Innovation | Strategy | Leadership
I continue to get questions on which social media channels are most effective for what purposes. No wonder, considering the growing complexity.
Thankfully, there is a very simple explanation, which I will be using from now on:
You’re welcome.
I was recently interviewed by BAI Banking Strategies on the evolving use of social media in banking and wealth management.
Here is an excerpt from the article, which was published yesterday:
Nicols, a former executive with Minneapolis-based U.S. Bancorp, agrees that social media can warn financial institutions of potential problems. “You ought to be happy when a client is complaining because you’re learning something,” he says.
Young customers are more likely to be influenced by what their peers do than older customers, which, in turn, highlights the potential for social media, Nicols says. He cited the example of a customer who had a problem with his bank that was successfully resolved, which led to an enthusiastic recommendation of the bank to other consumers in social media. “There are whole businesses built on peer recommendations, such as Yelp,” which posts online customer reviews of businesses, from restaurants to bank branches, Nicols says.
Banks also have to use the right channels to respond to customer inquiries, Nicols adds, citing an occasion when a CEO of a technology company tweeted the bank that he wanted to talk to someone about a mortgage. The marketing department, which received the tweet and didn’t know how to respond, sent an email to Nicols, who immediately tweeted the executive. “Customers are giving you signals about how they want to interact and you need to pick up on those signals – or lose business,” he says.
Read the whole article here: BAI Retail Strategies
(I originally wrote this as a guest post for the management consulting and strategic communications firm Beyond the Arc. You should check them out for a lot of great information on customer experience, strategy, analytics and social business. I will be speaking on a panel on How to Monetize Social Media with their CEO Steve Ramirez, along with Citibank’s Frank Eliason, cited below, at the BAI Retail Delivery Conference on October 9.)
I am sometimes asked to give social media advice to others in financial services.
“I wouldn’t necessarily consider myself a social media expert,” I once told a counsel-seeker.
“You’re a banker with a blog”, he shrugged, “the bar’s pretty low.”
Well, ex-banker now. I now run my own consulting business for financial advisors and firms, and many of them have questions about social media strategy. I often start by quoting Ron Shevlin, Aite Research analyst and Snarketing 2.0 blogger:
“There is no such thing as social media strategy. There is only business strategy.”
— Ron Shevlin
It is not uncommon for business managers to seek the holy grail, the silver bullet that when deployed, will magically transport their business to new heights. In the late 1990s, it was the internet. Lousy businesses added “dot-com” to the end of their name, changed their logo to purple and green, and threw up a website. They were still lousy businesses, and the internet didn’t change that. In some cases, it may have even accelerated their demise.
Social media is just a tool to use in running your business. There is nothing magical, or necessarily even compelling about it. Lots of very successful businesses have small or nonexistent social media presence. Frank Eliason, Global Head of Social Media for Citibank, and author of the book @Your Service: How to Attract New Customers, Increase Sales, and Grow Your Business Using Simple Customer Service Techniques, cites Apple as an example of a well-run, much-admired company that does not focus much on social media. Retired athlete Michael Jordan’s page has nearly triple the number of “likes” of Apple’s page, and dead musician Michael Jackson has nearly seven times as many.
Participating in social media increases the transparency of a company’s operations and people, which is a positive thing for most customers. The bad news is that poor practices and behaviors are highlighted as well. If you have a dumb policy or poorly trained people or a bad product, that will become readily apparent even sooner through social media. Maritz Research found that 51% of consumers who complain via social media expect to be contacted, but that 85% of those outcries are not addressed at all.
I sometimes air complaints and compliments via Twitter, partially as a social experiment. The range of results is stunning. I had a sleepless night in a Westin hotel due to a loud banging noise caused by a problem with air in their pipes. I tweeted my frustration and was contacted within hours by both the hotel management and their Starwood Preferred Guest loyalty program, and each offered me apologies and compensation for my inconvenience. My frustration was quelled and I remain a loyal SPG guest.
Quite the opposite experience I had with a major retailer. I was not having any luck reaching someone on their 800 number with the authority to reverse an express shipping charge to correct their own mistake, so I tagged them on Twitter. The next day I received a tweet apologizing and asking me to call in with a “reference number”, but when I called in, I was right back at the low level where I had begun. The “reference number” was meaningless and no one on the phone had any more information or any more authority than on my original call. I try to shop elsewhere.
What are today’s key business challenges and how can social media help?
Acquiring new customers
How can you use social media to differentiate in a crowded business and gain market share over the competition?
Retaining existing customers
Half of bank customers are considered “ripe for change”, and most change because of changing life circumstances.
Expanding relationships with existing customers
In the consumer banking business, as many as 80% of customer relationships are unprofitable. Those statistics may not be accurate in your industry, but some variation on the Pareto Principle (the “80/20 rule”) tends to exist in every business– a small number of customers typically provides profitability to subsidize the vast majority.
No matter what business you’re in, it’s likely you are dealing with these basic issues. A social media presence won’t make them go away, and poor social media practices will make them worse. Focus your business strategy on solving relevant customer problems, and leverage social media as an enabler. There are plenty of social media experts who can design just the right digital campaign to reach just the right markets with just the right messages –but first, ask yourself a key question (and one that we have discussed here before): Are you repainting the walls, when you have a serious crack in the foundation?
Hopefully readers can forgive me if I sometimes seem a little disjointed in my writings.
I attend wealth management conferences and find myself the only person talking about digital marketing, social media and engaging clients across multiple delivery channels. Then I attend social media and financial technology events and find myself the only person talking about wealth management, at least in terms of the kind that involves financial advisors actually helping clients.
Then I read, as I have referenced before, Ron Shevlin‘s BS-busting work on his blog Snarketing 2.0 and he skewers the very notion that some of this stuff even matters:
And so what if banks do create a “consistent brand experience across all channels”? Do you think bank customers will be lulled into forgetting the other issues and problems with their <sic> that they face?
He is right, of course. But I’ll come back to that.
Last week I sat in a room in New York full of bright wealth management executives to discuss important ways that firms can improve client service and grow their businesses. Booz & Company showed research that wealth management was one of the bright spots (along with payments) for growth in a sluggish financial industry. Their research showed an expected growth in the wealth management business of 3x GNP growth. That sounds pretty good until you realize that GNP growth has averaged about 1.5% over the past ten quarters.
Voice of the client largely missing
There were lots of good discussions on lots of relevant topics, but what struck me the most was how internally focused our industry has become. Maybe we have always been this way. Aside from my friends at the VIP Forum and WISE Gateway, most of the discussion was about the firms, their people, the investment strategies and the sales and marketing, rather than the clients themselves.
I can’t count the number of surveys and studies that show the increasing expectations of integrated mobile and web offerings, and the affluent have higher adoption rates than the general population. Yet someone in the room actually said out loud that they haven’t done anything with mobile technology because their clients haven’t been asking for it.
Henry Ford famously said (or perhaps never said, according to Patrick Vlaskovits in the Harvard Business Review) “If I had asked people what they wanted, they would have said faster horses.” Whether he said it or not, the apocryphal quote highlights both sides of the same coin for me.
Listen to your clients. But also use your own intuition to design something to solve their problems in a better, faster or cleaner way. That is the essence of innovation, and what is too often lacking in financial services. (See Five Things Banks Can Learn from Start-Ups.)
Don’t repaint when you need to fix a cracked foundation
Which brings me back to Ron Shevlin’s comments. In my mind, it’s not that financial firms shouldn’t strive to “create a consistent brand experience across all channels” (or engage in social media, or build their brand), it’s that too many firms are focused on the window dressing instead of addressing the core issues that consumers want us to address. Shevlin’s closing comments are spot on:
If, however, the focus was on “fixing problems” or “redesigning” processes and interactions, then maybe funds would flow to the places where they’re really needed.
But you’re not going to effectively prioritize those investment alternatives by asking consumers about their channel preferences.
I am now in Boston and off to another conference, surely filled with bright people. Let’s see who’s really focused on the clients…
More here next week.
Today: The GeekWire Summit
Startup technology news site GeekWire held its first birthday party on March 7 with the GeekWire Summit. Speakers included former Microsoft Chief Software Engineer and Cocomo co-founder Ray Ozzie, former Swype CEO Mike McSherry, Hulu CTO Richard Tom, T-Mobile CMO Cole Brodman, Rhapsody President Jon Irwin, venture capitalist/serial founder Oren Etzioni and other great technology minds. Nothing was focused on FinTech per se, but nonetheless here are some highlights and potential implications on the intersection of leadership, advice and technology in financial services:
“How do large companies innovate? They buy small companies.”
“It’s not enough to encourage employees to innovate.
You have to protect them from the cost of failure.”
– Jocelyn Goldfein, Facebook
(P.S. – I live tweeted my new startup idea from the conference: Embedded QR codes in public carpeting. Remember, I get a 20% Founders Fee.)
I created this blog to explore the intersection of leadership, advice and technology to improve the lives of financial advisors and their clients. Leadership is a critical element for any organization, and there are many great sources to tap for inspiration and further exploration.
But setting leadership aside for the moment, I have lately found myself thinking more deeply on how technology can enhance the advisor/client relationship– and how rarely it actually does.
In my last post, I reflected on banking as the second oldest profession in the world; and for much of the industry’s history it was not what we would call today a very “scalable platform”. It was a person to person business, and despite much innovation, in many respects it still is. Especially in the high net worth and ultra high net worth space.
Technology has been employed on a very large scale in transaction processing, record-keeping, funds transfer and numerous back office functions for analytics, risk management and compliance. But front office investments in technology have all too often been focused on cutting costs or improving advisor productivity. Good for shareholders, but what about the client experience?
Dodd-Frank and other legislation is quickly pushing compliance spending to the top of the priority list. A 2011 survey by Aite Group and Wall Street & Technology found the 25% of CIOs ranked compliance their top priority– up from 10% in 2010.
As tablets move into the workplace, the traditional advisor/client face to face conversations are moving to more collaborative “shoulder to shoulder” conversations, and many firms and advisors are not prepared for what I believe is truly a seismic shift.
Financial technology firm Balance Financial had a blog post entitled “What Facebook Taught Us About Personal Finance Tech“. The post described some of the challenges advisors and firms face:
Again, personal finance is a naturally collaborative chore. Even more, professional financial services rely on collaboration. If you are a financial advisor or CPA, you must interact and engage with your client to deliver services. You have to get to know your clients, collect information, stay informed of changes to their life and find ways to stay relevant in an ever changing world.
In the future, look for tools and solutions that use technology to help make the naturally engaging & collaborative process of professional financial services more efficient and rewarding. The most powerful technology being developed today makes the natural interaction and communication between humans more transparent, more efficient and more frequent.
I first learned of Balance Financial at Finovate 2011, and I recently had the chance to sit down with Balance CEO Devin Miller to learn more about how his company is using technology to improve the lives of advisors and their clients.
It seems like so much of the recent innovation in the financial industry has been to empower the do it yourself investor and borrower. I think that’s a really good and healthy thing for the industry, but so many clients don’t want to do it all themselves. They want a trusted advisor, but they don’t want to give up the cutting edge technology to get it.
In order to retain and win clients and assets in 2012 and beyond, advisors will need to engage and collaborate more with their clients. Technology can be a great enabler when it’s designed with the right end in mind.
How are you using technology to engage and collaborate with your clients?