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Social media will continue to connect people around the world as it continues to grow and evolve. With millions of users in the United States and around the world using multiple social networks, it is critical for businesses, especially the financial industry, to provide a social media presence. Just having a social media presence does not guarantee exposure or an increase in customers. Social media is an important tool that all businesses can use to connect with the public and even potential customers. Social media helps build relationships and enforces a company’s vision and mission. Establishing a presence and monitoring social networks are important for banks in order to analyze and understand what customers want. Financial institutions need to be agile to adjust their marketing and public relations’ campaigns to the quickly changing trends and consumer opinions. Improvements in technology will facilitate exposure of information to users of social media sites.
Current and future electronics will continue to effect companies. Businesses must adapt and follow consumer trends in order to adjust quickly to fulfill customer’s needs. Technology has facilitated the process of doing transactions online. Many consumers are using ATM’s, online banking, mobile banking, and phone banking to facilitate transactions in a fast-paced environment. With a few clicks of a button, consumers can spread information rapidly through social sites. At times, information may be harmful to organizations and businesses must have a team to listen and provide feedback to diminish unwanted information. The power of social media has given control to consumers and businesses trying to increase consumers and sales should constantly adjust to fulfill customer needs. Information, truthful or not, about financial institutions will be readily available to the public as current and new social sites grow globally. As the American economy continues to recover there will be an increase in spending, lending, credit, home purchases, and investments that will increase financial institutions’ revenues. Having a respected reputation and established relationship on social media will help banks compete and surpass competition.
A large part of the young population use social media periodically. As the young population ages, in the future a larger percentage of the overall population will be using social sites as a means of communication. Banks who establish a strong presence in social media sites will continue now and in the future on retaining customers. Word-of-mouth is a powerful marketing tool that can ruin or build a company’s reputation. Using social media sites to promote products and services through loyal users can help spread word-of-mouth to reach a larger audience. Fiancialbrand.com explains that word-of-mouth banking in the past five years has influenced banking purchases. In addition, there has been a seven percent to fourteen percent increase in consumers’ purchasing decisions through word-of-mouth on online social sites (the financialbrand.com, 2011).
While social media is beneficial for all businesses, social media can damage a company’s reputation. Establishing a team to monitor information about a company on social sites will help pinpoint critical issues to resolve and to help improve an organization’s strategy. Managing consumers’ issues, complaints, and questions on social media will help banks re-build some of the trust damaged due to the financial crisis. Not only will financial institutions benefit by using social media, all businesses, whether they deal with consumers directly or indirectly, should establish and maintain a social media presence.
With memories of the financial crisis that negatively affected millions of Americans still in place, banks need to approach a different marketing strategy to illustrate their social responsibility to the community. Banks are making profit, like Morgan Stanley, that almost has doubled the amount of common equity before the financial crisis in 2008 (propublic.org, 2011). A good relationship and trust within communities will help increase revenue and better compete with other banks. Social media affects all industries, people, and politics. Social media influenced the 2012 presidential election with millions of Americans tweeting on Twitter, commenting, and posting information on social sites. President Barack Obama and Mitt Romney used social media to reach out to the young population in order to bring in more votes (allvoice.com, 2012). The power of social media and the impact it has on financial institutions can distinguish the trust consumers have on certain banks. Keeping customers satisfied is critical to maintaining loyal customers and from preventing customers from switching to other banks (Jumaev & Hanaysha, 2012). People prefer two-way communication in regards to products and services rather than one-way communication. Social networking sites offer financial institutions the opportunity to reach new customers, using social sites as sales channels will help increase potential customers who are out of reach or who may inquire with questions. While electronic devices continue to expand and facilitate financial transactions, enabling new channels to continue the communication, social media will help maintain customer relationships.
Social sites are great tools to conduct research and gather information about a company’s competitive environment. Social media provides a platform to interact with the audience and allows businesses to know more about customer interests in order to adapt quickly and change products or services if need be. Social media users can use certain sites to post on other social media sites. This allows certain sites like Twitter, Instagram, blogs, and Pinterest to post information on Facebook to give businesses a glance on what competitor products or services interest users. Simply asking users questions, posting surveys, or analyzing data within social sites will bring new findings or illustrate changing trends to stay ahead of rivals. Businesses can follow competitors through their social media activity and discover demographics, products and services, or advertisements that competitors show. Social sites are useful for businesses in discovering what competitors offer to customers.
A specific social media site does not represent everyone using social sites; any data collected through social media must incorporate users’ demographics. Pingdom.com illustrates demographics for many social networking sites in the United States. Based on key findings, social sites such as LinkedIn and Yelp had a large user group of 35 to 65 and above of age, as opposed to devianART and Hacker News’ primary age group ranged from one to 24 years of age (venturebeat.com, 2012). Businesses can benefit by establishing a presence on different social media sites encompassing different demographics. With the ability to promote and build relationships across many social sites, businesses can communicate easily based on chosen age groups or locations. Organizations can choose which social sites best fits their product or service by determining the target group of products by age or other demographic specifications.
Social media is changing the way organizations communicate with customers (Wright & Hinson, 2008). Evidence shows that social media continues to grow and new technological advancement of devices such as mobile phones, are facilitating communication on social sites. Using modern technology is important for the adaptation of new banking products and services; modern technology plays a critical role in the increased competition for preservation and/or expansion of market segments (Balaceanu, 2011). Banks are starting to know that consumers like to hear from them, so banks are placing an emphasis on online communication (Balaceanu, 2011). The quick availability of Internet on many devices has facilitated consumer’s use of social media sites. Social media has become a normal daily routine for many consumers.
Social media also brings an important tool for banks to gather information using analytical data on social sites. Analytical programs track readers’ use of websites and show a writer the customer’s interest in order to revise content quickly (McEachern, 2011). Common social media sites that offer analytics include Google Analytics, QR Code Analytics, Facebook Insights, and YouTube Analytics. Analytics can assist financial institutions to gather consumer habits, location of traffic, age, amount of visitors, and much more. These built in programs can help businesses who promote certain products or services targeted towards a particular demographic group. Analytics data also helps determine where most of the traffic generated on online social sites comes from, thus facilitating the location where businesses can promote future products or services. Facebook has a built in analytical program for business pages that gives administrators critical information for decision-making, such as (Facebook.com, 2012):
- How many visits is it getting?
- Is it grabbing attention?
- How long did they stay on their visit?
- Is it persuasive enough?
- How many times did they come back?
- Was a sale made?
- Age, sex, location?
- What day of the week was it?
- Where are most visitors located?
- What kind of device did they visit from?
Social media brings benefits to sales representatives. Social media allows sales people to connect with potential clients who may be interested in their products or services. Social sites allow quick responses to potential or current customers who may inquire with questions. Financial intuitions can benefit by allowing sales people to use social media as a new sales channel. Nelson reports that 87.6% of sales planners using blog, forum, and social media, gained new clients (Nelson, 2010). Salespeople who aim to create value for their customers can attempt to help them in achieving their goals with social media. It is difficult for salespeople to create value for their customers through information with no value. Rather, sales people should offer solutions continuously on social sites to earn and maintain trust (Agnihotri, Kothandaraman, Kashyap, & Singh, 2012).
Providing constant feedback and building strong relationships with social media users increase the ability to bring in more customers through word-of-mouth. According to studies by Market Force, friends’ posts on social media sites influence 81 percent of United States consumers (dexone.com, 2012). Banks can benefit by word-of-mouth by providing social media content in driving purchase decisions.
Providing contact information on business social sites is important to allow people to contact a business who may have an interest in their products or services. With millions of users on social networking sites, banks can benefit by allowing people with questions to email, call, or send messages with information provided on social sites. Furthermore, surveys suggest that consumers are increasingly relying on social media to learn about unfamiliar brands (Naylor, Lamberton, & West, 2012). Having a two-way communication system on social sites can help re-establish or establish customers. According to a Genesys’ study, 90% of companies they studied did not provide an email address in their contact pages, but instead, 83% had a contact form that consumers tend to avoid (forbes.com, 2012). As social media continues to grow and many businesses incorporate social media strategies within their organization, large corporations are starting to embrace social media. Forrester Research found that sales of software to run corporate social networks will grow 61 % a year, becoming a $6.4 billion business by 2016 (usatoday.com, 2012). The benefits of social media for businesses are growing and within the next few years, large financial institutions with a social media presence will see a positive impact within the organization. MIT’s economist, Erik Brynjolfsson, explains that it takes five years for new technologies to show the full impact on companies while McAfee states that social networks are two or three years in for most businesses (usatoday.com, 2012).
Another major problem that can occur on social media is identity theft and privacy issues. The high volume of personal information often displayed on social networking sites could cause possible stolen personal and sensitive information. Cases have also appeared of users having photographs stolen from social networking sites in order to assist in identity theft. As Twitter and other social media sites become more popular, the possibility of getting one’s information or profile hacked is greater. Numerous celebrities have claimed to have their Twitter accounts hacked.
Privacy concerns have risen over a number of high profile incidents that can be considered embarrassing for users. This concern affects banks because financial institutions have sensitive and private information from consumers (Balaceanu, 2011). Along with other incidents of video posts on social networking sites, the ability for transferring personal information between users illustrates privacy concerns. In addition, most social networking sites require users to agree to a Code of Use policy before they may use their services. Controversially, the Code of Use declarations that users must agree to often contain clauses permitting social networking operators to store data on users, or even share it with third parties. Facebook has attracted attention over its policies regarding data storage, such as making it difficult to delete an account, holding onto data after an account is deactivated, and being caught sharing personal data with third parties. Sharing customer’s information can potentially damage a company’s image and create the perception of corporate irresponsibility (Jones, Temperley, & Lima, 2009).