Financial Institutions Must Revise Social Media Strategy
Once upon a time, people used social media sites like Facebook to communicate with friends online. Today, they're looked upon as powerful marketing tools that can benefit businesses of all kinds, but with some powerful reservations.
Indeed, credit unions and other financial institutions need to approach with caution and handle with care when it comes to social media, according to a new report from research and advisory firm Aite Group and retail finance association Efma.
For instance, don't just focus on friends and Facebook at the expense of the painful realities and valuable lessons that can come from consumer review sites. Engage your customer/member service department in the process, the report said, and look for the best way to measure the impact of integrated marketing efforts that follow.
The report-titled "Social Media at the Starting Blocks: A Look at Financial Institutions in Europe and the United States"-is based on a recent survey of 166 financial services executives. It found that six out of 10 financial institutions view themselves as social media "novices" or "beginners." And fully 30% of the respondents said they have no funding dedicated to social media efforts.
But lack of a social media budget isn't why most institutions hesitate; most say it's because they lack human resources or time, according to Aite Group, the Boston-based research and advisory firm.
By 2012, 90% percent of firms said they plan to make room in their budgets for social media, with one-third expecting to create a new budget for social media initiatives, analyst and report author Ron Shevlin said.
Others plan to pull funds from existing budgets, especially their direct marketing and print advertising budgets, to finance social media efforts. Regardless of where the money originates from, 40% of firms said they'll spend between 2% and 10% of their overall marketing budgets on social media two years from now.
Out of all the options, researchers found that Facebook is most commonly used and rated most effective.
Financial institution executives named brand awareness a top social media business objective, but they also expect the use of social media to generate revenue and increase customer retention. "These objectives are wishful thinking on the part of financial services marketers, and consistent with past delusions of marketing success," Shevlin said.
To help lead financial institutions down a social media success path, Aite Group recommended crafting social media initiatives to match business objectives. They should align them with the five components of the "marketing funnel": awareness, consideration, preference, purchase and loyalty.
Next, efforts should target a specific segment of the firm's market, not its general audience. Integrate social media strategies with other online capabilities by influencing customers' preferences and providing customers with collaborative support, researchers say. This can be done by integrating product reviews into their own websites and creating an online forum where customers can receive support and communicate with one another (for example, on a Facebook page).
Finally, Aite Group believes financial institutions must develop a measurement framework that reveals the performance levels of each of their marketing efforts and compare that to other methods and channels.