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.