis at the lower tiers,” Leimer adds. “Even larger retail institutions – the super-regionals and the regionals – have not learned enough about their own customer behavior to leverage that data.”

Ramirez agrees. At this stage, “it’s not about the science, the analytics and the algorithms; it’s really about better understanding customers,” he says.

Mr. England is an Arlington, Va.-based contributing writer for BAI Banking Strategies and the author of Black Box Casino: How Wall Street’s Risky Shadow Banking Crashed Global Finance.