Wednesday, January 28, 2015

The Failed Promise of Social Media Marketing

Everywhere you read and hear about the promise of social media, the next great marketing tool designed to lead companies to the Promised Land. Banks and credit unions create a Facebook account, a Twitter account, a LinkedIn account and a Pinterest account, hoping to deliver the next social media phenomenon that streaks across the social media stratosphere. What a bunch of garbage that has been sold to corporations around the world.

Bank and credit union executives are telling their marketing people, “We need to be in social media, engage in social media marketing, we need a social media strategy”. Why, because that is what traditional media and the social media pundits say needs to happen.  I am not saying social media does not have a place in a bank or credit union, however, I am saying that 99% of banks and credit unions are wasting their time with social media as it is currently being utilized.

We have to go back to what started the social media revolution. We have all heard the famous story about Mark Zuckerberg and his days at Harvard University. The evolution of social media is essentially an online and mobile tool that allows individuals to communicate and share information with other people or groups.  It is a “social” tool. 

Along came corporations that saw millions of online users and said, “We have to find a way to take advantage of that collection of people to communicate our corporate message”.  In essence, what has happened is corporations are attempting to hijack social media to deliver their marketing message. Oh, they may dress it up, but ultimately it is designed to sell. That is simply not what social media was designed to do, and is why social media marketing by almost any measure has failed to produce tangible long-term positive financial results. 

So if you are a credit union or bank executive and you believe or your marketing team believes that the effort put into social media to deliver your marketing message has a positive ROI, then you are mistaken. Social media works when delivering a person-to-person message, but not a business-to-person message. 

What is your bank’s or credit union’s goal with social media? Is it to increase new business?
Has it worked? I doubt you will find a true metric that shows it works. Is it to get “Likes” or “Followers”? Those are two of the most useless social media success metrics available. “Likes” and “Followers” are “one-time” engagement events. That is like sending a letter to all your members once and expecting positive benefits from that letter six months later. The only way to gauge social media success is based on “daily” interaction. Do you know the click through rate for social media messages that come from “Liked or Followed” companies? Less than a half of a percent, which is worse than direct mail. Do that math based on the number of “Likes” or “Followers” your bank or credit union has accumulated.  Does it produce a positive ROI? 

I hear feedback, “but it doesn’t cost us anything to engage in social media”. Wrong! Just like everyone used to say, it doesn’t cost us to SPAM email messages to customers and prospects. There are reputation or brand costs from slow response rates or unwanted messages. The time invested in social media could produce better returns elsewhere.

The problem is banks, credit unions, and companies are lazy or worse, unimaginative when it comes to social media. Let’s simply take our old marketing strategy and apply it to this new channel called “social media”. Trying to deliver a traditional marketing message through social media is like trying to drive your car down a sidewalk. There is a path, but the results will not be very successful and you will not make your neighbors happy. 

So where does social media fit into a credit union or bank strategy? Unless your bank or credit union is willing to innovate and develop a “game-changing” business model, it may not fit. Remember, social media is all about person-to-person social networking and communication. If your bank or credit union is willing to use social media and commits the resources to make it successful as a tool that allows your customers to interact with each other providing advice, counsel and recommendations around financial services then social media may make sense. But it has to extend beyond that, by allowing social media to influence the operations of your bank or credit union, such as for analyzing credit risk, influencing lending or deposit rates and product introductions. Social media will only work if your bank or credit union is capable of engaging your customers, which requires providing substantial and meaningful benefits to those that participate. Business social media must move away from one-way communication to two-way dialog. That can only occur with engaged customers. 

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