Thursday, 14 January 2010

Social Media in Financial Services (or at least #SocialMediaFS)

I was not fortunate enough to attend the the Social Media in Financial Services conference in London today and yesterday.   However, it being a conference about social media, we were all very fortunate to have so many delegates tweeting (or is it twittering) the conference highlights throughout the day using the hashtag #socialmediaFS.

I certainly got enough material from this during the two days to warrant a blog post.

Although I am naturally going to try and pull the nuggets out that have the most strategic significance, a conference or a post on social media in anything would not be complete without a definition of what social media is.
RT @TheFinanceCoach: Social media is simply digital word of mouth #socialmediafs
That's about as simply as you could put it.   Almost too simple to be worth mentioning.   Except to the extent that some many people just don't get it.   You hear constant criticism of services like Facebook.com and Twitter.com because some people will insist on updating their status to tell the world what they had for breakfast that morning.   And yes, as far as I am concerned, that is a waste of time.   I've also recently heard Twitter.com demonised because two people who conspired to murder had used Twitter.com to discuss their plans with each other (which, in hindsight, I am sure they regret).

But you don't hear those same criticisms levelled against the telephone.   I am sure that more people have discussed their breakfast on the telephone than have on Facebook, and I am equally sure that more murders have been discussed on the telephone than have on Twitter.com.   Word of mouth can be either helpful or not helpful.   If you don't want to know what people have for breakfast, simply tune out people who post about that, and tune into people who post content you find more interesting.   (I will confess to filtering out real world friends on Facebook because I don't like their Facebook posting style).

Social Media just makes word of mouth more powerful.   And if word of mouth is the most influential way of spreading your message, then you surely need to pay attention to the most powerful tools for doing so.
RT @PeteMatthew: 92% of people trust word of mouth as the best source of new product ideas. 62% consult online communities before buying ...
(If you still want a more full definition of Social Media, I'd recommend The Evolution of New Media, Web 2.0, Social Media, Social Business: A Brief History of Everything)

So, if social media is important, what can companies do about it?
RT @crispinheath: The three most powerful ways of using social media - marketing, communicating and creating community #socialmediafs

 There are, of course some differences.
RT @PeteMatthew: Social media replaces the physical things we use to promote ourselves; car, clothes etc now replaced by Websites, SM #S ...
One of the key differences is that what you say digitally and publicly with social media tends to stick longer than what you way around the water cooler at the office.   Your comments become artifacts.   People who interact with you online but meet you only infrequently, or possibly even never, form judgments about you based on those artifacts.   And so it becomes important that everything we put out there is consistent with the image we are trying to portray.
RT @crispinheath: Nicola Webber 'Every post is an opportunity to build your brand' very true #socialmediafs
It could equally be said that every post is an opportunity to destroy you brand.   The internet abounds with stories of people who've damaged their reputations, destroyed relationships or lost their jobs as a result of injudicious post of Facebook.com or Twitter.
RT @TheFinanceCoach: It takes twenty years to build a reputation and 5 minutes to ruin it. Warren Buffett #socialmediafs
Even so, even bad publicity on social media can be put to good use:
RT @TheFinanceCoach: Resist the temptation to delete something negative that a client says. Use it as an opp to interact #socialmediafs
What is true at a personal level is as true of corporate brands.
RT @PeteMatthew: Be single minded about your brand: communicate one thing in one way, in every sphere.#SocialMediaFS
The power of social media makes it possible for individuals and companies to desiminate more information and to have that information spread more rapidly and more widely than at any time in history.   And that is a double edged sword.   Too much information with too little focus can confuse your audience and do more harm than good.   Social media increase the importance of focus in your communication message.   And focus in your message is very hard to achieve without strategic focus and differentiation.

However, social media also means that it is not longer sensible not to communicate.
RT @bClear: while you're not communicating with your clients, everybody else is #socialmediafs
Customer engagement is fast becoming a key strategic enabler.   Its not a strategy in itself.   You still need a strategy with which to engage your customers, suppliers, distributors and other stakeholders.   But increasingly the companies with open two way channels of communication have access to levels of understanding of the needs and wants of their customers that give them a distinct advantage in formulating and executing successful strategies.
RT @martinskinner: "The ultimate downfall of big co's will b that the highest paid staff r typically the furthest from the customer @tho ...
The ability of small companies to engage directly with large numbers of customers and partners on a cost effective basis has largely eroded one of big companies' previous advantages - large research and development budgets. Small companies are now able to gather information directly from customers on a near-continual basis and incorporate that into continually evolving product and service designs. If they are more nimble than their larger competitors, this may enable them to outcompete them.
RT @topleftdesign#socialmediaFS@ThomasPower "its not the early adopters who spend the money - but they tell their mates and spread the word
Word of mouth works both ways of course. Not only is it the most important channel for getting customer feedback, it is also the most effective marketing channel.   The subject of how to get social networks to spread your marketing message is one of the most hotly debated topics in the marketing discipline.   I've posted about viral marketing and viral business models before.   The simple fact is, if you want people to spread your message, give them a message that makes them look good to their network.
RT @PeteMatthew: 'If I tell my Facebook friends about your brand, it's not because I like your brand, but because I like my friends' #So ...
In some ways, this turns marketing on their head. Marketers need to think not "what do we want people to tell their friends?", but "what do people want to tell their friends?" Often this involves giving away an awful lot before you expect to get anything in return.

One of the reasons big companies may not embrace social media is that, in order to succeed, they have to give up the control they've tried so hard to establish.
RT @davidricketts: Firms have to accept they have little control over what is said about them when using social media#socialmediafs
Moving on to financial services, more directly, the EngagementDB's July 2009 ranking of the top 100 global brands cites financial services as the industry sector with the lowest levels of engagement.   Other industries with similar levels of regulation have done better.
RT @crispinheath: 35k docs active on doctors.net.uk Doctors logging in 45 times a month and spending 25 minutes a day. Incredible nos. ...
This lack of engagement in the financial services sector creates a real opportunity for improvement.

I've also posted before about developments in Personal Financial Management.   In the UK, we (driven by the FSA?) tend to focus on financial education.   Sure, that may be what people need.   But is it what they're going to want to tell their friends about?   It will almost certainly take more to get people excited enough to pass the message on either down at the pub or through social media.
RT @PeteMatthew: Clients don't want a map for their financial journey, they want a satnav giving real-time directions:@mikelinskey #Soc ...
Sadly the UK market has been very slow in picking up on this despite numerous examples we could draw on from across the ocean.
RT @PeteMatthew: America is light years ahead of us in delivering Financial Advice online. See Mint, SmartyPig and Cent ...
Finally, no conference would be complete with a dose of interesting statistics.

I am constantly amazed by the number of executives who refuse to engage in social media and label it as the domain of impoverished students and school children who offer little commercial prospect.
RT @bClear: fastest growing sector of people using the internet are aged 35-54 #socialmediafs
There are plenty of statistics showing that social media is also incredibly popular in this age group (for example).

I was slighltly more surprised by these figures:
RT @crispinheath: Robert Pink '49% of general insurance iis bought online, 51% of car insurance bought online'#socialmediafs
Frankly, I thought they'd be a lot higher, given how easily comparable general and car insurance is, and how many discount and online brokers, supermarkets and price comparison web-sites there.   It is perhaps a sobering message for for social media enthusiasts.   Whilst the online market, those reachable through social media, may be by far the fastest growing segment, the offline segment remains substantial.

Which brings me to my final and equally but oppositely surprising statistic:
RT @PeteMatthew: Google UK. 25% of folks' leisure time is now spent online. #SocialMediaFS
I find it quite hard to believe that the figure is really that high.   Whether it is or isn't, it does highlight another danger of social media:   in a world where everyone is a publisher, and fact checkers are a luxury only the large publishers can afford, you can't believe everything you read online.   Its long been true of the internet, and even of traditional media, that you can't believe everything you read, but social media makes it easier for errors to enter the published domain, and easier and faster for them to spread rapidly.   It could be that the Google presenter got his facts wrong or mis-represented them, or that @PeteMatthew misheard or mistyped them, or that I miscopied them.   But the fact remain, that that figure is now permanently recorded in both his tweet and this blog entry.   On the other hand, if the figure is right, then the world has changed more and faster  than I had ever imagined.   (If anyone can verify this figure, please post a reference in the comments below.)

Perhaps I will get the opportunity to attend next year.

See also: