Perfect Circle PR

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.

PR for ‘useless’ financial products

Which? recently highlighted the top 10 most useless financial products including things such as mobile phone insurance and packaged current accounts.

Whether you agree with the Which? assessment or not, I thought it would be interesting to take a look at these products from the point of view of the PR person that has to promote (defend?) them. Which? essentially said that people don’t need these products or that they can get better deals elsewhere. So how do you contend with that?

Well, it depends what the criticism is. If it is that the rates or returns aren’t competitive, then fair enough, people don’t have to take these products but there might be many reasons why they might want to do so. For example ease of use/ ease of applying, service, consolidating different types of products with one provider or other benefits that come with the product. Price is not the only factor and some people simply don’t want to constantly shop around for the best deals, they just want to go down the simplest route.

If the criticism is that people don’t need the product, then that simply isn’t valid for everyone. People don’t NEED to buy mineral water, they can just get it for free from a tap. People don’t NEED to buy super unleaded petrol, they can just buy the normal grade. But people sometimes want to do these things so if consumer demand is there, however niche, then there is nothing wrong with catering for that, provided that people have all the information to make a decision.

This leads to the next criticism, which may be that people are hood-winked into taking out a policy or buying a product and not realise what they are getting into. This is where things get much trickier for PRs as your company or client is being accused of dodgy sales practices. There are no easy answers here and protestations that people should have read the small print are not going to find much sympathy with journalists. Ultimately, you can only do the best you can, but if something is rotten, it is rotten.

From a commercial point of view, bad media coverage does not necessarily mean that the providers will amend or withdraw the products. If the product is generating revenue then some companies will take the view that bad PR is a ‘price worth paying’. However, it is the PRs duty to flag up risks and to do their best to change companies for the better, too make them more transparent and to improve their reputation. It would be great to be in a position to make organisations more consumer-friendly using external reputation as leverage. This is what PR can potentially achieve.