For every article ramming social media down the throats of the financial services sector there’s another ‘revealing’ why social networking has no place in banking or why people don’t want #financialadvice on Twitter.
So, who’s right?
Last week TheFinancialBrand.com ran a post entitled, “Brands Struggle In Social Media, Data Shows Sobering Stats.” It’s a thought provoking read.
Among its key points are the facts that:
- “financial marketers are seldom (if ever) offered any hardcore stats on actual rates of engagement.”
- Whilst 850 million Facebook users might sound like a lot, they are, infact, just 12.4% of the world’s population.
- “Among consumers who say they ‘like’ brands on Facebook, 78% ‘like’ fewer than ten brands.”
That last point is extrapolated forward to ask what types of brands those who do ‘like’ actually like?
According to The Financial Brand, the answer is brands like Apple, Starbucks, Disney and Red Bull. “In other words, things people want, things they actually like.” By contrast, “Banking is something people need (and they only need it to get the things they want), and it’s never been particularly well-liked.”
So why, they ask, should you be among the few brands that a consumer connects with via social networking? Why should you want to be ‘liked’ when the stats show that hardly any brands actually have a solid reason to ‘like’ them anyway? Why should you want lots of followers when the stats show that people who ‘like’ you then get disappointed are actually more critical of the brand than those who never noticed you at all?
Well, in my view, it comes exactly back to that point about banking – all financial advice really – being something you need rather than want.
People need financial products. People need financial advice. They just don’t want to spend long getting it, and they especially don’t want to mess it up and make a mistake.
And that’s why social networking is one instance where financial services differs hugely from retailing. Yes, there are lots of similarities between the sectors (see our post of vertical integration and a greater role for platforms in financial advice) but when it comes to being ‘liked’ there are some big differences too.
If my favourite coffee comes from Starbucks I have little to gain from ‘liking’ them online. Yes, once in a while I might get an offer, but to be honest, if I was the type of person motivated by that I could tap ‘starbucks offers’ into Google most days and get some sort of reward.
Mostly, I’ll see status updates that are pretty uninteresting and pretty irrelevant. ‘Liking’ Starbucks won’t help me choose better coffee, it won’t make me aware of new alternatives to coffee and it won’t put me in touch with like minded souls who can share their coffee related pearls of wisdom – I’m more likely to get that from hanging out for an hour in a real life Starbucks outlet.
When it comes to money, however, the internet plays an entirely different role.
Fundamentally, most people don’t understand financial matters. They are scared of products, they are bewildered by choice and they are fearful of making a fool of themselves….. so wherever possible, they go with personal recommendations and word of mouth advice.
Over the past week the end of the tax year has prompted ten or more friends to get in touch with me to seek advice about where best to invest their ISA allocation. This, despite the fact that I only ever worked in the marketing department of a bank…. and I dealt almost exclusively with mortgages in any case.
Kurtosys CEO, Mash Patel, recently ran a quick experiment with similar results. Whilst sitting next to a guy from a leading investment fund, Mash tweeted about buying a new fund and described it as ‘awesome’. Within minutes, a whole host of his followers had tweeted back to ask if this was a fund that they too should be buying.
Mash and I aren’t financial advisors. We don’t really want to give financial advice, but we get asked to, time and time again because we know slightly more than the average man on the street – or at least that’s the perception our networks have of us.
If I ‘like’ a financial brand, my reputation carries weight with my friends on Facebook or my followers on Twitter. It’s not huge, but it is meaningful in a world where most people don’t trust financial institutions.
So, yes, by all means, financial brands should be targeting key influencers. Yes, they should think about the reasons they give people to ‘like’ them, but this doesn’t mean that they shouldn’t be online and it doesn’t mean that they should be using examples from retailing to shape their marketing strategy.
We all know banks are different. It’s time to recognise that that means vastly different marketing and engagement strategies.