Few organizations rely as heavily on reputation as do banks and credit unions. While front line staff put a “face” on a financial institution for customers, social media increasingly monitors, responds, amplifies, and shapes consumer perception and behaviour.
Since the economic downturn, consumer sentiment regarding financial services providers’ dependability, reliability, and trustworthiness has become ever more critical. The growing marketing power of social media can quickly establish and reinforce an institution’s credibility.
Because social media connects so many groups of people instantly and without geographic limitations, it can be seen as an extension of word-of-mouth communication, but with speed and reach that is unprecedented and unmatched. This direct connection between institutions and their customers is a powerful and diverse tool. With a sound social media strategy, it can be extraordinarily useful.
The adoption and use of digital channels, such as mobile phones and social media, has overgrown over the last decade. Institutions are adopting social media to market their products and services. This trend is accelerating the adoption rate of social media marketing by retail banks across the globe. Social media has the potential to be a channel for effective customer relationship management for retail banks.
However, despite spending a growing slice of their marketing budgets on social media activities, retail-banking executives often remain unclear about the value of the investment in the face of continuing consumer distaste for engaging with brands online.
The study, conducted by Vanson Bourne, surveyed retail banking executives from the United States, United Kingdom, France, Germany, and Australia. The survey showed that more than seven in ten (74 per cent) marketing directors in the retail banking industry had seen a greater emphasis on social media in their external communications. It was a significantly higher number than average (69 per cent), and second only to the telecommunications sector (81 per cent).
However, this growing importance is not present in the banks’ marketing spend. The research shows that social media spend in retail banking, as a share of marketing budgets, will only increase incrementally over the next few years. This year these firms expect to spend about 22 per cent of their marketing budget on outlets like Twitter and Facebook, up from 16 per cent in 2011, which is considerably less than what most other industries will spend.
The experimental approach is the fact that only just over half of marketers in retail banking are confident that their social media campaigns are useful, while nearly a third rate them as not practical.
More than half of marketing decision-makers in retail banking (53 per cent) say that social media will grow in importance as it becomes more rooted in customers’ lives. However, more than a third (34 per cent) believe that it will only apply to certain areas of their organization’s markets or business units.
Banks’ caution seems well-placed, given that only a quarter of 3,000 consumers quizzed use social media to follow and keep up-to-date with individual companies or brands, while more than three quarters are predominantly on the various platforms to stay in touch with friends and family.
Among people who follow brands, about half are receptive to receiving their brands’ respective marketing messages. The reverse is true among people who don’t follow brands: some 40 per cent say they would be annoyed to receive marketing missives.
Consumers rate unsolicited spam and pop-up advertisements as their worst experiences of social media marketing, and 65 per cent say they would even stop using a brand if they were upset or irritated by the brand’s online behaviour.
The research also suggests that marketers are, for the most part, misusing social media. For example, marketing decision-makers rate highly the effectiveness of newsletters, information about the organization’s social responsibility, and customer satisfaction surveys—all of which are least interesting to consumers. What customers want, it seems, are details on discounts, vouchers, new products, and services.