With the advent of mobile technology, e-commerce and
social networking, financial services marketers are embracing new
methods to reach out to existing customers and engage with new
ones. Victoria Conroy reports on the rise of interactive marketing
and its role in client acquisition and retention.
Go deeper with GlobalData
For the past three decades,
financial services customers all over the world have become used to
the sight of various marketing offers and mail-outs landing on
their doormats. From application forms to promotional offers, banks
have relied upon tried and trusted paper-based methods to tout
their wares to potential and existing customers.
But as the world changes and
becomes increasingly dependent on technology, so too must old
marketing strategies, which are being overhauled to fit in with the
advent of the internet, mobile phones and social networking.
More and more financial services
organisations are realising that not only is it important for them
to have an online presence, but that their marketing strategies
need to be much more interactive and intuitive, whether the channel
used is the internet, the mobile phone or viral marketing.
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By GlobalData
The evolution of online
marketing
Although financial services
organisations have long had a firm presence on the web through
dedicated company and product websites, over the past decade the
nature of customer engagement has changed dramatically.
From originating as merely online
‘shop windows’ where customers were presented with an array of
services or products, with little opportunity to influence what was
on offer, the nature of marketing today is centred around
interaction and active customer engagement, be it through online
forums where customers can ask questions or start discussions, or
dedicated portals where customers can participate in surveys, games
or other two-way channels of communication.
An extra dimension has been added
due to the advent of video-sharing websites like YouTube, where
financial players can present their latest TV or web adverts or
specific product showcases.
Social networking websites like
Facebook and Twitter are also becoming increasingly important
marketing tools, with many banks around the world creating
dedicated pages for specific products or campaigns. The growing
importance of social networking websites to the financial services
industry was illustrated in a study from research group Nielsen,
published in October 2009.
The study found that the US banking
industry’s advertising spend on social media rose by 98 %,
comparing August 2008 and August 2009, a period which saw the
banking industry in crisis mode, forcing them to cut back on
traditional and more costly advertising spending channels, such as
TV and print advertising. In stark contrast, advertising on the web
costs significantly less, and for channels like Facebook and
Twitter, it is free.
Nielsen research from January 2010
shows just why banks need to revamp their thinking when it comes to
social networking – according to Nielsen, global consumers spent
more than five and half hours on social networking sites in
December 2009, an 82 % increase from the same time in 2008 when
users were spending just over three hours on social networking
sites. In addition, the overall traffic to social networking sites
has grown over the last three years.
Globally, social networks and blogs
are the most popular online category when ranked by average time
spent in December, followed by online games and instant messaging.
With 206.9m unique visitors, Facebook was the largest global social
networking destination in December 2009 and 67 % of global social
media users visited the site during the month.
Appeal to different
demographics
Significantly, social
networking sites are extremely popular with younger consumers – a
valuable target segment for financial services companies.
According to US market research
specialist Mintel Comperemedia, adults under the age of 34, men,
and those earning upwards of $75,000 consistently report more usage
of and interest in social networking, because these individuals are
already engaged in social media and because they use the internet
more for research and purchasing.
Mintel released data in March 2010
from a recent survey it conducted, and found that only 11 % of all
respondents said they follow companies on social networking
websites, but 20 % of 25-34 year-olds and 19 % of those earning
$75,000-$100,000 said they do. Younger adults and men are also more
likely than average to say they find advertising on social
networking sites useful.
On a wider basis, Mintel survey
data suggests that consumers aren’t against social networking with
their bank or credit card company. Only one-in-four respondents of
a recent survey told Mintel they think financial services companies
on social networking websites are annoying. Moreover, 16 % said
they would follow a financial services company for coupons while 11
% would follow for contests or promotions.
With consumer trust in many
financial services organisations having been badly eroded over the
past two years following the credit crunch, advertising through
these channels could offer a way to reconnect with customers.
“Social media is rich with
opportunities for financial services institutions, but companies
need to be mindful of the medium’s nuances,” said behavioural
economist Susan Menke, who compiled the data for Mintel.
“Marketing on social media is about
making connections and establishing strong, trusting
relationships.
“Looking at the success stories of
last year, we see that people crave open, honest communication.
People want advice and structure to help them control their money
so they don’t get into financial trouble.
“Financial services companies need
to honour these values and respond with programmes and products
that help people do better banking,” Menke added.
Banks boost their
presence
But some organisations have
yet to come up with a marketing solution that effectively straddles
social media and their own web presences.
Some financial organisations often
seek to direct customers to their own stand-alone websites – often
at a higher financial cost – rather than focusing their attentions
on existing online social networks such as Facebook or YouTube.
Wells Fargo of the US was one of
the early movers into social media in 2005. Since then the bank has
worked consistently to build up its social media presence,
principally through the creation of a number of blogs hosted on the
Wells Fargo website.
Wells Fargo also launched a
customer service channel on Twitter in 2009, emulating peers such
as Bank of America and recent acquisition Wachovia. It also runs
YouTube channels targeting retail, wholesale banking and small
business customers.
US financial player Fiserv uses a
Facebook-based application to let users monitor and access their
bank accounts, including checking balances and transferring
funds.
In the UK, HSBC subsidiary First
Direct launched a social media newsroom in mid-2009, to enable
customers to share information. First Direct has already utilised
Twitter but has created the specialist site for customers to meet
as a community. First Direct has added functionality to allow users
to share text, video and images across blogs and social
networks.
Others, such as UBank, the direct
banking subsidiary of National Australia Bank, have taken
cross-promotional activities still further, using its Twitter page
to advertise its website, a 24-hour helpline, email contact
details, Skype address, YouTube channel and Facebook page.
However, UBank does not see its
Twitter channel as a direct means of driving product sales. Instead
it uses the page to engage with customers, provide financial
insights and support local and national community causes, believing
that blanket product placement would risk alienating potential
customers.
Barclaycard’s digital strategy has
also seen it use online video to promote its extremely popular
‘Waterslide’ iPhone game, offering a demonstration version and
competitions to customers on its YouTube channel, resulting in
user-generated video versions of the game and participation from
over onem people.
Waterslide has engaged over 9m
people online and through the iPhone – twice as many as would have
seen a primetime Waterslide TV advert.
But financial services players also
need to be mindful that just as they can reach out to customers in
new ways, those same customers can also use social networking to
express dissatisfaction with the service they receive. Facebook
contains many pages set up specifically for bank customers to
complain about poor service – ‘I hate Bank of America’ is a notable
example.
An integrated social media
strategy
US financial research consultancy
Javelin Strategy & Research warns financial services
organisations that they need to devise a social media security
strategy in order to protect their brand, mitigate fraud losses and
retain customers.
“Today, financial institutions are
wisely using social media primarily for branding, marketing,
financial literacy, community forums and customer service,” said
James Van Dyke, president and founder of Javelin.
“Financial institutions can also
help consumers better manage their money through the delivery of
cutting-edge tools that allow users to get financial alerts,
monitor account activity and transfer funds through their social
networks.”
Javelin’s recent report, Social
Media and Banking, adds extra impetus for financial services
players when it comes to boosting their social networking presence.
Key findings included:
- Adoption of social networks is
already widespread. About 52 % of all US adults with online access
spend time in social networks. That number increases to 81 % of
core millennials, who range in age from 18 through 24; - 2009 was a year of rapid adoption
of social networks. The fastest-growing segment of new users was
consumers ages 25 to 44; - Banks must find ways to combat
consumers’ fears about the safety of their personal information on
social networks. Those fears increase with age and very according
to ethnicity.
“At the very least, financial
institutions need to know what consumers are saying about them
online and respond when there is an issue,” said Mark
Schwanhausser, senior analyst at Javelin.
“But the real pay-off will come from being part of the
consumer’s always-on lifestyle. Social media can be used to build
customer loyalty and brand awareness, hold open conversations with
consumers in community forums, share financial literacy tips and
serve up banking transactions where it is convenient for
consumers.”
|
Social networking |
||
|
Average time spent per person |
||
|
Country |
Unique audience |
Time per person |
|
US |
142 |
6:09:13 |
|
Japan |
47 |
2:50:21 |
|
Brazil |
31 |
4:33:10 |
|
UK |
29 |
6:57:54 |
|
Germany |
28 |
4:11:45 |
|
France |
27 |
4:04:39 |
|
Spain |
19 |
5:30:55 |
|
Italy |
18 |
6:00:07 |
|
Australia |
10 |
6:52:28 |
|
Switzerland |
2 |
3:54:34 |
|
Source: Nielsen Research |
||
