Leveraging Social Media Insights to Craft an Effective ... · Social media increase the ante significantly for community banks and credit unions willing to respond to the positive

Leveraging Social Media Insights to Craft an Effective Community

Bank Marketing Strategy

Unique Insights | Implementation Guidance | Strategic and Tactical Direction | Immediately Relevant

fmswhitepaper

By Mary Lou Kolodziej, Consultant, FIS,Sarah Pedersen, NM Incite

and Brian Schlessinger, NM Incite

(With research provided by NM Incite)

www.fmsinc.org © 2012 Financial Managers Society, Inc.

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Leveraging Social Media Insights to Craft an Effective Community Bank Marketing Strategy By Mary Lou Kolodziej, Consultant, FIS, Sarah Pedersen, NM Incite and Brian Schlessinger, NM Incite (With research provided by NM Incite) Overview Consumers have largely favorable opinions of community institutions; this is particularly true relative to the tone of social media buzz surrounding some of the large, global banks. This fact illustrates an inherent advantage smaller financial institutions have over larger institutions. Research conducted by NM Incite reveals a number of specific categories in which community banks received particularly high marks, including: • Consumers willingly give advice to others regarding the upside and benefits of using a

community bank. • Customers openly identify themselves with their community banks online using such

applications as the location-based social networking application foursquare™ and the mobile photo-sharing application, Instagram.

• Consumers perceive that community banks provide superior customer service, an outgrowth of the customer care these institutions are reputed to foster.

• Consumers view community banks as a good source for obtaining loans. • The general public associates community banking with social responsibility and

serving the community. Social media increase the ante significantly for community banks and credit unions willing to respond to the positive trends identified. In a social world where it becomes difficult for any brand to control share of voice, and thus ultimately influence, using social media intelligence to connect with customers is critical to marketing success. Social media pervasive in banking Social media has proven to be a powerful catalyst for word-of-mouth that can now spread at lightning speed across the globe, bringing with it the real-time dimension that has proven challenging for businesses to grasp. The top-down shaping of opinion has been replaced by a “buzz” that infiltrates consumer consciousness “sideways” and from peer to peer. In the past, an organization would influence the market through the use of traditional media such as billboards, television, radio and newspapers − one-way communication


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from company to the consumer. To get an accurate reading of the customer’s experience − the most potent determinant of word-of-mouth − the business relied on customer surveys, focus groups and the like. The business controlled the message to a large extent, on its own terms. With the advent of social media, quite the opposite is true, and this new paradigm has raised the stakes considerably for banking. A strategic misstep that may have been easy to address or contain before the advent of social media can leave the institution vulnerable − spreading before corrective action can be taken. For example, a financial services firm that is perceived − justifiably or not − as providing poor customer service, being deceptive in its practices, or instituting an unpopular policy can experience a public relations nightmare before realizing one is even brewing. This downside is more than a little intimidating, and is likely a fundamental reason many financial institutions, especially private banks, have shown reluctance to embrace what social media has to offer.1 This is short-sighted, however, because like any other powerful force from a herd of mustangs to atomic energy, when harnessed correctly, social media can be of great benefit. This paper explores, in two parts, the potential impact social media can have on brand strategy for community institutions. First, it will examine the characteristics of the social media “chatter” surrounding banking based on exclusive research compiled on behalf of FIS™ Consulting Services by NM Incite − A Nielsen McKinsey Company. Then it will outline strategies to drive marketing and brand success.

Focus group

Methodology for research For community institutions seeking to leverage social media, it is imperative to consider the “social-sphere” as the world’s largest focus group. Unsolicited, unbounded insights are far more powerful than what traditional market research can deliver. Uninhibited by a set of pre-determined questions to a subset of your relevant customer segment, social media allows marketers to uncover what is really on the customer’s mind in real time. This allows for marketing strategies to be tweaked and adjusted as quickly and as frequently as needed. This isn’t to say that raw chatter on its own is sufficient; without the right industry and segment context, it is inaccurate and potentially misleading. In its analysis for “positive reactions surrounding community institutions,” NM Incite deployed a combination of automated information processing and human data analysis to provide insights in the right context. For this study, NM Incite analyzed more than 180 million social media sources2. All available social media sources were utilized, narrowed down by subject (opinions on

1 Sonia Kolesnikov-Jessop, “Banks Slow to Embrace Social Media,” The New York Times, March 26, 2012. 2 This limited the contribution of sources with largely private content like Facebook.


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community banking clusters on specific sites and forums). Only conversations identified as appropriate to the subject were included. This winnowing took into consideration the minimum sample required to ensure that a statistically significant audience was projected. The breakdown of specific sources for this study is shown in Figure 1.

Figure 1. Top Sources/Authors on Community Banking

The pie chart in Figure 2 shows a breakout of the community banking sources used for the purposes of this study:

Despite the best efforts of analysts, false positives (in the form of irony, sarcasm, jargon, slang, etc.) are unavoidable, given that naturalistic conversations are merely monitored. To ensure the extracted meaning was reliable, the study was structured to include a sufficient sample size determined using statistical analysis. While specific questions were never asked, the feedback received provided rich insights and answers to questions that might not even occur to a bank to ask. That the research model can generate this kind of customer insight makes this type of analysis uniquely

Twitter, 49%

Blogs, 33%

Boards, 12%

Facebook, 4% Groups, 1%

Top Sources on Community Banking Top Authors on Community Banking

Figure 2. Community Banking Social Media Breakout.


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effective and can offer a competitive advantage in a hotly contested financial services market. The positive vibe surrounding community banks presents opportunities for these institutions to separate themselves from the rest of the competition. Positive reactions surrounding community institutions The benefit of the doubt Relative to many large global banks, social media buzz in reference to community banks is mostly positive, presenting an inherent marketing advantage over their larger bank competitors whose buzz tends to be much more mixed. There seems to be an almost intrinsic link between the aggregated online voices heard through social media channels and the local focus that community banks make a lynchpin of their success. Today’s socio-political climate echoes throughout the social media landscape, revealing pervasive skepticism toward larger institutions. This can work to the community banks’ advantage. Past evidence of consumer good will extended toward community banks has largely been anecdotal, but social media has changed that. While its focus was technically credit unions, Bank Transfer Day − a consumer activist initiative fueled through social media which called for consumers to conduct a voluntary switch from banks to credit unions − has been to date the most prominent manifestation of the groundswell of support for smaller institutions into which community banks could tap. Indeed, community banks benefited from the positive buzz as a result of the movement, as shown in Figure 3:

Figure 3. Positive Community Banking Buzz Actuated by Bank Transfer Day (Percentage)

0%

1%

2%

3%

4%

5%

6%

7%

8%

% o

f tot

al C

omm

unity

Ban

k Bu

zz Bank Transfer Day (Saturday, November 5) drives considerable discussion from consumers who are contemplating a switch to a

community bank or credit union.

* Partial Week


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Confirmation that community bank buzz is positive is further supported by the research NM Incite conducted during the course of this study, summarized in Figure 4:

Figure 4. Community Bank Sentiment

Community bank topics of interest Once the messaging regarding community banks on social media was compiled and analyzed, it became possible to identify in detail what customers and potential customers found positive about community banks (or in many cases, the concept of community banks). While the messages often overlapped, they remained conspicuous in overall scoring. In order of most prominent to least, the five following topics surfaced as the most common. Giving advice The most prominent characteristic of community banks’ social media chatter is the fact that individuals actively give advice to others regarding the advantages of banking at smaller, local banks. Those who are already customers seem happy to publicly recommend their bank to others. Those who have not yet made the move openly ruminate on the prospect of doing so one day. This personal slant to community bank chatter contrasts to the buzz about larger banks, which usually focuses on products and services, such as strategies for receiving approval on credit card applications.

Checking in Free location-based social networking applications for mobile devices, such as smartphones, are emerging as a vital part of the social media mix. Using applications like foursquare, users "check in" at venues, meaning, they are essentially announcing their presence at various locations to others across their networks. Some users

@VenessaMiemis Have you tried a community bank? I LOVE my bank.

Twitter.com

“I just ousted Ryan O. as the mayor of Keystone Community Bank on @foursquare! http//foursquare.com/venue/19964178”


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compete for mayorship − a sought-out ranking for those frequently visiting certain establishments − of various branch or ATM locations, while others just share information about their location. Customer service As indicated by the above, community bank customers appreciate personal banking relationships and tend to find them part of

their community banking experience. This perception of caring about customers extends to how they feel about the specific services they receive from the bank, with which they are generally satisfied. Mortgage/loans/short sales Consumers often recommend visiting a community bank to obtain a loan, as it may be easier to qualify and less likely to be sold to a larger servicer. This optimism contrasts with the messaging

surrounding big banks, whose customers are likely to share news of foreclosures and perceived unethical practices. Serving community/social responsibility As locally-oriented businesses, community banks are looked upon favorably because they are assumed to be more likely to be involved in grass roots initiatives such as working with local charities or partnering with local businesses for sponsorships and events. Top themes within community banking discussion The collected social media data and resulting statistical analysis revealed three major themes community bank marketers should leverage to inform brand strategy: • Customer care • Superior customer service • Support the local community (bank locally) As a group, community banks and credit unions perform exceptionally well in customer satisfaction surveys of all types. The following graphic illustrates that regardless of the type of survey, community banks and credit unions score particularly well.

“Bank with a local community bank or credit union, they actually have customer service and you always get to talk to a real live person!...love love love my community bank” Community.babycenter.com

“Best bet will be to look for a small community bank or possibly a credit union. Then establish a personal and business relationship with the entity. A community bank or small credit union is more likely to hold on to the mortgage vs. selling to one of the big servicers and thus might be able to work your out-of-the-box situation into something suitable for you.”

“Please tell Scranton city council to move their money to a local community bank/credit union. We need socially responsible bank.”

Twitter.com


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Quick hits, 27 business cases

49%

35%

-6%

19%

13%

10%

71%

57%

36%

66%

55%

31%Mega-Banks

Community and Regional

Banks

Credit Unions

Likelihood to Recommend

Likelihood to Stay

Customer ServiceExtremely Supportive Rating

Net PromoterScore

Source: NPS - Bain & Co, Customer Loyalty in Retail Banking 2010; all others – Raddon Financial Group, National Consumer Research, Fall 2010

Figure 5. Community Banks and Credit Union Loyalty

Consumers’ positive sentiment toward community banks is driven by the related themes mentioned previously. These themes create opportunities for smaller financial institutions to develop strategies to leverage the positive vibes around their organizations. The following table summarizes both strategies and tactics that can harness this positive sentiment: Theme: Care about customers Provide better service Support local community

Strategy: Prove your community bank knows and cares about customers

Establish service levels to take advantage of inherent community bank advantages

Buy local/bank local

Tactics: Personal greeting by front-line staff

Set time limit of interactive voice response (IVR) before a live, local operator engages

Solicit votes to support top-ranked local charities

Tactics: Free advisory sessions to targeted individuals

Have bank staff indicate the local town they reside in

Use local giving/charity advantage to migrate from free to fee

Tactics: Personally address and sign letters in cross-sell campaigns

Solicit service testimonials in social media

Create virtual buying groups of local businesses

Tactics: Tie caring theme into local charity vote

Use real-time chat to connect with services issues

Target local non-profits and then publicize relationships

Tactics: Online check-ins trigger personal greeting back from bankers

Create local column or online newsletter to answer most frequently asked banking questions

Follow local small businesses on Facebook and LinkedIn


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While all these strategies may not fit every institution, they do offer ideas that community banks can act on today. Strategy 1: Prove your community institution knows and cares about its customers Perceptions become reality, and that can be a good thing when customers feel as though small banks care. Familiarity and a personal touch go a long way when competing with larger institutions’ advantages of more sophisticated products and national advertising campaigns. Smaller community banks should use this customer intimacy to their advantage. Clients should be greeted by their name whenever possible. This is especially effective if the bank can leverage a sales and service tool that allows them to call a customer by their preferred nickname and then also inquire about the rest of the household. Free offers tied to caring can create powerful buying incentives. Selected individuals can personally be invited to visit a branch to discuss college planning or retirement goals. This can be done in partnership with the Trust department, but the personal relationship of the local banker should be the driver for meeting with financial planning experts. Personalization shows attention to detail and reinforces an image of caring. If your bank has the bandwidth, try to hand address and sign letters that cross-sell new products to existing customers. This will not only help the open rate on direct mail campaigns, it reinforces the personal touch and caring your local bank provides. Local charities are best identified and understood by local banks. Consider teaming up with a local non-profit for a charitable donation drive. If your customers “check in” online when they enter a branch or when they perform a banking activity online, consider a reward program that offers small tokens of appreciation when they hit certain activity levels. Build and track profiles of these customers so you can greet them virtually much like you address in-person visitors by name. Another easy tactic you can employ to show your bank cares is to “friend” or connect with local small businesses that may have a presence on Facebook or LinkedIn. Following them online shows you care and will help relationship managers stay abreast of changes and growth within their customer base (including your existing customers and future prospects). Strategy 2: Provide superior customer service Great customer service may be difficult to quantify, but certain tactics can help community banks extend their inherent advantage in this area. Community bankers looking to distinguish themselves from their larger competitors should consider setting a hard time limit for customers on voice response unit (VRU) calls. Live operators solving


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issues and answering questions goes a long way toward achieving superior service ratings. Also, when answering phone inquiries, employees should identify the town they live in; this provides a stark contrast with call center employees of global institutions who likely will not be based locally. Community banks can easily solicit customer testimonials where bank service exceeded expectations. These quotes offer excellent content for future marketing campaigns, Web sites and newsletters. Success stories of superior customer services will help reinforce the image community banks want to perpetuate. For online customers, consider offering real-time chat as a means to extend personal service to technology savvy customers. Done correctly, this support is efficient and personal, and creates a high-tech image for your customer support staff. Also, consider proactively extending thought leadership through blogs or local newspaper columns. If your local paper has a financial services column, offer to become a regular contributor. Strategy 3: Buy local and bank local One comment uncovered in this research really captured the sentiment surrounding banking at a local institution versus a national bank: “I’m now at a community bank and I love them. They actually care about our community and sponsor my station’s ‘Food for Families.’” This favorable impression of local banking creates a huge opportunity for community banks. For example, one community bank in Mississippi tied a project to wean customers off of free checking to a promotion of a local charity. They introduced fees for checking products, but charges for the first three months were donated to a prominent local charity. The bank had minimal attrition and generated good will. Other local activities could include soliciting votes online and in branches for a “local charity of the month.” Each month a local organization can be voted to receive a bank donation. Community banks can also create local buying groups, serving as the focal point to highlight locally owned businesses. This can be done online with a small business portal, or more simply in the form of listings and highlighted newsletter articles. Of course, the highlighted businesses will receive press, but also mention their banking relationships and the excellent service they receive from a locally owned institution. Community banks understand local sentiment and can use their smaller size to quickly react to local non-profit opportunities. For example, a local community bank was the first financial institution on the scene after a tornado whipped through a small Midwestern community. The bank staff simply distributed bottled water, but their support was genuine and newsworthy. Where to start? Any one of the three aforementioned strategies could fit a variety of community institutions. If you’re a community bank looking to leverage the positive sentiment toward your institution − how should you start? Marketing activities should start with an assessment. This assessment should measure the characteristics of a community


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bank’s local market and demographics. The assessment will help create a plan which includes the following activities: • Link marketing tactics with your bank’s goals and objectives. • Target/select your customers and prospects by utilizing the assessment information. • Track and measure results. • Use results to refine future plans. The uncertainty that surrounds social media can cause inaction, which in turn can lead to missed opportunities to grow market share and revenues. So, given the challenges inherent in finding time to plan effectively, institutions may find it prudent to seek the assistance of outside expertise, in addition to the expertise that’s available in-house. ______________________________________________________________________

About NM Incite

NM Incite is a joint venture between Nielsen and McKinsey & Company, bringing to bear deep expertise in measurement science and management consulting. As one of the largest global leaders in applying social media to solve marketing problems, NM Incite operates in over 30 markets, including the United States, Canada, United Kingdom, Germany, China, India, Japan and Australia. NM Incite was established with the vision that real-time, authentic consumer expression in social media transforms how marketers build strong brands, create passionate and engaged brand communities, and ultimately achieve superior sales outcomes.

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About FIS FIS Consulting Services helps financial institutions assess their current environment and then define and transition to an optimal future state enterprise. Consulting Services provides a combination of improved cost structures, improved revenue opportunities and improved customer experiences. FIS is the world’s largest global provider dedicated to banking and payments technologies. With a long history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100 countries. ______________________________________________________________________


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Published by: Financial Managers Society, Inc.

100 W. Monroe, Suite 1700 Chicago, IL 60603

312 - 578 - 1 300 [email protected] www.fmsinc.org

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Leveraging Social Media Insights to Craft an Effective ... · Social media increase the ante significantly for community banks and credit unions willing to respond to the positive