Social media: Is the phenomenon a passing trend or something that can lead to sustained increases in revenues? Globally, financial services firms appear to be sitting on the fence when it comes to rolling out social media strategies. While some big firms such as Morgan Stanley made news last June by permitting employees to use Twitter and LinkedIn, the majority of wealth managers and private banks received a failing grade from Swiss consulting firm Assetinum when it came to taking advantage of social media.

These results are surprising, considering that 40 percent of high-net worth individuals younger than 50 viewed social media as important channels for communicating with their banks.* The era of broadcast-style messaging appears to be over. More and more, consumers either do not believe, or tune out, traditional advertising, seeking instead advice and recommendations from trusted sources and taking the time to research online before making a purchase. Business has always been about people and relationships. What has changed is that now people are relating to each other online as well as offline. Having a well-planned social media presence shows that you are available, accessible, and paying attention. Clients want to see that your business is reputable and can be trusted, so copying and pasting marketing lingo into social media does not work. Instead it is now about building real one-to-one relationships online. It also improves your search engine ranking—the more that independent connections find your content useful, informative, or entertaining, the more your placement improves.

Typically cited concerns are regulatory issues, reputational risks, and wariness as to whether social media are worth taking seriously. Companies can have a difficult time coming to terms with the transparency of social media, as a negative comment can now be seen by everyone. But there is an opportunity to address such comments immediately and to demonstrate to others that your business has integrity and knows how to deal with criticism. And on the plus side, social media platforms can be used to draw attention to other activities such as sports sponsorships and patronage of the arts.

It is important to remember that social media are in their infancy; five years from now the landscape will very likely have shifted considerably. Nevertheless, at the basic level, there is a strong case to be made that they should be integrated into business operations—sales, marketing, and customer service. For example, businesses must ask themselves how they can take a complaint that appears on Twitter and get it into the customer relationship management (CRM) database workflow so that someone can proactively follow up before a customer calls and complains to the call centre.

Regulators in the U.S. and Canada have started providing guidance on the use of social media. The staff of the Investment Industry Regulatory Organization of Canada (IIROC ) has updated the content of existing Guidance Notice MR0281 to “address the unique compliance and supervisory issues when using social media web sites to communicate with clients and the public for business purposes, as well as to provide dealer members considerations when designing firm policies and procedures for the review, supervision, retention and retrieval of various forms of communications.” Similarly, in January 2012, the SEC issued their observations relating to the use of social media by registered investment advisers.

Joyce Sullivan, founder and CEO of SocMediaFin.com in New York, advises financial services firms on how to best develop a compliant social media strategy. She believes that companies need to ask themselves if they want to seize the opportunity to expand their reach to target audiences or be left behind. Of the Fortune 100 companies, 82 percent use Twitter, 68 percent are on YouTube, and 59 percent incorporate Facebook into corporate communications programs. She tells clients, “if you wait for other firms to do it first, it will be too late to catch up; have a working group in place to be ready.”

How to Get an Internal Social Media Pilot Started

• Find out if your firm has a social media policy. Read it and see what you can and cannot do
• Volunteer to participate in social media groups looking for ways to begin using social media internally (or externally). If no group exists, start one by approaching a senior leader to sponsor an internal working group for social media
• Look at staff/members backgrounds for areas of interest. Seek out and invite “early adopters/eager learners” to join movement
• Start small. See which department could benefit from being a pilot candidate; show benefits of launching a test program
• Nurture top leaders/influencers to become conversant in social tools. Become working partners with your legal and compliance teams
• Look for opportunities to introduce social communications: event promotion, internal networking, charity events
• Celebrate early successes. Advertise internally/externally social milestones. Continue to advocate/change when needed

CASE STUDY

General Motors: Using social media to reshape a brand

Three years ago, GM was in chapter 11 bankruptcy. Mary Henige, Director of GM’s Social Media and Digital Communications, says GM’s senior management has learned from that “near-death experience.” Back then, no one cared about GM and whether the company survived; the company was nothing more than a logo in people’s minds,” she said. The company needed to humanize how it was perceived; people needed to see GM as an enjoyable and interesting place to work, a company of kind people who care about the transportation industry.

Accordingly, GM went through months of painfully listening to what people had to say about them. No one is indifferent to the auto industry, Henige claims. “People love their cars.” This is not surprising when you consider that for most people a car is their second largest expenditure after a house. Listening to their customers helped GM formulate an overall communications plan aimed at rebuilding the company’s reputation and consumers’ trust.

As a start, GM launched a consumer blog, “The Faces of GM” to showcase short videos about GM employees and how they are hard-working, caring members of their communities. GM posts two stories per week (half the stories are tied back to hard news) to provide colour and content on employees who are behind the stories in mainstream media. More than anything, it allows GM to bypass traditional media and other gatekeepers and have its story told its own way. An example was “Toys for Tots,” which showed GM employees working throughout the year to raise $10,000 for charity.

Other social media channels followed, as shown in Table 1. In 2009, four employees were taken from the call centre and were dedicated to providing online customer assistance on Twitter. GM now boasts a response time on Twitter of two minutes or less. Today, the online customer response team has grown to 17. It covers Facebook, Twitter, and third-party industry forums in which they identify themselves to the moderator and let participants know that GM has assigned someone to help customers.

Henige says that one of the big lessons for GM was that it was not always necessary to know exactly what the final outcome of a social media strategy would be. “Social media are new, they are a very experimental process and you have to play in them to understand what works and what doesn’t,” she says. They are the intersection of media relations, marketing-driven storytelling, and customer engagement, and they require a sophisticated understanding of the behaviour of your audience. Done right, social media can help shape consumer opinion at a lower cost than traditional advertising.

It is OK to make mistakes. Consumers give companies credit for trying and for not being afraid to run a pilot project to see how it works, knowing they can stop it if necessary. Henige admitted that initially it can be daunting to hear customers ranting on Twitter, or to read forum posts that are “dripping with poison,” but ignoring what your customers are saying is not going to make the comments go away or improve the situation. Instead, GM prefers to look at those unhappy customers as potential wins. “It’s the customers that we don’t hear from that we can’t save,” she states.

Most recently, GM joined forces with its PR firm, Fleishman Hilliard, and Google’s Detroit account team to brainstorm how GM could use Google+, the newest credible social network for business using online customer engagement.

Henige pointed out that GM is a content-rich company; it is comprised of 90 individual companies, with material offered in 30 languages. In 2011, it had over 1,000 news releases. GM found Google+ was excellent for niche journalists as it permits grouping of contacts into “Circles.” Industry media can be leveraged across vertical media groups, and GM can provide increased access to smaller bloggers and other influencers. GM now releases content selectively, depending on need, to bloggers, parenting magazines, women’s media, green media, etc. GM staff can add colour and even participate in online “hangouts,” discussing a story or events. Henige’s social media team always looks for a news hook to connect to content. For example, on Valentine’s Day, content included consumers talking about “love at first sight” with their car. Similarly, Father’s Day stories were about customers’ first memories of cars with their dads.

And the results? Henige pointed to “Reputation Rehab” statistics from Harris Interactive showing that GM was one of three companies, alongside Toyota and BP that saw a solid gain in measures such as emotional appeal and social responsibility from 2010 to 2011.

GM has also been working with its dealer network to provide training and education. Not surprisingly, dealers who score highly on customer satisfaction also do well on Facebook. Dealerships are often used for community events, and dealers do well by leveraging that across Facebook to humanize their businesses. Henige’s conclusion is that, while social media can be a way to get media coverage, ultimately, efforts in this area are pointless unless they are carefully designed to be part of an overall business strategy.

GM ’s Social Media Strategy

Goal: Improve the reputation of our company and products by building relationships with consumers by changing entrenched perceptions, building affinities, and creating positive associations.

Tactics: Listen and engage with audiences to

• Build confidence and trust
• Create awareness and strengthen brands
• Help increase sales by increasing consideration
• Engage and empower employee advocates
• Capture and channel feedback appropriately to improve the business

Key Learnings:

• This isn’t about us, the community comes first
• Define each channel’s reason for being, then build and feed it. Not all content belongs on all channels. GM aims to go where its customers are and provide the best and most appropriate content for that channel
• Integrate social media into marketing and PR efforts
• Do not be afraid to take risks and make mistakes. Become a student of “what’s new”