Social media-at-starting-blocks-wp-320793

Oracle White Paper
February 2011

Social Media at the Starting Blocks:
A Look at Financial Institutions in Europe and the United States

Social Media at the Starting Blocks: A Look at Financial Institutions in Europe and the United States

Impact Points ...................................................................................... 1
Introduction ......................................................................................... 2
Methodology ........................................................................................ 3
Social Media in Financial Institutions .............................................. 3
Funding Social Media Initiatives ...................................................... 5
Organizing for Social Media ............................................................ 9
Business Objectives of Social Media ............................................ 10
Social Media Tool Deployment ..................................................... 12
Measuring Social Media ................................................................ 18
Conclusion ........................................................................................ 22
Recommendations ............................................................................ 23
Align Social Media Investments with the Marketing Funnel .......... 23
Address Specific Market Segments .............................................. 23
Integrate Social Media Approaches into Online Capabilities ........ 24
Establish an Integrated Marketing Measurement Framework ....... 28
Related Aite Group Research ........................................................... 29
About Aite Group ............................................................................... 29
About Efma ....................................................................................... 29


Impact Points

The following Impact Report is based on an August through October 2010 survey of 166
financial services executives in the United States and Europe, conducted by Aite Group and
EFMA. It is intended for companies seeking to understand financial institutions’ current and
planned use of social media to support their marketing efforts.

Six in 10 financial institutions consider themselves to be either novices or beginners at social
media.

Today, 30% of firms get no specific funding or have no dedicated budget for their social
media initiatives, but 90% of firms expect to have dedicated budgets for their social media
efforts by 2012, with one‐third anticipating the creation of a new budget.

By 2012, 40% of financial firms expect to invest between 2% and 10% of their overall
marketing budget on social media.

Engaging customers, building brand awareness, and building brand affinity top the list of
business objectives driving the use of social media in financial firms today. • Slightly more
than half of the firms surveyed have a Facebook presence today, with two‐thirds of the rest
planning to use the site. Twitter was the next most popular tool, used at 44% of firms,
followed by YouTube, in use at 38% of FIs.

Facebook is rated the most effective social media tool for marketing purposes, followed by
customer review sites and blogs.

Few firms rank themselves highly when asked to compare their performance against their
peers along a range of social media performance measures.

1


Introduction

With the number of people on Facebook crossing the 500 million mark , there’s no doubt that
social media is the hottest topic in marketing for 2010. The term “social media” can be applied
to a wide range of technologies, tools, and techniques. Andreas Kaplan and Michael Haenlein,
professors at the ESCP Europe Business school define social media as: “A group of
Internet‐based applications that build on the ideological and technological foundations of Web
2.0, which allows the creation and exchange of user‐generated content.”1

As Wikipedia notes, “a common thread running through all definitions of social media is a
blending of technology and social interaction for the co‐creation of value.”2 This Aite Group
Impact Report analyzes financial institutions’ current and planned use of social media to
support their marketing efforts.

1 ‖The Challenges and Opportunities of Social Media,‖ Business Horizons, January‐February 2010.
2 http://en.wikipedia.org/wiki/Social_media#cite_note‐0

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Methodology
The following analysis is based on an Aite Group and EFMA survey of 166 financial services
executives in the United States and Europe, conducted between August and October of 2010. The
survey, conducted online, was designed to capture the social media strategies and tactics that financial
services firms are deploying. Respondents were recruited from EFMA members in Europe and Aite
Group contacts in the United States (see Figure 1).

Figure 1: Geographic Region of Survey Respondents

Source: Aite Group/EFMA survey of 166 financial services executives, August‐October2010

Social Media in Financial Institutions
Financial services firms are in the early stages of building their competency in social media. Six in 10
firms consider themselves to be either a ―novice‖ or ―beginner‖ at social media (see Figure 2). There is
little difference between U.S. and European firms on this matter—a slightly higher percentage of U.S.
than European financial institutions consider themselves novices, but the percentage of firms that
consider themselves ―intermediate‖ or ―advanced‖ in their use of social media is virtually the same
across the two regions (see Figure 3).

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Figure 2: Financial Institutions’ Experience With Social Media, U.S. and Europe


Figure 3: Financial Institutions’ Experience With Social Media by Region


Although six in 10 financial institutions are novices or beginners at social media, there aren’t a lot of
strong barriers preventing them from incorporating social media into their marketing. The most
frequently cited barrier is the lack of human resources or time, and that was mentioned by just
one‐third of survey respondents (see Figure 4). Importantly, lack of funding or budget is not an issue
for most firms. Novices were the most likely to cite the absence of a clear ROI and lack of senior
management support as barriers to using social media (see Figure 5).

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Figure 4: Barriers to Deploying Social Media


Figure 5: Barriers to Deploying Social Media by Level of Experience


Funding Social Media Initiatives
That a lack of funding or budget is a strong barrier to just 12% of financial firms doesn’t mean there is
a lot of money flowing to social media efforts. Today, 30% of firms get no specific funding or have no
dedicated budget for their social media initiatives—in fact, less than one in ten firms have a dedicated
budget. The largest segment—43%―gets funding from other departments’ budgets. The funding
picture will change dramatically over the next two years. By 2012, 90% of firms expect to have

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dedicated budgets for their social media efforts, with one‐third anticipating the creation of new budget,
one‐third expecting the money to come from existing budgets, and onefourth foreseeing the
combination of new funding and existing budget shifts (see Figure 6).

Figure 6: Funding Sources for Social Media Efforts


Today, the percentage of U.S. and European firms that have no dedicated budget or funding for social
media is nearly identical. In two years, very few European financial services firms will be without a
dedicated social media budget (see Figure 7).

Figure 7: Lack of Funding Sources for Social Media Efforts by Geographic Region


For firms that are funding social media by shifting money from other budgets, the money is coming
from a variety of sources. At the top of the list are direct marketing and print advertising. Two years

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from now, more firms plan to hit up print advertising’s budget to fund social media than any other
source. In fact, financial firms plan to pull funds from a broader variety of sources in two years than
they do today (see Figure 8).

Figure 8: Budget Sources for Social Media Initiatives


The most prominent changes in budget shifts will come from European firms that plan to pull even
more from TV advertising and promotional budgets than they do today (see Figure 9).

Figure 9: Budget Sources for Social Media Initiatives for European Financial Firms


For now, the owners of the direct marketing and advertising budgets have little to worry about— the
amount of funds that are shifting out of those areas is pretty small. Overall, more than half of the firms

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surveyed said that, as a percentage of their total marketing spending, investments in social media are
too small to measure. This will change dramatically over the next five years. By 2012, 40% of financial
firms expect to invest between 2% and 10% of their overall marketing budget on social media. And by
2015, nearly one in five expects that percentage to be greater than 10%. There’s plenty of uncertainty,
however, as nearly three in 10 firms don’t know what their social media spending will look like in five
years (see Table A). The differences between U.S. and European firms are not significant.

Table A: Percentage of Marketing Spending on Social Media

Q. WHAT PERCENTAGE OF YOUR FIRM'S MARKETING SPEND DOES (WILL) SOCIAL MEDIA REPRESENT?

TODAY IN 2 YEARS IN 5 YEARS

Too small to measure 53% 10% 6%

1% to 2% 10% 22% 5%

3% to 5% 9% 20% 20%

6% to 10% 4% 20% 21%

11% to 25% 1% 5% 14%

26% to 50% 1% 2% 4%

Greater than 50% 0% 1% 1%

Don’t know 5% 15% 29%

No separate budget 18% 6% 0%

Source: Aite Group/EFMA survey of 166 financial services executives, August‐October2010.

Significant differences are found by comparing the social media beginners to those firms that
categorize themselves as intermediate or advanced in their use of social media. Among the beginners,
63% are spending so little on social media that it isn’t measurable. Among the intermediate and
advanced firms, however, roughly one in four already invests at least 2% of their marketing budget in
social‐media‐related efforts (see Figure 10).

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Figure 10: Percentage of Marketing Spending on Social Media by Experience Level


Organizing for Social Media
Significant differences are found by comparing the social media beginners to those firms that
categorize themselves as intermediate or advanced in their use of social media. Among the beginners,
63% are spending so little on social media that it isn’t measurable. Among the intermediate and
advanced firms, however, roughly one in four already invests at least 2% of their marketing budget in
social‐media‐related efforts (see Figure 10).

Figure 11: Organizational Approach to Social Media


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Not surprisingly—considering that survey respondents came predominantly from marketing
departments—marketing was the most frequently cited department involved in the management of
financial firms’ social media efforts. The public relations and online channel groups also participate in
social media management in many financial firms (see Figure 12). By firm experience level, beginners
differ from intermediate/advanced firms regarding the involvement of the customer service group,
which is involved in just 20% of beginner firms, but in 36% of intermediate/advanced firms.

Figure 12: Organizational Participants in the Management of Social Media


Business Objectives of Social Media
Engaging customers, building brand awareness, and building brand affinity top the list of business
objectives driving the use of social media among financial firms today. To a lesser extent, financial
firms are turning to social media to improve customer retention, though few firms expect social media
to generate revenue or help reduce customer service or marketing costs (see Figure 13).

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Figure 13: Business Objectives of Social Media


With one exception—managing crises—more U.S. firms consider the range of business objectives that
the survey asked about to be important than did their European counterparts (see Figure 14). This may
reflect a cultural difference in responding to surveys or an indication that European financial firms’
social media objectives are not as clear or explicit as the objectives of U.S. firms. Aite Group also
believes that the term ―customer engagement‖ is less popular outside the United States, accounting for
the lower percentage of European firms that considered it a strong objective of their social media
initiatives.

Figure 14: Business Objectives of Social Media by Region


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Looking ahead a couple of years, financial firms’ list of business objectives for social media will expand
dramatically. In just two years, social media investments will have to produce tangible benefits for
financial firms; that is, a significantly higher percentage of firms will look to social media to retain
customers, generate revenue, and reduce marketing costs (see Figure 15).

Figure 15: Business Objectives of Social Media in Two Years


Social Media Tool Deployment
Slightly more than half of the firms surveyed have a Facebook presence today, with two‐thirds of the
rest planning to use the site. Twitter was the next most popular tool, used by 44% of firms, followed
by YouTube, in use at 38% of financial institutions. Firms that don’t currently blog or use Twitter are
evenly split between those that plan to use these tools and those that don’t plan to (see Table B).

Table B: Social Media Tool Deployment

Q. WHICH STATEMENT BEST DESCRIBES YOUR FIRM'S USE OF THESE SOCIAL MEDIA TOOLS? (N=166)

USE THIS TODAY DON'T USE, BUT PLAN DON'T USE, DON'T PLAN TO

TO

Facebook 53% 30% 16%

Twitter 44% 28% 27%

YouTube 38% 28% 34%

LinkedIn 36% 17% 47%

Blog 32% 34% 34%

12


User‐generated 17% 35% 48%
content

Customer review sites 12% 27% 61%

Flickr or other photo 11% 15% 73%
sharing site

Financial services 7% 28% 65%
social networking sites

Table B: Social Media Tool Deployment


U.S. financial firms are more likely than European financial institutions to use Facebook and Twitter
today, but European firms plan to close that gap in the future. On the other hand, more European
firms use YouTube today, but more than half of the U.S. firms that don’t use it today plan to in the
future (see Table C and Table D).

Table C: Social Media Tool Deployment Among U.S. Financial Firms



TO


Twitter 49% 26% 25%

Blog 32% 36% 32%

YouTube 33% 36% 30%


Flickr or other photo 17% 20% 64%
sharing site

content




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Table D: Social Media Tool Deployment Among European Financial Firms



TO


Twitter 41% 30% 29%

Blog 32% 32% 36%

YouTube 42% 22% 36%


Photo sharing site 8% 12% 80%
(e.g., Flickr)

content




Intermediate/advanced firms are, not surprisingly, more likely than beginners to use a range of social
media tools, although relatively few use customer review sites like Yelp or financial services social
networking sites like Zecco (see Figure 16).

Figure 16: Social Media Tool Deployment by Level of Experience

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Many firms use third‐party sites (―off‐us‖) or tools like Facebook and Twitter as well as on‐site
(―on‐us‖) tools, like blogs and user‐generated content. Today, the social media efforts of 30% of the
firms surveyed are limited to just on‐us efforts, while another nearly four in 10 firms’ efforts are mostly
on‐us, with some off‐us initiatives. The picture will be very different by 2012, with only one in 10 firms
will be strictly using on‐us tools (see Figure 17).

Figure 17: On‐Us vs. Off‐Us Social Media Tool Deployment


With so many financial firms turning to social media (Facebook, Twitter, blogs, and YouTube, in
particular)to engage customer and build brand awareness, the question to be answered is, Are these
tools effective at achieving these objectives? Unfortunately, there’s little consensus among financial
services executives on which tools are truly effective.
Facebook is considered to ―very effective‖ for engaging customers by 39% of respondents, with
another 48% rating the site ―somewhat effective‖ for accomplishing the objective. Usergenerated
content garners the second highest number of ―very effective‖ votes, with 34% of the sample. Only
about one in 10 respondents flat‐out consider Facebook, user‐generated content, or customer review
sites to be ―ineffective‖ at increasing customer engagement. It’s important to note, however, that a
meaningful percentage of financial executives don’t know how effective many tools are for increasing
engagement (see Figure 18).

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Figure 18: Social Media Tool Effectiveness at Increasing Customer Engagement


For generating consumer awareness, 43% of survey respondents consider Facebook ―very effective,‖
with another 44% rating it as ―somewhat effective.‖ Blogs are rated as ―very effective‖ by 32% of
financial executives, although nearly one in five says that blogs are ―not effective‖ (see Figure 19).

Figure 19: Social Media Tool Effectiveness at Generating Consumer Awareness


For influencing consumer preference, 46% of respondents deem customer review sites to be very
effective, although 20% don’t know how effective these sites are for accomplishing this objective.
Financial institutions don’t consider Facebook to be as effective for influencing consumer preferences
as they do for engaging customers or generating consumer awareness (see Figure 20).

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Figure 20: Social Media Tool Effectiveness at Influencing Consumer Preference


So which is the most effective social media tool? We assigned 10 points for each ―very effective‖ rating
a tool received, and five points for a ―somewhat effective‖ rating. When we tallied the results,
Facebook came out on top, followed by customer review sites and blogs (see Table E).

Table E: Social Media Tool Effectiveness Scores by Marketing Objective

INCREASING CUSTOMER GENERATING INFLUENCING TOTAL

ENGAGEMENT CONSUMER CONSUMER

AWARENESS PREFERENCE

Facebook 6.30 6.50 5.06 17.87

Customer review site 5.04 4.82 5.95 15.80

Blog 5.07 5.14 5.52 15.72

User‐generated 5.00 4.32 4.71 14.04
content

Twitter 4.93 4.83 4.08 13.84

YouTube 3.35 5.07 3.52 11.94

FS social networking 3.56 3.80 3.99 11.35
site

LinkedIn 2.57 3.13 2.57 8.27

Photo sharing site 1.36 1.39 0.93 3.68

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Averaging the scores across the three objectives shows that European financial firms have a more
optimistic view of the marketing effectiveness of social media tools than do U.S. firms, with the
exception of photo sharing sites (see Figure 21).

Figure 21: Social Media Tool Effectiveness at Influencing Consumer Preference


Measuring Social Media
To understand what performance metrics financial firms are using to gauge the success of their social
media efforts, the study adapted a measurement framework developed by Web Analytics Demystified
and the Altimeter Group, published as open research in a report titled Social Marketing Analytics: A
New Framework for Measuring Results in Social Media, and used with permission from the two firms.
The framework defines 12 performance metrics that correspond with four different business objectives
(see Table F).

Table F: Social Media Measurement Framework

BUSINESS OBJECTIVE METRIC DEFINITION

Foster dialogue Share of voice % of brand mentions in social channels

Audience engagement % of visitors who contribute comments or links

Conversation reach # of visitors who participate in topic conversations

Promote advocacy Active advocates # of individuals generating positive sentiment over a given time frame

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Advocate influence % of influence for an individual advocate in social media channels

Advocacy impact Direct or indirect contributions of advocacy on conversions

Facilitate support Resolution rate % of customer service inquiries resolved satisfactorily using social
media channels

Resolution time Time required to produce a human response to customer‐service
issues posed in social media channels

Satisfaction score Indexed score indicating the relative satisfaction of customers

Spur innovation Topic trends Brand/product/service topics identified by monitoring social media
conversations

Sentiment ratio Ratio of positive to neutral to negative brand mentions

Idea impact Rate of interaction engagement and positive sentiment generated from
a new product or service idea

Source: Web Analytics Demystified and Altimeter Group

While respondents’ perspectives are mixed between which metrics they see as ―very important‖ and
those they see as ―somewhat important,‖ few believe that these are ―not important‖ (see Figure 22).Of
the four business objectives in the measurement framework, metrics relating to facilitating support are
rated as most important.

Figure 22: Social Media Metric Importance


Just because a firm believes a social media metric is important doesn’t mean it measures that metric,
however. In fact, none of the 12 metrics tracked are currently measured by more than 30% of the firms
surveyed (see Figure 23). This creates a measurement gap—the difference between the percentage of

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respondents that consider a metric to be very important and those that are currently measuring the
metric (see Figure 24).

Figure 23: Social Media Metric Measurement


Figure 24: Social Media Metric Measurement Gap


Intermediate and advanced firms have different views of which metrics are ―very important,‖ however.
Compared to beginners, they’re more likely to consider metrics like active advocates, resolution time,
resolution rate, and share of voice to be very important (see Figure 25).

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Figure 25: Social Media Metric Importance by Experience


Regardless of whether or not they currently measure the metrics in the framework, few firms rank
themselves highly when asked to compare their performance for each metric against that of their peers
(see Figure 26).

Figure 26: Social Media Metrics Ratings


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Conclusion
From our study of social media strategies among financial institutions in the United States and Europe,
Aite Group concludes that:
Social media in financial services is still in the early stages of its evolution. While it’s true that
six in 10 financial institutions believe that they’re either novices or beginners at social media, other
signs serve as signals that social media within financial services firms is immature, including the lack
of consensus regarding the effectiveness of various tools and the absence of a social media
measurement infrastructure in most firms.
Financial institutions’ social media objectives are unrealistic. By 2012, two‐thirds of financial
institutions will look to social media to increase customer retention, and nearly half will expect to
generate revenue from their social media efforts. These objectives are wishful thinking on the part of
financial services marketers, and consistent with past delusions of marketing success. Marketers have
expected increases in retention and cross‐selling as a result of adoption in online banking, online bill
pay, and—more recently—e‐bills and personal financial management PFM. Aite Group believes
that, because the industry is still so early in the evolution of social media, no one can be quite sure
exactly which marketing objectives are the best fit for social media efforts.
Financial institutions are failing to use social media throughout the marketing funnel.
Though financial executives consider customer review sites to be the most effective tools for
influencing customer preferences, just one‐third of financial institutions will host or use customer
review sites, compared with the 80% of financial firms that have or will have a presence on
Facebook. As a result, it seems that financial institutions are deploying social media to support the
early stages of the marketing funnel (awareness) and the later stages of the funnel
(engagement/loyalty), but not the middle of the funnel (interest and preference).
The lack of broad organizational participation is a warning sign. Less than one in four
financial firms involves their customer service department in the management of social media
efforts, yet more than half of survey respondents say that supportrelated metrics—resolution rate,
resolution time, and satisfaction rate—are ―very important.‖ With two‐thirds of firms considering
the reduction of customer service costs to be at least somewhat of a social media objective, the
absence of customer service in the management of social media will be a barrier to reaching these
goals.
Financial firms should expect marketing budgets to decline. In five years, nearly one in five
firms expects social media to account for more than 10% of its marketing budget. With nearly 30%
of respondents unable to forecast out that far, the percentage spending more than 10% might even
be higher. Many firms realize that their social media budget will come from other marketing sources,
and are unlikely to be replenished. But we foresee another factor driving the marketing budget down:
If chief marketing officers are successful in arguing that social media marketing efforts are more
effective and less expensive than other channels, then chief financial officers will argue that CMOs
should be able to do more with less.

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Recommendations
To ensure and improve the success of social media investments and initiatives, Aite Group
recommends that financial institutions: 1) Align social media investments with the marketing funnel; 2)
Target specific market segments; 3) Integrate social media approaches into online capabilities; and 4)
Establish an integrated marketing measurement framework that incorporates social media‐specific
measures.

Align Social Media Investments with the Marketing Funnel
Financial institutions should track and categorize their social media investments and efforts not just by
business objectives (like building brand affinity, retaining customers, etc.), but by components of the
marketing funnel (awareness, consideration, preference, purchase, loyalty). Marketers that do this will
be in a better position to ensure that their social media efforts span the spectrum of marketing
objectives, and will be better able to determine if they’re under‐ or over‐investing in any particular
element of the funnel.

Address Specific Market Segments
Many financial firms that have ventured into the social media space with blogs, Twitter accounts, or
Facebook do so by establishing general, all‐purpose pages or sites designed to appeal to the general
public. The success stories we heard from financial institutions, however, had a common thread: Their
efforts were focused on a particular market segment. Two campaigns stand out:
Young & Free Alberta: In 2007, Commonwealth Credit Union in Alberta, Canada recognized the
need to lower the average age of its member base, and to capture a larger percentage of the Gen Y
market, which represented a disproportionately high percentage of the demand for banking products
in Canada.
A social media campaign called Young & Free Alberta was created building upon an idea to run a
contest to find a spokesperson from the Gen Y community to run the program for a year, which
would include blogging and making public appearances at events where Gen Yers were likely to
gather. The program launched in October 2007 with a two‐month search to find a dedicated Young
& Free Alberta Spokesperson. The winner became a paid employee of the credit union, working full
time with the job description ―talk, type, and tell good stories.‖ In addition, the effort involved the
creation of a new checking account with no monthly fees to be marketed to young consumers.
In the first year of the program, the microsite received more than 63,000 site visits; visitors averaged
more than three minutes per visit and left more than 900 comments. The campaign also generated
C$179,000 in unpaid media and more than two million impressions. Overall, in its first year alone,
Young & Free Alberta generated 2,316 new accounts, totaling C$3,587,000 in new funds. New
account openings grew by 960% over the same period one year prior among 19‐ to 25‐year‐olds.

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The campaign is still active―a new contest to find new spokespeople is conducted each year. Traffic
and sales have been steady even though all supporting traditional media targeted at reaching Gen
Yers stopped shortly after the program was launched.
Verity Mom. From an analysis of consumers’ money management habits, Verity Credit Union, in
Seattle, Washington, discovered that moms—the female heads of households—made the financial
decisions in 83% of U.S. households. Verity believed that this segment of the market had been
overlooked by most of the financial services industry, but also believed that moms influenced where
their children banked, as well.
In conjunction with a social media campaign, which centers around a blog written and managed by a
mom from the community (who, similar to the Young & Free campaign, had to audition for the
job), Verity phased out its existing checking account and introduced a new, high‐yield checking
account designed to appeal to moms. In addition to the microsite, there is a YouTube account, a
Twitter account, and a Facebook page, each with content provided by the Verity Mom.
The average age of new members opening up the credit union’s new account is about 37 years old,
well below the average age of the overall membership base. In addition, monthly account openings
are running about 100% higher than the comparable month from the prior year, when the credit
union was selling its old account.
In addition to these campaigns, statistics compiled by VisibleBanking.com (a Europe‐based site
dedicated to social media in financial services) suggest that the financial institutions with the most
Facebook users focus those pages on specific market segments. JPMorgan Chase’s Community Giving
page on Facebook leads all financial institutions, with more than 2.5 million fans as of October 2010.
The site with the largest monthly growth in October 2010 was U.K.‐ based Barclay Bank’s site, which
is focused on attracting football (i.e., soccer) fans. And the site with the most monthly users in October
2010 was Geico’s Pet Photos site, serving pet owners.3

Integrate Social Media Approaches into Online Capabilities
While Facebook pages, Twitter IDs, and blogs will continue to be popular with financial firms over the
next few years, these tools will help firms that are primarily in the early stages of the marketing funnel,
namely in brand awareness. To focus on the latter aspects of the funnel, firms should integrate social
media tools and techniques by focusing on 1) influencing customer preferences, and 2) providing
collaborative support.

Influencing Customer Preferences

With the exception of customer review sites, financial firms see few social media tools as being
particularly effective at influencing consumer preferences. But few of the popular review sites (like
Yelp, for example) provide much financial services content.

3 http://www.visible‐banking.com/2010/10/top‐10‐most‐liked‐financial‐institutions‐on‐facebook‐inoctobe

r2010‐617‐pages‐groups‐apps‐in‐67‐cou.html

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As a result, financial firms need to integrate product reviews into their own sites.
America First Credit Union, based in Salt Lake City, Utah, accomplishes a number of objectives with
user reviews integrated into its site (see Figure 27):
Supporting prospects’ decision process: Rate and fee information is only a part of the
information that consumers need to make account decisions. User reviews help them understand
what it’s like to interact with and be a member of the credit union.
Demonstrating member advocacy: Advocacy―the perception that the credit union is doing
what’s best for the member and not just its own bottom line―is a key contributor to member loyalty.
By enabling site visitors to see the low ratings as well as the high ones, America First is helping
establish itself as being transparent and truly concerned with helping prospects and members make
the right decisions for them.
Gathering market intelligence: If America First wanted to know how its members felt about its
products, it could hire a market research firm to survey members. This would likely carry a high price
tag, and would only capture member sentiment at a point in time. By enabling member reviews on its
site instead, America First continuously monitors member perceptions, gains valuable feedback
about product perceptions, and gauges whether or not their product improvement efforts are paying
off.
Engaging members: Everyone likes to have their opinions heard and valued. Rather than
providing feedback through anonymous surveys, America First members see their reviews posted on
the site, and can potentially become a ―top contributor.‖ Responding to negative reviews helps it
demonstrate advocacy to its members.

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Figure 27: Member Reviews on America First Credit Union’s Site

Source: http://www.americafirst.com/personal/checking‐savings/checking/checking.cfm

Why are customer reviews effective at influencing preferences? Because consumers have come to
mistrust the recommendations of financial firms (and marketers, in general), they look toward peers for
recommendations; if a product or provider has been chosen by another person, it might be good for
them, as well. It’s important to give prospects the opportunity to see both sides of the coin, however.
Negative reviews helps foster a belief that the credit union is transparent, and isn’t hiding something or
trying to ―game the system.‖

Providing Collaborative Support

Although a few financial firms have turned to social media to provide customer support―most notably
Bank of America, with its ―BofA_Help‖ Twitter handle―these efforts are more akin to creating a new
channel for providing traditional means of support than they are providing customer support in a new
way. In the financial services arena, Thomas Cook UK is an early adopter of providing collaborative,
community‐driven customer support, doing so on its Facebook page (see Figure 28).

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Figure 28: Thomas Cook UK provides community‐driven support on Facebook

Source: http://www.facebook.com/pages/Thomas‐Cook‐UK/188819677670#!/pages/Thomas‐Cook‐

UK/188819677670?v=app_227698805184

The benefits of a collaborative, community‐driven support capability are five‐fold:
Reduced call volume: Reducing call center volume depends on: 1) how effective a firm is at driving
awareness and usage of the site, and 2) the demographics of a firm’s customer base. A few months
after the launch of its community site, Mint.com has seen 3% of its users enroll in the support site.
With effective marketing of the online capability, a firm with 500,000 customers could deflect US$2
million in call center costs over five years (see Figure 29).
Expanded knowledge base: Many financial firms have an FAQ section on their site in an attempt
to address site users’ most common questions about the firm. These pages often contain sparse,
outdated information. Likewise, many call centers maintain – or try to maintain—knowledge bases
to help reps answer incoming questions. Community‐driven sites help increase the pool of
knowledge to fuel both online FAQ and call‐center efforts.
Better employee training: An actively used community support site provides a mechanism to train
employees on the types of questions that customers frequently ask, as well as to provide them with
the best responses to those questions.

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Enhanced customer segmentation: Aite Group research has found that the customers that are
most engaged with their financial institutions are also the most loyal customers.4 Participation in a
community support site is a signal that a customer is engaged and likely to expand his or her
relationship with the firm and refer it to friends and family members.
Increased member engagement: As with customer review pages, a community support site lets
customers engage with the financial institution and other customers.

Number of customers 500,000

Number of support 4
calls/yr/customer

Total number of calls 2,000,000

Cost/call $5

Total support cost $10,000,000

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Community support penetration 3% 6% 9% 12% 15%

Reduced calls/customer/year 1 1 2 2 2

Savings $75,000 $150,000 $450,000 $600,000 $750,000

Total: $2,025,000

Source: Aite Group

Establish an Integrated Marketing Measurement Framework
There’s a wide discrepancy between the number of social media metrics that survey respondents find
important and the number of metrics that are being measured today. Recommending that firms close
that gap between the two would be an easy recommendation to make, but would be a bad
recommendation. The cost of developing an infrastructure to measure social media investments is not
insignificant. Considering that many firms’ total investment in social media might only represent 1% to
2% of their marketing spend, building a measurement capability might cost as much as their entire
social media budget.
The challenge that many financial firms have isn’t simply determining how well their social media
investments are paying off, but determining how well all of their marketing investments are doing.
Financial institutions’ effort to measure marketing results should focus on building a framework that
enables marketers to determine how all of their investments are performing, and how well social media
is doing relative to other channels and methods.

4 See Aite Group’s report, Measuring Customer Engagement: Making the Metric Matter, June 2009.

28


Related Aite Group Research
Personal Financial Management: A Platform for Customer Engagement, February 2010.
Top 10 Banking Trends for 2010, February 2010.
Credit Unions’ Online Channel Priorities 2010, February 2010.
Financial Services Rewards Programs: The Quest for Profitability, December 2009.
Engaging Gen Y: Cultivating a New Generation of Banking Customers, September 2009.
The Next Generation of CRM in Retail Banking: Sense‐and‐Respond Marketing, June 2009.
Measuring Customer Engagement: Making the Metric Matter, June 2009.
How to (Re)Build Consumer Trust in Banks, April 2009.
Banks’ New ROA: Return on Advertising, March 2009.
The Hallmarks of High‐Performing Integrated Marketers in Retail Financial Services, June
2008.

About Aite Group
Aite Group is an independent research and advisory firm focused on business, technology, and
regulatory issues and their impact on the financial services industry. With expertise in banking,
payments, securities & investments, and insurance, Aite Group’s analysts deliver comprehensive,
actionable advice to key market participants in financial services. Headquartered in Boston with a
presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its clients
as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they remain at the
forefront of industry trends.

About Efma
Efma promotes innovation in retail finance by fostering debate and discussion among peers supported
by a robust array of information services and numerous opportunities for direct encounters. Efma was
formed in 1971 by bankers and insurers to encourage their colleagues to share experiences, promote
the best practices of their institution, and collaborate through alliances and partnerships.
Through events, publications, and its comprehensive website, the association provides members with
answers to their questions about developing financial products, successfully selling them, rebuilding the
distribution network, managing customer relationships, and improving performance and profitability.

29

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