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Knocking the Froth off Social Media

Social media has exploded across the financial services industry. And like many a new craze before it, it has largely been driven by the perceived need to do something, compounded by a lack of industry consensus around what that something should be. Initiatives have been launched without clear objectives. They are not targeted at specific customer needs. Measures of success have not been identified or tracked. Long term strategies are not mapped out. To cap it all, I’ve even heard the worst harbinger of doom uttered from the lips of bankers. “Don’t worry about the RoI or NPV. We just need to launch something – and fast.” If ever there was a warning sign – it was that. Social media has become frothy. This really matters, because social media needs to be taken seriously. In a world where customers spend more time online and visit branches less and less, social media sites represent the best opportunity for banks to maintain their relationships with customers. Frothiness will deter the more cynical members of the banking fraternity from believing in the potential of social media to drive value. And worse, it will distract bankers from really focusing on the hard questions of how they can drive value from social media for customers and banks. The froth needs to be knocked off social media – and quickly! So how can we measure the value of social media? I think there are a number of different ways – these are just a few examples: Sales benefits: As well as simple measurements like click through rates and click to sale rates, more advanced measurements are being developed. Software vendors have developed tools which enable social media managers in banks to track which users have ‘liked’ their content – and also track how many people in that original user’s social network have also clicked ‘like’. These users can then be tracked through to purchase. This means content can be targeted to users – and the most influential users can also be targeted. This can be converted into a proper £ or $ figure. Cost reduction: This is something that the telecoms industry has done really well. By getting customers to answer each others’ questions online, call volumes can be reduced. The numbers of questions answered online can be correlated with the number of calls received, and again this can be converted into a proper £ or $ figure. Marketing benefits: Companies can learn from the social graph (that’s the information companies can get about a user from what they do on a social media site – who do they like, what do they like, etc) of their online users. American Express have done this really well in the US with their ‘Link, Like, Love’ promotion – where customers are given discounts for products that they or their friends have ‘liked’. Utilisation rates for these kinds of offers and the value of improved customer retention can be used as measure of success. Social graph data can also be used to refine marketing models and customer segments – which can be used to improve sales conversion across a whole bank. Where banks fails to build a compelling benefit case, social media initiatives will quickly drop off the radar. This is well illustrated by the fact that many of the social media accounts set up by financial services companies are now inactive. This is a big mistake. However, until banks figure out how to apply the old maxim of ‘if it can’t be measured, it can’t be managed’ to social media initiatives, then banks will fail to exploit this enormous opportunity to build lasting, meaningful relationships with customers.
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Alex Bray

Alex Bray

AVP, Omni-Channel Acquisition & Servicing

Genpact

Member since

05 Feb 2011

Location

London

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23

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