In addition, it was found that nearly 40% of social media users access content from their mobile phone and that Internet users over age 55 are driving the growth of social networking through their mobile devices. As a result, "there is a need for companies to engage more strategically in the social space than they do currently," according to Radha Subramanyam, senior vice president for media and advertising insights and analytics at Nielsen.
|Social Media Demographics, Nielsen Q3 2011 Report on Social Media|
With networking continuing to increase, and the need to connect with customers and prospects in the most efficient and effective manner possible, more banks are using social media as part of their overall communications strategy. But, while interacting with customers through social channels can be effective, measuring the effectiveness of your marketing investment is no easy task. In fact, while many of the largest banks in the U.S. and overseas are leveraging many of the primary social networks, their strategies usually involve non-financial initiatives such as sweepstakes, charitable causes, etc.
For instance, on August 16, Citibank used the front page of the Wall Street Journal to promote its Facebook page. On the Facebook site for Citibank US, visitors were prompted to hit 'Like' to learn how to get special access to Beyonce tickets. According to Jim Bruene from NetBanker there were 36,500 likes by midnight of that day for an increase of around 2,000 fans. Today, the page registers more than 125,000 likes (see below). But what is the return on investment for this strategy?
|Citibank US Facebook Page, September 13, 2011|
To show how fast what is considered a success in social media changes, we only need to look back to last March when Chase used their Chase Community Giving Facebook page to serve as the foundation for a voting process to allocate $5 million in charitable donations. At the time, this program was considered the industry standard with around 2 million 'likes'. Again, however, there was not a clear linkage between the buzz and revenues.
|Chase Bank Community Giving Facebook Page|
American Express, on the other hand has built very direct link between their Facebook page and credit card acquisition and engagement with their 'Link. Like. Love.' program. Unlike the Chase strategy described above, the American Express strategy is not limited duration and the program is all about their card product. With 'Link. Like. Love.', followers link their AmEx card using the Facebook platform to receive merchant-funded rewards. As rewards are communicated via Facebook (as opposed to on an online bank statement), the customer can link the offer to their card and are prompted to share the offer on Facebook with others in their network for a word of mouth marketing (WOMM) impact. As of today, AmEx has over 2 million fans with over 100,000 'likes' being generated each month based on a comparison to results on July 26.
|American Express 'Link. Like. Love' Facebook Page - September 13, 2011|
So how do you build a social media strategy that is effective from a financial perspective? How do you know how much to invest in a strategy and whether the strategy is successful from an ROI perspective? There is a great deal of debate today around 'attribution' and the real value of efforts that may not be directly tied to sales. And until we can do a better job of tying intangible benefits such as traffic, fans, mentions and views to some traditional metric, we should continue to be challenged by the finance departments of banks to provide more accurate measurements.
As shown in the infographic below developed recently by MDG Advertising, the vast majority of current measures used by CMOs are 'intangibles,' which by their very definition should prompt caution when using besides metrics like revenue, average order volume, reduced call volume or sales. And while 72% of CMOs cited that social media helped to close business, there was no direct connection between the investment and the return.
Finally, even though the infographic indicates which social channels were thought to have the best ROI (Facebook), the majority of respondents didn't know what the return was on their investment or did not think there was an ROI. Obviously measurement and correlation needs to improve for social media to continue to grow as a viable financial institution marketing channel.
|Infographic from MDG Advertising, September 2011|
As with any marketing strategy, your social media strategy should begin with a clear establishment and understanding of your social media objectives. Look at how your competitors and those outside the industry are establishing goals and make sure that your measurement criteria is fully integrated with your current analytics system. Will your social efforts be to increase sales, improve customer service, generate customer engagement/loyalty, assist with product development or simply increase awareness of your brand?
Once your objectives are delineated, you need to determine what percentage of your marketing budget should be allocated to your efforts. Be careful. Social media is not 'free'. Not only is there a cost for the internal team that manages the program, but there are usually external agency costs as well. In addition, since most banks don't have the luxury of simply implementing a social media strategy and getting immediate traction, most programs will need to integrate traditional media to promote social media efforts (advertising costs). Finally, there are creative, placement and tracking costs that also should be considered.
The banking industry is known for moving en masse towards the next 'shiny object'. I would suggest viewing The Financial Brand's 'Reality Check 2.0: Myths and Facts' Webinar to understand some of the 'false reads' you could be getting from industry publications. While social media should definitely be part of every bank's strategy (customers expect a social presence), be cautious of building strategies that do not have a clear metric associated. Until key performance indicators (KPI) are established and agreed upon, bank marketers would be well advised to move conservatively and focus on integrating all communication channels.
Let me know: How are you leveraging social media at your bank? How are you measuring success? I am interesting in any success stories.