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Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
Creating Customer Value Through Social Media
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Creating Customer Value Through Social Media

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As the most-popular online activity, social media represents a fundamental shift in the way people communicate with each other and with businesses. The gateway into social media conversations via …

As the most-popular online activity, social media represents a fundamental shift in the way people communicate with each other and with businesses. The gateway into social media conversations via corporate social responsibility (CSR) initiatives represents a relatively low-risk usage of social media by financial institutions. However, financial institutions are now borrowing from the pages of companies in other industries, as well as leveraging their core competencies, to accomplish objectives beyond gaining attention and brand-building that CSR initiatives address.

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  • 1. Creating Customer Value through Social MediaConsumer Insights BriefOctober 2011Paul McAdam, SVP of Research and Thought Leadership, FISMandy Putnam, Director of Research and Thought Leadership, FISwww.fisglobal.com
  • 2. Creating Customer Value through Social MediaThe Social Media Imperative Cuts across Industries and their Business DivisionsSocial media has surpassed fad status. As the most-popular online activity, it represents a fundamental shift inthe way people communicate with each other and with businesses.1Social media is becoming increasingly integrated with the activities of various business divisions withincompanies — most commonly in marketing— but integration remains a challenge in other business units.Findings from a 2010 survey of 338 businesses by Econsultancy point out the high percentage (85 percent) ofrespondents who indicate at least a “somewhat integrated” relationship between marketing and social media(Figure 1). Social media is only somewhat integrated with other divisions within companies — customer service,sales, CRM/customer data, product development and human resources (the latter typically using social mediasites such as LinkedIn for employee recruiting) — to create value and/or reduce costs.2 Figure 1: Integration of Social Media Activity with Other Business Functions 0% 50% 100% Marketing 33% 52% Customer Service 10% 39% Sales 7% 48% CRM/customer data 6% 31% Product 32% Development 5% Human Resources 2% 24% Well Integrated Somewhat Integrated Source: Econsultancy, “Social Media and Online PR Report 2010” sponsored by bigmouthmedia, provided to eMarketer, September 29, 2010. 3
  • 3. Creating Customer Value through Social MediaGateway to Social Media Usage via Corporate Social Responsibility (CSR) InitiativesCompanies have built successful advertising campaigns around CSR initiatives that have generated massive“buzz” for brands. For example, Pepsi’s “Refresh” campaign has used multiple social-media channels tocrowdsource CSR priorities for spending $20 million in grant money offered by the company (Figure 2). Pepsihas employed blogs, YouTube videos, Facebook and Twitter to receive feedback and ideas for grants to supportprograms ranging from supporting the School of Rock, which gives free music lessons to underprivileged youth,to helping the Benwood, West Virginia volunteer fire department buy a new truck. The campaign has generatedmore than four million Facebook fans, more than four million YouTube views and thousands of Twitterfollowers.3Figure 2: Pepsi Refresh Campaign “Your ideas are helping communities everywhere. This year, what will you refresh?” *Sources: http://www.refresheverything.com/, 3/18/11; http://www.slideshare.net/Eyeblaster/eyeblaster-case-study-pepsi- refresh-everything-dear-mr-president, 3/18/11; http://twitter.com/#!/pepsi, 3/18/2011In the financial industry, JP Morgan Chase has led the pack in promoting its CSR initiatives via social media. ItsCommunity Giving program has generated more than 2.9 million Facebook fans. Chase continually solicitsconsumer voting to determine the 100 winning charities that each receive a $25,000 grant for supporting causesranging from preventing animal abuse to promoting youth leadership programs.4The gateway into social media conversations via CSR initiatives represents a relatively low-risk usage of socialmedia by financial institutions. However, financial institutions are now borrowing from the pages of companiesin other industries, as well as leveraging their core competencies, to accomplish objectives beyond gainingattention and brand-building that CSR initiatives address. Examples of objectives addressed via social mediainclude:  Attracting new customers  Retaining customers  Increasing share of wallet  Reducing customer service costs  Generating and screening new product ideas 4
  • 4. Creating Customer Value through Social MediaAttracting New Customers Figure 3: Young & Free WebsiteThe Young & Free campaign created by CurrencyMarketing bills itself as a “North American credit unionmovement that gives young people a voice, a head startand useful information (Figure 3).” Its goals are twofold: 1)help Gen Y consumers get a handle on their finances andprovide them with a more affordable alternative to banks,and 2) help credit unions remain vibrant by attracting GenY customers.Currency Marketing claims responsibility for the creationof more than 60,000 relationships between young adults Source: www.youngfreehq.comand Y&F credit union clients. Each Y&F regional communityselects a personality who is responsible for content generation through YouTube videos, blogs and Twitterupdates. “Stickiness” (retention) is supported through daily freshening of website content, contests— videochallenges, scholarship contests, music and dance competitions — for prize money (e.g., $2,500 checks) andmember-only events and concerts.5Retaining CustomersTwo financial institutions leveraging their websites and social media to build and retain customer bases areCitibank and ING.Citibank’s 11- year old Women & Co. website reaches and retains a community of women by providing themwith a “one-stop” financial information site (Figure 4). The website enables financial insight sharing amongwomen and provides a wealth of financial information from subject matter experts. Audio seminars, planningtools in the form of 5-minute video guides and pdfs, proprietary research findings, blogs and email newslettersgeared towards women are available to visitors. The site links to videos on YouTube and to social media sitesFacebook, Twitter, Del.icio.us and StumbleUpon. Through Women & Co., Citibank positions itself as an “expertfinancial advisor” while steering clear of making specific investment recommendations.6 Figure 4: Citibank’s Women & Co. Website Source: www1.citibank.com/womenandco 5
  • 5. Creating Customer Value through Social MediaRecently, Citibank ran a front-page ad in the Wall Street Journal to promote its ThankYou™ Points campaignfeaturing exclusive access to a Beyoncé concert for Citibank ThankYou customers (Figure 5). Citibank ThankYoucustomers are directed to facebook.com/citibank to express their “like” of Citibank in order to find out how theycan get exclusive access to the concert in New York City. Unfortunately, the concert quickly sold out and mostThankYou customers will have to settle for the Beyoncé video content available only to Citibank Facebook fans.7 Figure 5: Citibank’s Facebook Page Source: facebook.com/citibankING Direct developed the “We the Savers” microsite three years ago to empower consumers to take control oftheir finances and solicit visitor feedback (Figure 6). “We the Savers” serves as a support community plus aknowledge database for consumers who want to save money. The home landing page is a blog where featuredwriters post tips and general experiences about saving money. Posts are rated and the most popular ones arecalled out in a separate section where the original post and responses to it can be read. Links from each postallow readers to send the post to Facebook, Twitter and other social media sites. The site’s official “Declarationof Financial Independence,” which lists 10 points that support gaining financial independence, has attractedmore than 30,000 signatures, which can be viewed by name or state. From ING’s perspective, collecting thisinput allows further engagement, targeting, and adjustment of product offerings.8 Figure 6: ING’s We the Savers Website Source: www.wethesavers.com 6
  • 6. Creating Customer Value through Social MediaIncreasing Share of WalletOriginally launched in 2007, American Express’ Open Forum website (http://www.openforum.com/) serves asa place for small business owners to help grow their businesses (Figure 7). From American Express’ perspective,small business represents its biggest growth opportunity. As small business customers grow, their needs for linesof credit, loans and other financial products also grow, thereby benefitting American Express.Providing insights from experts, business apps to streamline operations, account management tools and avehicle for making business connections, Open Forum has grown its traffic to more than one million uniquevisitors per month. More than 11,000 small businesses have joined Connectodex — a social network “Rolodex”for entrepreneurs. Open Forum has 10,000 Twitter followers. Last year, Open Forum opened its membershipbeyond cardholders to LinkedIn members, which provides opportunity to attract new AmEx customers.Recently updated, Open Forum now enables small business owners to join discussions through Facebook andprovides a “subscription” service tailored to specific needs and preferences. Its mobile platform is being updatedand the educational component beefed up even more.9 Figure 7: American Express Open Forum for Small Businesses Source: www.openforum.comReducing Customer Service CostsAs customers embrace new technologies and forms of communication companies have been able to reducecustomer service costs while improving customer satisfaction. Proprietary forums and blogs, as well asestablished tools like Twitter, are becoming key points of contact between companies and customers.InfusionSoft and Pitney Bowes offer two examples of improving both efficiency of and satisfaction withcustomer service (Figure 8):  Through its community site to address customer service issues, InfusionSoft increased the number of Be A customer issues handled by agents threefold and improved its customer satisfaction rating by 10 percentage points. The support site offers “live” training events, pre-recorded fundamentals webinars, a video and article library plus the help center, which lists the most popular queries along with a search function to input other queries.9 7
  • 7. Creating Customer Value through Social Media  Pitney Bowes’ user forum has led to a significant decrease in customer service calls. Pitney Bowes met all of its first year expenses — including start-up costs — within six weeks of launching its forum through diverting a total of 30,000 calls from customer service centers at the average cost of $10 per call. The Pitney forum includes helpful areas, such as: blogs with relevant customer topics, an “ask-the-expert” section with archive files, and a bookmark/tagging feature that helps make content easily searchable. Recently, it added mobile formatting to enable “on-the-go” connection.10 Figure 8: Reducing Customer Service Costs Source: http://mackcollier.com/5-ways-companies-are-using-social-media-to-lower-costs/Financial institutions such as Bank of America are leveraging Twitter to support customer service. Bank ofAmerica has seven Twitter accounts with handles like; BofA_News, BofA_Tips, BofA_Community, and BofA_Help.The BofA_Help account employs six representatives to help, listen to and learn from 12,000+ followers therebyenabling Bank of America to garner feedback and connect regularly with customers (Figure 9).11 Figure 9: Twitter Representatives @BofA_Help “We are official Bank of America Schedule: Twitter reps, here to help, listen 8am-8pm EST Mon-Fri & learn from our customers” 9am-1pm EST Sat Source: social.bankofamerica.com 8
  • 8. Creating Customer Value through Social MediaGenerating and Screening New Product IdeasAlthough only 37 percent of survey respondents from the Econsultancy survey noted social media integrationwith product development activities, some prominent companies have created value by leveraging consumers’input via social media. Integration with social media can lower research costs and improve speed-to-market.Examples include:  Dell’s IdeaStorm online community has generated more than 15,000 suggestions from which 442 ideas have been implemented. Dell uses eight different social media channels, from online communities and support forums to Facebook and Twitter accounts, to communicate with customers and promote products.12  The online bank Prosper uses crowdsourcing to allow its members to bid on loans they want to fund. Loan proposals with the most popular ideas are funded regardless of underwriting risk.12  Threadless is a t-shirt company, which crowdsources its designs from its community members. Members vote weekly on which shirts should be produced. As a result, Threadless has never failed to sell out of its shirts.13SummaryThe integration of social media within companies’ business units is in its infancy. Only one-third of companiesreported that social media is well-integrated within marketing departments where social media initiatives aremost common. Integration with other departments is limited.Consumers — especially younger ones — increasingly expect to be able to communicate with businesses viasocial media. No longer can companies afford to segregate social media departments from the rest of theorganization and remain relevant across their customer bases.Examples of companies successfully utilizing social media beyond brand-building initiatives such as CSR-orientedcampaigns range the gambit: CPG companies, tech companies, large financial institutions, retailers — especiallyones such as pure-play Threadless and ones with long multichannel histories.Regardless of industry, the return on social media investment is most easily rationalized when the companyaligns social media programs with overall corporate goals — e.g. acquiring and retaining customers, deepeningrelationships, reducing customer service costs.With the advent of new regulations, financial institutions are looking for alternative sources of revenue andways to reduce costs. Social media represents a powerful tool to attract and retain customers and build moreprofitable relationships with customers. The challenge is to identify the most relevant social media andmessaging that resonate with target customers and support overall corporate goals. 9
  • 9. Creating Customer Value through Social MediaCitations:1 Socialnomics, Copyright 2009, 2011 by Erik Qualman2 Econsultancy, “Social Media and Online PR Report 2010,” sponsored by bigmouthmedia, provided toeMarketer, September 29, 2010.3 http://www.refresheverything.com/4 Business Wire, March 31, 20115 http://www.youngfreehq.com6 http://www1citibank.com/womenandco7 http://www.facebook.com/citibank8 http://www.wethesavers.com9 http://smedio.com2011/05/18/american-express-launches-open-forum-3-010 http://mackcollier.com/5-ways-companies-are-using-social-media-to-lower-costs/11 http://social.bankofamerica.com12 David Aaker, “Beyond Communication to Changing the Marketplace,” Marketing News, July 30, 2011.13 http://www.mengonline.com/newsroom/crowdsourcing-new-product-developmentAbout the ResearchCreating Customer Value through Social Media is derived from a research project conducted by MBA candidatesfor the class of 2012 at Babson College’s F.W. Olin School of Business and managed by FIS Enterprise Strategy.The study’s primary objective was to determine how banks can leverage social media to capture value fromconsumers, especially adult members of Generation Y (born between 1980 and 1990).The research findings herein are based on: 1) secondary research on social media, 2) executive interviews withsocial media experts and financial institution executives, 3) qualitative research conducted with Babson peersand 4) a 10-question survey completed by about 70 Babson students.About FISFIS (NYSE: FIS) is the world’s largest global provider dedicated to banking and payments technologies. With along history deeply rooted in the financial services sector, FIS serves more than 14,000 institutions in over 100countries. Headquartered in Jacksonville, Fla., FIS employs more than 32,000 people worldwide and holdsleadership positions in payment processing and banking solutions, providing software, services and outsourcingof the technology that drives financial institutions. FIS is ranked 426 on the Fortune 500, is a member ofStandard & Poor’s 500® Index and consistently holds a leading ranking in the annual FinTech 100 list.Creating Customer Value through Social Media was authored by Paul McAdam, SVP of Research and ThoughtLeadership at FIS, Mandy Putnam, Director of Research and Thought Leadership at FIS and Abigail Burnham andDonald Chapman, MBA candidates for the class of 2012 at Babson College’s F.W. Olin School of Business.Please contact Paul McAdam or Mandy Putnam if you have questions about the research or how the resultsapply to your financial institution.Paul McAdam Mandy PutnamPh: 708.449.7743 Ph: 614.414.4207paul.mcadam@fisglobal.com mandy.putnam@fisglobal.com 10

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