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Banks And Credit Unions Can Forget Twitter For Marketing

A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors

According to a Banking My Way article titled Credit Unions Reach Out, Strike Out on Twitter:

“A recent study from IBM shows that 68% of banking executives are unprepared for new communication technologies like Twitter, suggesting that credit unions risk losing customers to larger banks that do a better job of engaging customers in social media. Again and again, studies show that bank customers want to engage in social media, but attracting Twitter followers has proven more frustrating than most credit union marketers had anticipated. The takeaway? Big banks, which seem to do a better job at the social media game than credit unions (and with much larger budgets, why shouldn’t they?), have a big advantage over credit unions.”

My take: The author of the article is misinterpreting what’s going on:

1. Credit unions don’t risk losing “customers” to larger banks. The statement “credit unions risk losing customers to larger banks that do a better job of engaging customers in social media” is ridiculous. If credit union members aren’t engaging with their own credit unions (for proof of that, see the Financial Brand article Credit Unions Struggle With Twitter, One In Five Abandon Accounts), then why would they be engaging with larger banks?

2. Bank customers may want to engage in social media, but not necessarily with banks. According to a study done by the Financial Brand, nearly half of the top 400 banks had less than 200 Twitter followers. Looking at it from a different angle, the study found that less than half a million people follow a bank, or about one-half of one percent of all Twitter users.

3. Big banks don’t do a better job at the social media game. How the author of the article came to the conclusion that big banks “seem to do a better job” and that “with much larger budgets, why shouldn’t they?” is beyond my comprehension. The research I’ve done is getting a bit dated, but in the survey I conducted in Q3 2010, the banks I surveyed were spending such a small percentage of their marketing budget on social media that it wasn’t even measurable.


Unfortunately, the Banking My Way article, like too many articles like it, fails to address the more important question:

For what marketing purposes is Twitter good for?

You can argue all you want with me on this, but I will remain steadfast in my belief that there are four potential marketing uses for Twitter: 1) Awareness; 2) Consideration; 3) Preference; and 4) Engagement. (I would argue, too, that engagement is actually just a way of creating awareness, generating consideration, or influencing preference).

  • Is Twitter good for creating awareness? By definition, no. Consumers choose to follow a bank or credit union. They can’t follow one that they don’t know of.
  • Is Twitter good for generating consideration or influencing preference? Maybe. But there are a few problems in trying to answer this question. First, attributing ultimate consideration or preference to a tweet or series of tweets is a nearly impossible task. Second, the channel isn’t nearly mature enough for any one to really know what kind of tweets are more effective at generating consideration or influencing preference.
  • Is Twitter good for engaging customers and prospects? Possibly. I’m actually inclined to answer “yes.” But with so few people following and connecting with their banks and credit unions, the potential value of the channel to engage consumers is untapped.

Bottom line: Banks and credit unions simply risk nothing by not using Twitter for their marketing purposes. Statements like “you’ll be left behind if you’re not on Twitter” are stupid, and marketers who say stuff like that should have their marketing licenses revoked. Oh wait, any idiot with access to social media can claim to be a marketing expert (after all, I do).

The notion that credit unions risk losing out to banks is ridiculous. The most effective marketing campaigns that credit unions have seen in the past 18 months were executed by non-credit unions: The Bank Transfer Day Facebook page by some woman in California, and the leaked announcement from Bank of America regarding a $5 monthly debit card fee.

Credit unions own efforts — whether through Twitter, other social media channels, or other marketing channels altogether — haven’t been nearly as effective.  

Bank and credit union CEOs need to start asking their CMOs: Is Twitter really the best use of your department’s time and resources?

I can’t imagine the answer to that question is yes.

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Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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  1. Ron – your conclusions that failure with the use of social media – and twitter in particular – in Banking is a function of customer preferences. These conclusions are based on the assertion that since Banks and Credit Unions have been unable to engage consumers through social media, then Consumers surely aren’t interested.

    There is another way to look at the data – which is to say that Community Banks and Credit Unions have failed to provide Consumers with reasons to engage with them, thus their results are highly disappointing.

    As you can tell, the implications are very different based on how one interprets the cause & effect of Retail Banks’ failure in social media.

    I believe that the data is overwhelming that it is indeed Community Banks and Credit Unions that are failing to leverage the channel — look at The Financial Brand’s own surveys that indicate that most Community Banks and Credit Unions have yet to scratch the surface of social media marketing and just a cursory review of Community Bank and Credit Union social media channels will clarify that most have not offered Consumers any reason to engage.

    Community Bank and Credit Union executives should be engaging their CMOs into a discussion of how best to leverage these new channels. Specifically, it should be noted that a facebook page is not synonymous with social media marketing; nor are postings related to branch hours, bank’s philanthropic and community activities, staff birthdays and cutest cat contests.

    Community Banks and Credit Union execs need to recognize that what may have been effective 5 or 10 years ago, is unlikely to generate the needed growth and profitability going forward. We all recognize that smoke signals, while effective in the past, are no longer an effective communication channel. Change happens – those who wish to succeed must understand the change and adjust to it.

    Community Banks and Credit Unions could and should be more agile generating much better performance. Yet, we are not seeing this. What we continue to see are the same old tired marketing campaigns that fail to generate ROI (return on investment).

    Doing something different, especially when it results in positive ROI should be a worthwhile pursuit.

  2. Serge: Good points, but not I’m not putting all the weight on “consumers’ lack of interest.”

    As I say in the post “he channel isn’t nearly mature enough for any one to really know what kind of tweets are more effective at generating consideration or influencing preference.”

    I think that supports your point about ineffective use.

    But the problem here is more than just “ineffective engagement.” The complicating factor is poor measurement tools. There’s no good way for an FI to test and measure the effectiveness of the messages.

    So how can FIs figure out if they’re engaging effectively or not? If one random person tweets that he refinanced his mortgage because he saw a tweet? That doesn’t prove anything.

    Here’s the point I think bank/CU CMOs are missing: Social media is a superior channel in terms of efficiency, not necessarily effectiveness (I argued this point in a past post).

    Facebook and Twitter radically cut the cost of disseminating messages. But determining the effectiveness of a particular message (or offer, or whatever) might very well need to be done in a different channel.

  3. If you step back from the picture and remember twitter and social media is about community, and banks are all about personal connection. The relationship consumers have with their bank has is suppose to be very personal, and the industry has gotten away from that over the past 10 years. Social media is giving them an opportunity to get back to a community. Think of twitter as a communication tool talk to your customers about their community not just cross-sales.

  4. InfoSight: Thanks for commenting. I have to admit that I don’t quite get your point, though. If, it’s about (as you say) “personal connection,” then what does “community” have to do with it?

    And when you say “Social media is giving them an opportunity to get back to a community” what exactly do you mean by that? I know that some of the most successful FI-related Facebook pages (Chase Community Giving, Geico pet ownership, etc.) do this, but how does this pertain to Twitter? What exactly should an FI tweet that would be an example of “getting back to a community” and that could be measured and proved to be effective?

  5. I have never been a customer or member at any financial institution that even remotely made me feel there was a “personal connection.” For that matter, I can’t even say (m)any of the doctors I’ve seen did a very good job at that, and there are few things more personal than having someone poking their fingers inside you.

    If there is any “feeling” I’ve gotten from banks, its that I feel like just a number.

    Quite frankly, I’d be annoyed if my financial institution sought to forge a deeper personal relationship with me. I just want them to keep track of my money accurately and process my transactions accurately. Other than that, I’d prefer they stay out of my life.

  6. First, I am not much of a social media marketer. But, note, the only reason I saw this post was because of Twitter.

    But, would my credit union or bank reach me better via Social Media? I don’t think so. At home, I’m rarely using those mediums and I wouldn’t subscribe to them with my company account.

    Frankly, I am a semi-old school guy. I even still go visit my branches. My bank and credit union would do better if they just trained their tellers or accounts reps to spend some time with me instead of trying to rush me out the door.

    I also use online services, but the marketing messages they send or display when I sign on have never hit a chord with me. Except for USAA. They have gotten business just by asking questions and letting me know they have products to fit my needs. They get repeat business because of their great service.

    I like the articles, songs, books, etc. that those I follow share. Of course that is what social media is supposed to be about. Sharing items of interest, not marketing messages.

  7. It’s interesting how “hot” this issue is.

    I believe that it really depends on the financial institution. Blanket statements don’t work. There are lots of banks and credit unions that don’t engage their customers outside of social media, so why should we think they can do it within social media? Banking is about forming and building relationships with prospects and customers and social media is an extension of that. If you don’t have a relationship with your banker, you probably aren’t going to want to have a relationship with your banker through social media.

    Plus, we are still in the early stages and most marketers have not figured out how to do something meaningful through social media. It is not a sales channel and those banks that try the hard sell will be tuned out. It’s also not a fluff channel so those that only talk about the annual barbecue will have limited success. I keep wondering why people keep talking about social media marketing; I think of it as social media communications. It’s about communicating and engaging..about building relationships.

    It is my hope that banks will begin to think of how they can add value: how can we educate customers about new types of services in an entertaining way? How can we get people to think about how to better manage their money? How can we involve customers in product development? I like the idea of a customer forum where customers can share ideas about how they save money and how they use mobile banking and how they build their credit record. The bank provides the forum for customers to learn and share.

    And community banks should use social media to engage with their communities and support community programs and initiatives. Large banks can’t do that. Community banks can because their communities are defined by geography. How can work together to make our communities a better place to live, work and do business?

    And, an events calendar can and should be part of the communications. Social media can be a place where people get info on the shred day and the barbecue and the holiday food drive. It just shouldn’t be the only message. There are customers who care and want a quick way to get this info.

    As for measurement, how do we measure the effectiveness of our communications now? Mostly, we don’t. We want to have a higher standard for social media than we do for PR and corporate communications. How fair is that? What is the ROI for serving ice cream sundaes or collecting food for the food bank? Some of it is just the right thing to do.

    And lastly, marketing folks are often limited by their management. Many bank execs are older, conservative and very traditional. If they allow their employees to get involved in social media, it is probably going to be with a lot of strings attached. They may be forced to start small and build on it over time. It’s the nature of banking. We approach things cautiously. But, as more banks find ways to engage customers, share content and make a difference in people’s lives through social media, it will open up opportunities for others to do the same.

    The ROI may not be there now, but younger people will eventually be in a position to demand that their bankers use social media to build relationships with them. I could be wrong, but it will be exciting to see how it all evolves. None of us probably have it right!

  8. Lori: Thanks for taking the time and effort to comment. Much appreciated. Let me address a few of the points you make.

    First off, unless I overlooked something, not once in my post did I mention the term ROI. I talked about four marketing objectives that (hopefully) influence and impact ROI, but I did not establish ROI as the sole — let alone a — criteria for determining whether or not an FI should use Twitter.

    So I think your question about the ROI for serving ice cream sundaes or collecting food for the food bank isn’t on the same level as the Twitter decision. But let me address your question: While there is no “ROI” on serving ice cream or collecting for the food bank, there is “rationale” for doing so: It may be influencing someone’s decision to consider the FI, or influence their preference for selecting the FI.

    The bank I use serves free coffee and donuts on Saturday mornings. While the bank can’t measure the ROI, or even the impact on customers’ decision preferences, they CAN, at the end of the days, figure out how much coffee was consumed, and how many donuts were eaten.

    Can you figure out how many people read your tweets? I can’t. I know how many followers I have, but I have no clue how many actually read anything I tweet.

    I agree with you that banks have to “think of how they can add value, educate customers about new types of services in an entertaining way, and can get people to think about how to better manage their money.” But is there any indication that Twitter is an effective tool for doing any of that? I find it hard to believe that a 140 character limitation is a good venue to do the things you list.

    Lastly, it’s certainly true that many bank execs are “older, conservative and very traditional.” While that’s certainly a negative at times, the reality is that the opposite — “young, reckless, and un-traditional” has drawbacks, too.

    The cries from the gurus about “embrace SM or die!” carry little credence. Of all the banks that went out of business in 2011, what percentage of them would you say went out of business because they didn’t leverage social media? I’m thinking ZERO.

    Lori, I agree with you 100% about what’s needed in the industry. I’m simply trying to point out that: 1) Social media, in and of itself, is no panacea, and 2) Twitter, in and of itself, may be of very little value.

  9. Thanks, Ron, for your response. I agree with many of your comments. And, the blanket “embrace social media or die” is ridiculous. Like I said in the beginning of my response–it really depends on the bank.

    You’re right though. I expanded my discussion from your focus on JUST Twitter to more of an all-encompassing discussion of social media as well as the demand for ROI for social media efforts. That was not your purpose for this post. Sorry. Got carried away.

  10. Let’s mix it up. Twitter and the rest of social media is a big waste of time for the FI space. Wait, I have second thoughts about that statement. Twitter and the rest of social media is a f***ing waste of time for the FI space. Where should you spend your time? Where you get triple digit ROI!

  11. I’m with you, Ron and David! Truth is that truly community-involved banks and CUs, not those that just cut the occasional check to the no-kill shelter, don’t have even a sniff of a need for social media.

    Heavy research indicates that the only entities making any money at all from social media in the bank and CU world are consultants, analysts and other wonks living off the tired and vacant “Banks Must Change” message.

  12. Scott, right on!

  13. Trevor Rasmussen says:

    I think the biggest problem here lies in WHO is trying to interact with the consumers. Do you want to talk to a logo or a person. The mythical unicorn just might be in who is doing the interaction as well as what is being shared. From what I’ve seen, banks and CUs are just joining and sharing a bunch of me-centric garbage that no one cares about because they don’t want to talk to a logo and the content isn’t relevant.

    It also comes down to strategy. There is a LOT of strategy that goes into successful social media, its woven into everything they do as a company, not just some little department with an intern that is posting about their new low rates or some new program they offer.

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