An Aite Group report on social media marketing in financial services found that more than half of the financial institutions surveyed said that, as a percentage of their overall marketing budgets, social media was too small to measure. Looking out two years, more than half don't expect social media's percentage of the total to exceed 10%. This means that for at least the next two years, more than 90% of financial institutions' marketing spend will go to areas other than social media.

"My biggest pet peeve is this pervasive assertion that nothing else works, and social media is the end-all be-all of every one of the marketing issues that face financial institutions today," said Ron Shevlin, senior analyst at Aite Group. "If social media truly is the new marketing revolution, then why are so many still using it with the same old mindset of placing a message in front of you?"

Shevlin added that he's not a social media basher, but the standard arguments for social media like "you have to be on Facebook" make him a bit cranky.

"If this is a new opportunity for marketing then it requires a fundamental mind shift from the persuasion paradigm to relationship building," said Shevlin. "Historically, the notion is that you persuade consumers to do business with you, not the competition. If you're engaged with me in meaningful ways and I act in your best interest to help you as the member to do what you need then I don't need persuasion because I've already demonstrated to you that we have a relationship."

Shevlin said that is the value that social media presents. It takes the incremental cost of member or prospect messaging down to nearly zero, and marketers can focus on relationship-building through conversations because they don't have to obsess over the ROI of every message.

"If you are simply pumping out marketing messages, then you are just making old use of what you did in other channels in this new one," said Shevlin. "So marketing has not learned yet what social media means in terms of how it's different."

He said it starts with having a clear, well-understood and well-communicated business strategy or marketing strategy identifying the opportunities and challenges as far as what the credit union could improve and determining what social media will really accomplish and which member segment will be targeted to grow relationships. When it comes to cross selling success, Shevlin said there is a strong correlation between consumers believing their financial institution did what was right for them and not the institution's bottom line and those that grew relationships and strong loyalty with the financial institution. He added that rather than focusing on one's reach on Facebook or Twitter, credit unions should be looking to tie social media to strategy and advocacy, integrating social media technology like peer comparison, member reviews, and social support into the core business processes.

"There needs to be a clear understanding and separation of the social media tools and technology," said Shevlin. "I recently wrote a report for Filene about the future of member-facing technology, and it had a lot to do with how to more effectively, efficiently connect with members. That social media technology is going to be more integrated into what a credit union does-their existing marketing, sales and service processes. As far as I'm concerned, when firms are integrating social media into their business processes, then social media won't be a waste of time."

Because strategy is so vital and unique to each financial institution, Pilcher is equally loathe to offer blanket advice on social media. That said, he does like the practical use of the concept of social media inviting and publishing member reviews on the website, similar to what USAA and AmericaFirst Credit Union have done.

"It's not for the thin-skinned though. The management team has to be willing and able to make adjustments and some core data systems are not flexible, so it could be a nightmare if you can't address their concerns or act on suggestions," said Pilcher. "If you can pull it off, allowing people to rate and comment on your service and products should result in two things: encourage your organization to hold itself accountable and provide meaningful, useful information to financial shoppers."