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How Financial Services Companies Drive Results Through Social Business

Posted @ 12:22 pm by Tim Ross | Category: Community & Social Media, Financial Services, Strategy | 1 Comment

This is part two of our series on how Financial Services firms can leverage web and mobile technologies to drive business results.

Financial services companies have spent the last year running scared from mainstream social media. After steadily investing in social media strategies—including some 1,200-odd Facebook pages—over the past several years, the financial services industry suddenly and dramatically reduced its social investments in 2012. While more than 20 percent of financial services institutions were investing in social by the end of 2011, as the first quarter of 2012 drew to a close that number had plummeted to just 6 percent. That drop was largely due to major public scrutiny of banks for everything from Libor rigging to new fees.

Of course, even before last year’s scandals, the financial services industry was struggling to make sense of social media. Because of the regulatory and privacy concerns of the industry, it’s been tough for financial services institutions to figure out what the heck to do with social apart from creating the requisite Facebook page. The key to success for those few companies that have it gotten right—Bank of America and Charles Schwab, for example—is moving beyond the standard social platforms and thinking about all the ways in which a social approach to business problems can be effective. Following are three ways to do exactly that:

1. Build Customer Communities Around Particular Business Areas

Forget Facebook and Twitter. Financial services companies need to look at creating their own, proprietary social communities. Bank of America’s Small Business Online Community, for example, has become hugely popular among small business owners and helped anchor the bank’s small business department. Proprietary communities for financial services companies are more about engaging existing customers, both to sell them on new services and to use them as a focus group of sorts, than finding new customers, but that doesn’t make them any less valuable than marketing efforts aimed at finding and converting new customers.

2. Engage Your Most Active Customers

Stop thinking of social as a way to find new customers; it’s next to impossible for financial services companies to do that via traditional social networks. Instead, leverage social to turn active customers into fiercely loyal brand advocates; people you cannot only sell more to, but who will then go out and sell your brand to new customers. Charles Schwab’s Jive-based active trader community is a great example. The online community grew to more than 10,000 members in its first year and the firm has found that members trade more actively than non-members, including non-members who would also be described as active traders. Members of the community also drive higher revenue (1.3 times higher than non-member active traders and 3.8 times higher than average retail traders), are more profitable, and are more likely to own and purchase other financial products.

3. Social Customer Support

According to Brandwatch, banks lose over 60% of customers due to long customer service response time. At the same time, social customer service (via either existing social channels or a proprietary channel) costs about 1/10 of phone-based customer service. All of which makes the idea of social customer service rather appealing. Several banks already have Twitter accounts dedicated to dealing with customer issues, but a few forward-thinking companies have also developed social communities that help prevent issues before they happen. Denmark’s Jyske Bank, for example, built a social TV site to offer customers interactive Q&A sessions.

Yes, there are issues unique to the financial services industry that make social media efforts a bit more complicated than they are in other industries, but the opportunities of social—data collection, brand building, deep customer engagement—still make it worth the effort for those companies that can develop and execute creative strategies.
Author: Tim Ross is CEO of SolutionSet.

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  1. [...] is part one of two on our series on how Financial Services firms can leverage web and mobile technologies to drive [...]

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