Social media was once an “experimental communication tool used by a few forward‐thinking firms” in our industry. Now, on nearly every financial firm’s website you’ll find a trio of little blue boxes somewhere near the bottom. Corporate Insight, a research firm that provides competitive intelligence to financial institutions, released on Thursday a report spotlighting how financial firms have taken that growth and turned it into effective social media strategies.
“Over the past few years, the use of social media by financial services firms has increased exponentially,” Alan Maginn, senior analyst and social media expert at Corporate Insight, said in a statement. “Social media is a critical way for companies to communicate with their clients, prospects and other targeted audiences on a personal level.”
The report examines 90 financial services firms and ranks their Facebook pages, Twitter profiles, proprietary communities and blogs. While most firms that commit to a social media strategy will utilize the Big Three—Facebook, Twitter and LinkedIn—Corporate Insight excluded LinkedIn from its report, as well as Google+ and YouTube.
LinkedIn has an extraordinary membership (150 million members worldwide), but Corporate Insight notes that “there’s very little variance between one firm’s LinkedIn presence and the next.” Furthermore, most interactions are private, making engagement exceedingly difficult to measure accurately. YouTube offers better metrics by which to measure engagement, but the report found engagement tends to be low. The commenting feature is rarely used by fans of financial services channels, and in fact, is often disabled by the firms. Since Google+ allowed firms to create business pages in November 2011, roughly 50% of the firms tracked by Corporate Insight established a business page in their name. However, they appear to have done little more than that. “Until more firms have the chance to establish functioning accounts on this new community, we feel it is premature to grade their efforts,” the report says.
Corporate Insight based its analysis of firms’ social media accounts on audience, content and engagement, but is especially focused on engagement.
“Engagement is truly what sets social media apart from more traditional business-to-consumer communications, and this direct interaction with current and prospective clients is a major benefit of a well-executed social media offering,” Maginn said.
Twitter is tops when it comes to which social media platform to favor, the report found. In 2010, Facebook was slightly more popular, but even though more firms had a Facebook page, the average number of Twitter accounts per firm was outpacing Facebook. By the end of 2011, 92% of the firms tracked by Corporate Insight had a Twitter presence, compared with 88% on Facebook.
The report noted that more conservative sectors of the industry like full-service brokerages and mutual fund companies were more likely to prefer Twitter to Facebook. Corporate Insight suggests this may be due to the compliance burden of reviewing and moderating comments from other users on their Facebook page.
“Social media was reserved for banks and self-directed brokerages, but now it’s made its way to asset managers” and other financial services firms, Maginn told AdvisorOne on Friday.
“The key is having compliance involved when [firms are] developing their social media strategy,” Maginn said. He noted that education is just as important for firms using social media as having the compliance department review posts before they are published.
“Whoever is writing the posts should be informed of what is acceptable and what isn’t,” he said. For example, Morgan Stanley Smith Barney launched a social media pilot program that allowed about a third of its advisors to use social media to publish pre-reviewed posts, Maginn said. In the past month or so, he continued, a much smaller group of advisors have been allowed to write and publish posts without approval.
Technology is also helping firms stay compliant, Maginn said. “There are several firms that allow companies to track and manage what’s going out there.”
Maginn said that as firms continue to utilize social media successfully with raising the ire of regulators, firms that have been reluctant to take on social media use will follow. In fact, he expects to see more and more asset managers take up social media over the next 12 to 18 months.
It’s important for firms to use social media to support other campaigns and not just to push static content out to their followers, Maginn said. Firms should use their channels to communicate. “You need to be relating to individuals and engaging individuals to show you care, and that you have a stake in your brand.”
Twitter is especially popular as a customer service tool due to its ability for real-time communication and private direct messaging. The trend toward maintaining a dedicated customer service Twitter account was led by Wachovia and Bank of America in 2008, but the insurance and brokerage industries are starting to follow that example.
Recruitment is another goal financial services firms have for their social media strategy. Roughly 10% of the properties analyzed provided information on careers or list available job opportunities.
Corporate Insight makes the following recommendations to financial services firms looking to develop an effective social media strategy:
1. Communicate in a manner appropriate to the social channel and industry. The report notes that depending on the audience, the tone may change between social networks and even between accounts in the same network. “For instance, informal, pithy comments may be appropriate for mascot accounts on Facebook and Twitter, but customer service Twitter accounts and blogs offering marketing commentary or financial insight should use a more formal tone to convey the seriousness of the issues being discussed.”
Volume is also important. Hourly messages may be too much for Facebook fans and may drive clients away from using that method of communication. Twitter users, on the other hand, are accustomed to frequent updates.
2. Consider campaigns aimed at different client/support segments. While social media makes reaching a broad audience easy, that’s not always the goal. “By isolating a subset of your broader audience, you can increase the value of the social interactions by enabling these individuals to share their experience with issues they share with their peers.
3. Offer guidance to users who express issues. The report notes that users who go through a firm’s social media account for customer service are likely trying to avoid extended phone trees and hold times. If a firm doesn’t provide a dedicated customer service account, it should be prepared to field questions and requests submitted through other accounts.
In fact, when questions are submitted publicly, the report recommends trying to solve them publicly if possible. Other clients may have the same problem, and it demonstrates that the firm is willing to solve problems, not hide them. “When necessary,” the report adds, “direct users to use private messaging features or take the conversation offline and always remind them not to publish personal or account information.”
4. Strive to provide the information users want, not the information you want to deliver. That may be easier said than done. The report notes that just providing insightful content isn’t enough; to be the “go-to source” for what you provide your clients, you have to also be entertaining. Corporate Insight recommends incorporating pictures and videos into your message; using current events and holidays to provide context to financial topics; ask questions of clients to engage them and get them thinking about the topic; and share third-party content as well as your own.
5. Integrate social tools into your website design. “There’s no longer a clear distinction between social media websites and the rest of the Internet,” the report states. “The social web is the web.” Firms should incorporate features like ratings, comments and link sharing in their websites. This doesn’t just improve the experience for clients. It can help you determine what your clients find helpful.