How social commerce might work in financial services
Social commerce in financial services
Social commerce can be defined as ‘the use of social technologies to connect, listen, understand, and engage to improve the shopping experience’. Altimeter Group says that there are four stages of social commerce:
- Let’s Be Social – simply using social technology to build the brand and community
- Enlightened Engagement – informing customers through reviews, experts or other respected sources
- Store of the Community – customers help drive product selection assortment and merchandising
- Frictionless Commerce – the buying experience is completely redesigned to create a fully customer-centric experience
How is this relevant to retail financial services? Well, a shopper is a shopper, no matter whether they are looking for a personal loan, a savings account, some IT hardware or an airline ticket. Believe it or not, social commerce is changing the way we shop, and this is already affecting the financial services sector.
Most financial services companies have not progressed beyond the first stage of simply being social. First Direct are using Twitter, Flickr and YouTube and Barclaycard are using Twitter and Facebook to connect and engage with their customers. These are big steps in the right direction and very innovative for the sector.
How might social commerce go beyond that though? Stage two, ‘Enlightened Engagement’ could include customer case studies on YouTube or Flickr, for example. Imagine how powerful it would be if you were looking for home or car insurance and you could view video clips from people extolling the virtues of your claims management service. (Too much emphasis is placed on cost these days anyway.) You could also have experts from outside your organisation, such as financial commentators, provide video or audio clips to help inform people. Or, you could have a forum where potential customers can discuss amongst themselves what they think of the product or service before purchase.
Stage 3, ‘Store of the Community’ could be a product or product range that is influenced by consumers via social media channels such as Facebook or Twitter. Imagine a simplified, stripped down mortgage or insurance product designed by product and propositions people as a direct response to what they gathered from Twitter and twitpolls.
How about product and proposition teams stop guessing what people want and just ask them? Social media is a rich vein of feedback and intelligence waiting to be tapped. Taking it a step further, you could even part develop two propositions, video them and get people to vote for their favourite, a bit like Google Slam.
Stage 4, ‘Frictionless Commerce’ is a tough one. Is it even possible for an existing financial services firm to start from scratch to put the customer at the heart of the experience? I suspect not and I think that the only organisations that will be able to achieve this nirvana will be new ones. However, here I defer to a higher authority, Brett King, and his post on the prototype bank.
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Terry Golesworthy
November 16th, 2010 at 16:28
We are seeing an uptick in reviews and ratings in financial services companies especially USAA, and Progressive. This presumably would be your stage 2. What about banks that engage with a customer service program eg BofA, Citi, Wells Fargo. Are they on stage 1 building a community?
Joe
November 17th, 2010 at 16:03
Sounds like BofA, Citi and Wells Fargo are stage 1, but doing it very well, from what I can see.
Simon
January 2nd, 2011 at 13:13
Enlightened engagement is a tough jump for financial services companies. For most of them their marketing department only just convinced their Information Security department that they had to use Social Networks “At least just for press releases”.
Using social media for press releases is like using a telephone for morse code. A backward step.
The board, and middle management in these companies don’t use social media, don’t like it, and don’t want it. The only effective sell appears to be “look what everyone else is doing”. I’m interested to see how banks taking the engagement thing further get on…
The community store (App store), is almost a whole extra issue, and a massive investment for banks that aren’t already on the cloud infrastructure route. The idea of having an ecosystem and marketplace of developers vying to make your channels better, for free seems like a tempting one… but again Info Security hate it.
Frictionless payments is one they all see £ signs in. They just don’t know how to do it… and want it to look a lot like the current model. Buying what, from where, with what funding mechanism and network?
The PayPal approach is to abstract the payment from the funding source, by giving you a virtual wallet. Interesting though that their “PayPal X” platform isn’t anything near a standard, and if anything still largely a benefactor of Ebay’s size. What will Visa and Mastercard do? Square is an interesting one too…
Robert Mehler
January 3rd, 2011 at 09:59
Fantastic post!
Brett King and many others from within financial institutions are looking to redefine how to place the customer in the center of a shopping experience, which I believe is far more than a better look and feel, rather focuses on the interaction experience itself.
Aite Group Sr. Analyst, Ron Shevlin, refers to the interaction experience I am focusing on as the “sense and respond” experience or what we call at ActivePath, “Take Action.”
The nexus between these seemingly disparate networks and digital channels will lie at the customer’s sense of value of an experience, where the aesthetic must be matched by their abillity to hav ethe option to take action and engage in a 2Way interaction.
In 2011 we have everything that we need sitting at our fingertips, but do we have the ability to engage with the customer in the way they may want? I too defer to the higher authority – the customer.