The Future of Social Media


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.

Advertisements

Word-of-Mouth in a Social World


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.

Taking a Different Approach with Social Media


  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.

Sales in Social Media


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.

Identity Theft and Privacy


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).

Ignoring Social Media


Ignoring customer complaints on social media sites can worsen the problem that can gradually harm the company’s image.  Ignoring customers or potential customers can upset them.  Not providing feedback to consumers can affect a business negatively while potentially producing obstacles to improve the customer relationship (Tokunaga, 2010).  On a case-by-case basis, when customers post unwanted information on a company’s social webpage, organizations must avoid deleting the customer complaint or comment from the site.  

  • Deleting comments will give users a reason to share their experience with friends causing a negative image on the company.
  • A complaint from one or even a few customers can grow exponentially, costing prospect customers for the business. 
  • When dealing with complaints effectively, customers can tell their friends how good the company is on dealing with issues and what great customer service they offer.  This can also encourage an increase in new customers (Chen, Xu, & Whinston, 2011). 

Any bank or business can offer great service, but mistakes happen and customers can get upset and complain.  With the growth of social media, dealing with mistakes with two-way communication and engagement can offer better results.  Financial institutions need to have a clear strategy to manage their online image.  Businesses need to have procedures and practices in place to manage their reputation and risks involved when engaging with the community on social networks (Jones, Temperley, & Lima, 2009).

Negative Aspects of Social Media for Businesses


Establishing a social media presence alone does not bring visibility or increase sales.  Social media can help banks increase their reputation by interacting with users and always keeping a two-way communication dialogue open.  Two-way communication is important, especially for banks, since many consumers feel that banks have a bad reputation (Bonini, Court, & Marchi, 2009).  Negatively, social media can also harm a bank’s reputation.  Too many advertisements can push consumers away from a company’s social site.  Through the freedom of expression on social media, many active audiences generate their own content and opinions (Chen, Xu, & Whinston, 2011).  Word of mouth in today’s economy is a key factor that influences the audience.  Ignoring complaints on social media can cause unsatisfied customers to set up a Facebook war by defaming a company on their personal Facebook page.  Important to marketers, studies have shown that 3.5 billion estimated word-of-mouth conversations occur around the world each day, and about 2.3 billion of them refer to a brand, product, or service.  Word of mouth has manifested itself through digital and social media farther and faster (Evans, 2012).