Social media – whether in the form of Twitter, Facebook, YouTube or other online communities – has long passed the phase of a fad. However, banks are still struggling with how social media can help them reach their business goals and how to implement social media strategies that impact the bottom line. At its core, social media can be an effective channel for banks to connect with both existing customers and new prospects. The challenge is in how to translate the multitude of comments floating around online into actionable intelligence for the bank.
Some banks tackle social media by treating it as just another way to distribute marketing messages. Instead, banks should begin by defining their business objectives, listening to the social conversations occurring online and creating a targeted plan to meet customer needs. By monitoring social media, you don’t have to guess what your customer wants. You can be part of the conversation as they discuss their financial goals.
Financial institutions that use social media effectively focus on three key business objectives:
- Customer acquisition: Engaging brand advocates to acquire new customers and increase loan portfolios.
- Community engagement: Building strong customer relationships through participation in local events and promotions.
- Customer service: Providing prompt, personal attention for questions or complaints.
With customer acquisition, the key is to create and energize fans of the brand. In order for people to share positive experiences with their expanded social network, the bank must deliver something of value. As a trusted advisor on financial topics, think about information that can help customers reach their goals. Target the audience you want to reach, pair it with the appropriate message and select the social media channel.
For example, parents of high school students may respond to a YouTube video series that educates them on how to fund and save for college expenses. If the audience includes college-bound high school students, they may respond to online games that encourage them to interact with the bank. A bank Facebook page could be used to integrate these efforts, with links to online banking to start a loan application. What’s the return on investment (ROI)? Track loan originations before and after the social media campaign. You can also track metrics such as growth in fans, amount of comments received, and the number of people who visited your website based on the campaign.
Banks are also finding that community engagement is a great way to build business through social media. Banks can target key demographics with sponsorships that align with their interests, such as athletic events or corporate philanthropy challenges. For example, JPMorgan Chase & Co. leveraged Facebook to promote and engage participants in this year’s Chase Corporate Challenge, a series of races to raise money for philanthropy across the globe.
In an online analysis of the results, we wrote: “With the proliferation of social media, a sponsorship event is much larger than the event itself.” Chase connected with its audience through engaging content that leveraged the excitement around the event. In doing so, the bank built community at the event itself but also encouraged the growth of an online community on its Facebook fan pages. Through engagement with the bank and one another, this community helped to boost brand recognition well after the race was over.
Enhancing the Bottom Line
The most common way of using social media to impact the bottom line is by enhancing customer service. Banks can use Twitter to help customers by providing quick responses to general questions about accounts, online banking and more. The key here is having tools in place that can monitor comments about the bank in real time and deploying a dedicated support staff that can respond and answer questions appropriately.
Many banks have systems in place to monitor surveys and call centers, but the overwhelming amount of data online is more difficult to manage. Banks should begin by seeking out three types of conversations. The first is conversations about your individual bank, which can guide a bank into seeing what the overall online sentiment is and identify hardcore fans or detractors. The absence of any conversation is also useful in educating the bank on where they need to build conversations.
The second is conversations about competing banks. Is a rival bank tackling a new project? Gaining new customers? See what the competition is doing and build programs that are unique and build allegiance to your institution. And finally there are conversations on industry issues, which individual institutions can monitor to inform their business decisions on items such as new fees, new services and expanded service hours. Banks monitoring social media last October could have gotten ahead of the groundswell of anger over debit card fees and adjusted their strategies accordingly.
Once a bank builds a platform for monitoring feedback, the next step is to use predictive and text analytics to help you respond to customers in more proactive, targeted ways. As an example, by classifying sentiment in social media data and tying that to customer data, you can predict people who are likely to be favorable to your company. You can then target specific customers and prospects with special messages or offers.
Some financial institutions select a full-service partner to build Social Customer Insights programs. Others prefer to do the analytics in house, using automated software tools to track and analyze social media. If you’d like to try a pilot project you can do yourself, here are a couple of concrete steps to begin:
- Capture 1,000 comments in the social media sites you monitor. You’ll need to determine who to respond to, and how.
- As it’s not feasible to respond to all comments, you can use analytics to classify sentiment, and based on the results, follow a three-pronged response strategy. Send your thanks to positive comments and reinforce the relationship. For negative comments, try to find out what is behind the problem. If necessary, apologize for the inconvenience and let the customer know what you are doing to address the cause of the dissatisfaction. For those consumers “on the fence” about your brand, send an invitation to engage via one-on-one social interaction with a support or sales representative. You can engage customers “in social” through networks such as Twitter, or direct them to your online email portal or phone bank.
- Next, you’ll want to measure the effectiveness of your response strategy. After planning your responses, test different messages for each response type to gauge effectiveness, analyze and understand response rates and refine your messaging. This testing will inform the engagement strategy the bank should deploy going forward.
To align social media efforts with key business objectives, banks have to approach social media with focus and strategy. Banks should conduct social media monitoring and benchmarking to define key performance indicators that can guide a strategic approach. This kind of strategic engagement can provide a wealth of insightful consumer data while, at the same time, helping improve the customer experience, strengthen loyalty and attract new business.
Mr. Ramirez is CEO of Berkeley, Calif.-based Beyond the Arc, Inc., a management consulting firm that combines strategy consulting with advanced analytics to help financial services clients identify opportunities to differentiate themselves in the marketplace. He can be reached at email@example.com.