What may have started out as a light-hearted social experiment a few years ago has advanced into a full-blown sales and marketing platform to push the boundaries of a modern business. We're talking about the increased significance of social networking, of course.
At IBM, we refer to the widespread use of social and online collaboration tools by our clients and ourselves as "social business." Social business is about harnessing the collective power of online communities and social interaction to drive real business outcomes that help companies boost profit, reach new customers and drive legions of brand enthusiasts. It is about using social tools to look at business processes differently -- from how a business listens to its customers, to how it is engaging with a wide variety of constituencies.
The amount of time that consumers spend on social media is hard to ignore. More than 800 million users are active on Facebook for an average of 40 minutes a day. A 2010 Nielson report found that social media use is growing at 308% versus only 120% for general banking website use.
The banking industry has begun to sit up and take notice as banks' clients (including the baby boomers who have the majority of assets in banks) use social tools to navigate family events, opinions and plans -- all part of the customer relationship that banks want to build. Banks are reacting with their own Twitter traffic, Facebook pages, social products and customer service in more social models: feedback, ratings, YouTube videos, and often a new, more social face for the bank.
As mobile devices are increasingly ubiquitous, customers want more than simple mobile banking -- they want services that offer payment options, recognize and exploit location information, and deliver discounts and deals and wisdom of the crowd. This is a historic moment in time when banks can use social media to heighten their competitive differentiation, while clearing new paths for innovation.
1) Social business is critical for forging new connections, as well as elevating the brand.
Banks that can use it wisely can generate immediate, impactful results on increasingly social customers, many of whom use social media as an underlying "operating system" for their work and social lives.
For example, Wells Fargo, which jumped in early to social business, recently announced its new presence in Manhattan by doing a "flash mob" and posting it on YouTube. To date, that clip has been viewed more than 1.8 million times. By using this integrated multichannel customer experience, Wells Fargo was able to create value for the customer while reinforcing brand objectives.
2) Social business is a pivotal outlet for building communities.
Selling banking products and services can be understandably complex. However, building communities around products and services opens up a new way for consumers to inquire, engage and share material.
Focusing on customer service and adopting the personalities of the people they serve, banks can bring new meaning to customer centricity. Retail was one of the first industries to pioneer community building online. For the past two years, Urban Outfitters has been using its Facebook page not only to keep customers informed about discounts and in-store events, but also to promote other activities, such as job opportunities and community outreach events, and to educate customers on the latest trends. Most banks have been observing what retailers have been doing over the past 18 months and are taking special interest in loyalty and couponing. For example, ING Direct publishes the "We the Savers" blog to draw attention to its savings products, specifically to attract young professionals. Customers are invited to comment on the blog and integrate savings tips into the search landing page. BancoSabadell has more than 4,000 followers of its Twitter feed.
3) Social business can be an invaluable tool for product research and education.
Whether you're crowd-sourcing to find out what customers think of your services, or using social media to encourage customers to develop new products, the social network provides a channel to solicit ideas and input. In fact, social customers expect to be able to input ideas, rate experiences and debate ideas. Banks are redesigning their websites to include new features to gather ideas and feedback. They deliver videos on product information via YouTube and ask customers to rate the site and suggest new products.
4) Social business can provide deeper insights into bank customers.
All of the information that is generated on social media sites is valuable data that can be analyzed and mined. New patterns can be uncovered and valuable insight gleaned -- from gauging what customers like and dislike, to understanding what products they respond to and assessing areas of improvement for customer service. Banks are just starting to use more advanced analytics to tap into this data and develop more customized services and offerings for customers to ultimately drive more business. They can deliver more tailored marketing and sales campaigns to generate more targeted results.
Getting On Board
The next steps include:
- defining the social business road map with a strategy for marketing, products and client experience.
- supporting the internal use of social tools, as understanding the use and advantage of collaboration will have cost and service benefits that will reach the bottom line.
- setting guidelines and processes to protect the bank as well as collect data for meaningful analytics.
Overcoming Fears and Defining the Future
Social business creates the same initial fears that ATMs, the Internet and mobile banking created: security, reputation and control. But like all technology introductions, a clear path of action emerges for the future. Social business is now at that point.
Even if many banks started adopting social media in a defensive mode, the value of social business now is being appreciated and realized. Conduct guidelines published by banks and others guide employees in proper use, just as they did with telephones and email.
Social media is emerging as a cultural change, not a fad. Defining a strategy for the future of consumer and business banking that includes social business will result in improved customer service, higher employee productivity and new products for the changing marketplace.
About the Authors: Boxley Llewellyn is Director of Growth Initiatives and Chitra Dorai is Program Director for Lending Innovations, both with IBM.