January 16, 2012

With any new technological development, adoption follows a predictable pattern. First, a handful of early adopters embrace the new technology. If the new systems provide value, it’s these early adopters who drive the buzz and growth among broader audiences. Once the majority adopts a technology, however, there will still be a small group that lags behind and never realizes the benefits of the new technology.

Are financial institutions at risk of being left behind by social media?

Social media is no longer a fad embraced by only the younger generation. Some 800 million consumers spend nearly four hours each week on Facebook. Today’s consumers expect businesses to listen, engage and provide personal attention through social networks.

Some credit unions are slowly experimenting with social media, because this is where their members are, especially the younger generation that will fuel future growth. The key is targeting your resources to where social media can have the most significant impact.

Aligning Social Media With Critical Business Objectives

Credit unions that use social media effectively are concentrating on three key business objectives:

• Member acquisition: Engaging brand advocates to acquire new members and increase loan portfolios.
• Community engagement: Building strong member relationships by increasing the impact of community participation.
• Member service: Providing prompt, personal attention for questions or complaints.

Member acquisition – opportunities in social media

When it comes to member acquisition, the key is leveraging existing fans of the credit union’s brand to share positive experiences with their social network. Credit unions will need to identify and target the proper audience and pair it with the appropriate message and channel.

For example, a credit union may focus on Generation Y. These consumers are young professionals and young families making significant financial decisions – some of them for the first time. Generation Y turns to their social media network when seeking financial advice. Can you provide them with information on where to open a checking account without fees, how to save – whether for retirement or a new iPhone, and what buying a home really entails?

Credit unions can reach this audience by offering expert advice, showcasing social responsibility and delivering value through cross-promotions, such as partnering with an insurance firm for member discounts.

Community engagement – opportunities in social media

Credit unions can also engage members through community involvement, a cornerstone of a credit union’s philosophy. It is important to target sponsorships that align with member interests. For example, credit unions can sponsor a charity event. The credit union can then build a Facebook event page to provide supporters with a central location to share stories/photos and invite others to join. With proactive use of an event page, credit union marketers can encourage participation before, during and after the event.

A similar approach can be used to tap into the passion for local sports teams, celebrities or rewards programs.

Member service – opportunities in social media

One of the best ways to utilize social media is for credit unions to use it to enhance member service. Credit unions are using channels like Twitter to help members, by providing quick responses to general questions about their accounts, online banking, nearest ATM and more. Many credit unions are also tweeting information about member service hours, loan programs and other information for members.

A perfect example comes from Denver-based Bellco Credit Union. A properly monitored Twitter account can respond to member needs, even outside of typical business hours. In this example, Bellco CU quickly lets the member know how they can contact the credit union to get a solution to their issue.

From: Bellco CU’s Twitter channel (@Bellco_CU):

“Member: Please return the $.99 that was taken from my account for a “descriptive [withdrawal]” Transf of my own money does not req a fee.

@Bellco_CU: plz give us a call tomorrow & someone can look into that for you. Or you can login to Online Banking & send a request with the Answer Center feature.”

Driving Business Value With Social Media

Social media is quickly evolving past the novel and into mainstream usage for financial services institutions.

To align social media efforts with key business objectives, credit unions should conduct social media benchmarking to define key performance indicators that can guide a strategic approach. Not only will this kind of strategic engagement provide a wealth of insightful consumer data, it could help improve the member experience, strengthen loyalty, and attract new business.

Next month, we’ll look at how credit unions can begin benchmarking social media conversations and using the information to build social media strategies.

Steven J. Ramirez is CEO of Beyond the Arc, Inc., a management consulting firm that combines strategy consulting with advanced analytics to help financial services clients identify opportunities to differentiate themselves in the marketplace. The company’s social media data mining helps clients improve their customer experience across products, channels, and touch points. For more information visit http://beyondthearc.com.