The Marketing Advantages of Social Media

In today’s competitive economic landscape, banks need to ensure that they not only attain customers but also retain them. To that end, financial institutions are looking for ways to deliver the highest quality of service to their valued customers in a way that is tailored to their specific wants and needs. However, the sales process of selecting a bank or banking product is no longer in the hands of the financial institutions. In fact, with social media channels such as Facebook, Twitter and Google +, consumers now have the power to determine if a bank is the right fit for them before they even speak with a sales representative.

By utilizing these social media channels, consumers can now easily gain access to the existing customers of a particular bank to get first-hand knowledge about their overall experience with that institution or financial product. By facilitating that communication, social channels pose a threat to the bond that customers and their banks typically develop after working directly with one another for a number of years; consumers no longer feel the need to stay loyal to one particular institution, which builds pressure on banks to work harder to retain their customers by incorporating social media channels into their communications mix.

One of the most beneficial aspects of social media is the opportunity to attend to each customer at the individual level. As many corporations can affirm, not all customers are created equal. Some customers are much more vocal in their expectations and feedback while others are more reserved in their interactions. That is, however the beauty of social media – through these channels, banks now have the opportunity to capture customer suggestions and analyze them in order to develop more tailored products and services. By continuing to modify product offerings based on the on-going conversations taking place on social media, financial institutions can ensure that they continue to provide valuable offerings to their customers.

Social media can also help banks to retain the customers that they have already acquired. For example, banks are now using these social channels to seek feedback on current advertising campaigns, to determine opinions on new promotions and to make changes to existing policies. By actively taking part in customer feedback, banks can help to shape their brand identity while determining a future product’s market appeal.

Being able to service customers in real-time is one of the greatest advantages for banks looking to adopt a social media strategy. The majority of young consumers look first to social media when dealing with a product problem or with a general inquiry. Some consumers prefer Twitter to interact with a customer service representative (CSR) while others favor the Facebook chat interaction. Either way, giving customers a choice when dealing with a CSR enables them to have control of the conversation while improving the odds that they remain a loyal customer.

Finally, using social media can help banks to improve their top line revenue. By being able to determine what social media channel a particular customer is most active with, banks have the opportunity to offer discounts and promotions via the most effective means of communication for that particular individual.

Social media also opens the door to help banks better understand customers’ spending patterns, their spending preferences and their important life events. For example, if a certain customer becomes engaged or married, banks have the ability to access this information and offer sales pitches that would be of interest to that client. They may try and offer them a promotion on a house mortgage for example or credit on family insurance. Through these new social channels, banks have the opportunity to tailor each and every interaction with their customers to fit their personal lifestyle and interaction preference.

Mr. Venugopal is executive vice president, interim head, Banking and Capital Markets, for Bangalore, India-based MphasiS, a subsidiary of Hewlett-Packard. He can be reached at [email protected].