Cost Effectiveness and Crowd Sourcing


Organizations with a social media presence attempt to gain a larger customer base to market product and services at a relatively low cost.  Unfortunately, social media presence requires more than making a Facebook page.  Building relationships through social media with consumers is important, especially for banks in order to promote and build trust.  Unlike social media, traditional marketing can be difficult in establishing two-way communication.  Two-way communication should be about helping others, answering questions, and providing informative data.  Seventy percent of content should be about catering to current and potential customers by providing resources, information, and value added activities (Ginovsky, 2011).  Most social media sites are free of charge and can cost a lot less to promote products and services compared to traditional media.  One of the metrics used by marketers to determine the cost-effectiveness of marketing efforts is cost-per-impression (CPI), or the cost required to gain the attention of just a single member of their audience.  Social media marketing channels like Facebook and Twitter yield a CPI lower than that of traditional marketing.

While social media can help build relationships for banks and lower the cost for marketing, social media can help gather important information and increase visibility through crowd sourcing.  Crowd sourcing is an effective way to leverage the reach of the crowd through content marketing.  Brands like American Express OPEN Forum grew rapidly by crowd sourcing.  American Express tapped into the crowd of industry experts and invited them to write free content for the website (openforum.com, 2012).  Content can come in many forms, including reviews, comments, images, videos, and more.  Crowd sourcing can help banks gather information, surveys, and public opinion by crowd sourcing on social media.

Most social media sites, like Pinterest and Facebook, can help banks with crowd sourcing.  To leverage crowd sourcing in social media marketing, banks can invite customers to pin content on Pinterest pin boards or share pictures and videos on Facebook or other social media sites.  This helps keep customers engaged by allowing them to comment and provide feedback on the things that interest them the most.  Pins, videos, and images can explain contests, quizzes, concepts of products or services, or a collection of interesting mages.  There are many ways to leverage the crowd to assist with direct and indirect promotion of goods and services.  Seth Wescott, an Olympic snowboarder, in conjunction with a bank generated 2,745 visits to the bank’s website and 14,486 page views because the engagement of users (Ginovsky, 2011).

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Social Media Surveys


Many organizations have focused on customer surveys to determine the effectiveness of their services and products and the current satisfaction of customers.  For banks to be successful in the intensively competitive environment, they are bound to attach importance to customer satisfaction.  While surveys give important information about customer’s experience, how effective are they?  Developing and posting surveys on social sites are beneficial for banks who want to reach a large specific audience.  Posting surveys and questions on social sites are helpful in establishing relationships and gathering information on customer needs and wants.  Constantly communicating with customers and potential clients via social sites can reinforce customer loyalty.  To overcome reduced customer satisfaction on social media, banks need to concentrate on adapting to each customer’s needs and values by treating different customers in different manners and providing products and service that fit their needs (Koçoğlu & Kirmaci, 2012).  Currently, Gallup tracks all of Wells Fargo’s 270,000 employees with a regular questionnaire and surveys about customer satisfaction (Businessweek.com, 2012).  Surveys can help businesses change strategies to improve customer satisfaction when customer surveys are negative.  Networking sites are important tools for engaging directly with unsatisfied customers.  Banks must deal with bad information from surveys immediately to avoid customers from switching to competitors.  In Wells Fargo’s case, negative surveys conducted by Gallup should require immediate response.  Calling back upset customers is important to retain and improve relationships.  In general, providing constant feedback and providing surveys on social sites help minimize issues and pinpoint problems that can arise in the near future.

Social media is an important tool in improving and retaining customers because of the large outreach it has worldwide.  Allowing constant communications between banks and consumers helps increase loyalty and improves trust.  Studies show that financial institutions have been slow to embrace social media strategies (nytimes.com, 2012).  In addition, according to Scorpio Partnership, Standard Chartered Private Bank, and SEI Global Wealth Service, 40 percent of young high-net-worth individuals viewed social media important for communicating with banks (nytimes.com, 2012).  Social network sites help businesses, especially banks, improve and retain customer relationships.

Building Trust and Relationships


The emphasis on relationship building by banks stems from the financial turmoil that occurred in 2008.  Large, global banks collapsed and the United States government stepped in to rescue small banks.  Consumers trust in financial institutions hit an all-time low and many American banks focused their strategy on rebuilding that trust.  Customers have high expectations in the quality of service when dealing with banks.  Understanding customer behavior so that appropriate marketing strategies directed towards relationship building and customer retention are developed is critical for all banks (Jumaev & Hanaysha, 2012).  Competition between banks on increasing customer base has increased since 2008, and many financial institutions that offer similar services and products are providing support for community programs to differentiate themselves from rivals and to help build relationships with the community.  Supporting community programs helps show trust and social responsibility to communities.  A study on consumer behavior indicates that consumers are more likely to purchase products and services from socially minded companies that support important causes like the environment (calibergroup.wordpress.com, 2011).  Banks know the importance of having good public relations.  Supporting community-based programs can help improve a bank’s image and using social sites to communicate the message can help build trust and relationships.

Digital Banking


Consumer trends have also changed since the financial crisis as new advances in technology facilitated transactions on electronics.  Building relationships with personal bankers and any person working in banks brings a challenge to financial institutions.  Rebuilding trust face to face becomes an obstacle, as consumers prefer online banking.  Visiting a bank branch becomes uncommon, as banking transitions to digital.  The increasing number of Automated Teller Machines (ATMs) has minimized the need for visiting a branch.  ATMs save banks money by minimizing the need for tellers, but can banks maintain relationships with customers without the need to meet in person?  Currently, Bank of America offers eBanking that is limited to digital transactions not involving face-to-face transactions. 

The rise in digital banking has changed how banks promote their products and services.  According to the United States Federal Reserve, most of the younger population in the United States prefers to manage their finances online (federalreserve.gov, 2012).  Opportunities to offer new products and services to existing customers become a challenge for banks as online banking and mobile devices become more common.  To fill that gap, banks need to build one-on-one interactions with the customer by finding ways to communicate as consumer’s trends continue to move digitally.  Unless a particular institution manages a certain differential, it becomes easy to get confused between brands as all banks advertise the importance of social responsibility.  In order to retain customers, critical in today’s market, from switching bank accounts, banks needs to understand what customers want.  Banks have looked at directly communicating the product or service benefit, without stressing too much on the relationship with the customer.

Technology


Digital devices have changed quickly and continue to change overnight.  Bank of America has seven million active mobile web-based and app customers and 1.2 million text-banking customers who transferred more than $12 billion using phones (Valentine, 2011).  Increasing the use of technology with banks will not only help banks lower cost, but help in providing new services to customers.  The increased use of digital devices and wireless capabilities has allowed individuals to access social media content on the go.  Research by Nielsen explains that two out of five owners currently use smart phones and/or tablets to go online while watching television.  42% to 48% of households using smart phones or tablets while watching television engage on social media sites (heidicohen.com, 2012).  This trend illustrates the impact that social media has on consumers.  Banks can harvest the benefits of promoting with social media because consumers are actively engaged on networking site applications on digital devices (Balaceanu, 2011).

The Importance of Interaction


Having a social media presence is not enough to brand the image of a bank or to gain new customers.  Social media is a tool that helps build relationships and trust with current and potential new customers.  Social networks are about having conversations and providing reasons to connect with a business on a social site (Ginovsky, 2011).  Using two-way communication with customers assists businesses, especially financial institutions, on listening to customers while simultaneously showing a sense of corporate social responsibility.  Instead of a bank’s reputation as revenue-searching entities, banks can show themselves as organizations that care about the community by communicating the benefits of saving or educating the public on the importance of having good credit.  Lauryn Franzoni explains that social media is about connecting to people who will help get results and not about how many connections a business has, connecting with few loyal customers may have a larger impact than many others who do not care (Schuele, Madison, & Gourniak, 2010). 

In addition, financial institutions that know about their customer’s opinions and complaints through social media can react more quickly to maintain good relationships.  In many cases, customer service departments in small businesses use social media to connect with people instead of using traditional communication methods.  Businesses are scrambling to develop positions for social media in order to better utilize the platform within the organization (Meredith, 2012).  Banks that fail to listen and engage with customers can miss opportunities to gain more customers and build their image.  Social media offers the ability to meet people online that banks may never have the opportunity to meet in their branch.  Social networking sites are helpful in conducting face-to-face meetings, conferences, providing feedback, meeting new people, and sharing expertise without leaving the office.  Lead generating is also another tool for financial institutions to utilize in social media marketing.  Generating leads is an important part of a bank’s strategy, thus using social media marketing for campaigns can help reach targeted leads.  Google’s search site displays updates on social sites that can help businesses attract potential customers who search for key words (socialexaminer.com, 2011).  People who interact and like information on a business social site can become potential new customers for businesses.  Well-defined organizational communication channel strategies must include social media campaigns (Meredith, 2012).

Benefits of Social Media in the Financial Industry


Banks can benefit financially with social media marketing channels to announce new services and products.  Social networks are not about selling products directly, but an effective way to lure people interested in knowing more about the bank; once interested, individuals may research the bank or walk into a branch (Ginovsky, 2011).  Social media helps spread the word of new products and services, inform consumers of arrivals, or release dates.

Social media marketing for banks can help discover customer preferences regarding products, which permits banks to act based on what the public wants.  Knowing customer preferences makes it simpler to enhance products or services and assist with planning marketing campaigns effectively.  Social media provides virtually instant access to information throughout the world, thus giving banks the ability to share news about their offerings with people that normally are out of reach.  Social media is one of the fastest growing benefits of technology today because it allows large marketing exposure with little or no cost.