Marketers who obsess over driving social media connections (like Facebook likes and Twitter follows) because they see or hear that social media likers/followers are more likely to buy, are better customers, or whatever, are missing an important point:
Social media connections don’t cause the desirable behavior/attitudes — they’re the result of something else. That “something else” is customer engagement.
In a survey of more than 1,100 US consumers, Aite Group asked respondents how frequently they performed financial management activities like creating/managing a household budget, categorizing/forecasting their spending, analyzing the return on their savings and investments, and seeking help and guidance in making financial decisions (there were 13 activities, overall).
Based on their responses, respondents received a score for each activity and an overall Financial Activities Score. That score qualified them for one of three groups (with the percentage of the population each group represents): Level 1: Inactive (30%); Level 2: Moderately Active (50%); and Level 3: Highly Active (20%).
Highly Active consumers (Level 3) are the most likely to:
Grow their relationship with their primary financial institution. Just 4% of Inactive consumers expanded their relationship with their primary FI in the past 12 months (by increasing balances and/or number of accounts). Among Moderately Active consumers, that percentage is 11%, and among Highly Active consumers it’s 14%.
Refer their FI. Highly Active consumers are 1.5 times more likely to refer their primary FI to family/friends than Moderately Active consumers, and twice as likely as Inactive consumers.
Use and reap the benefits of PFM. Nearly two-thirds of Level 3 consumers use an online PFM tool, in contrast to just one in four Level 2 consumers, and one in 10 Level 1 consumers. More importantly, Highly Active consumers reap the benefits of PFM. In a soon-to-be-published Aite Group report, I defined three levels of benefits that users achieve from PFM: 1) Oversight: The ability to know where their money is and where it goes; 2) Insight: The ability to better control and manage their financial accounts; and 3) Foresight: The ability to make better financial decisions. Among PFM users, Highly Active consumers are four times as likely as Level 1 and 2 consumers to have reached the Foresight level of benefits. The benefit to FIs of PFM users reaching the Foresight level will be described in the report.
Connect with FIs on social media. Among Highly Active consumers, nearly three in 10 are Facebook fans of their primary FI, and one in five follow the FI on Twitter. Among other consumers, those percentages are in the low single digits. Looking at it from a different perspective, of the customers that follow their primary FI on Twitter, 95% are Moderately Active or Highly Active consumers. Ninety percent of Facebook fans come from these two segments.
Bottom line: Encouraging customers who aren’t actively involved in the management of their financial lives to “Like us on Facebook!” or “Follow us on Twitter!” is a waste of financial services marketers’ time and efforts. The customers who make those connections are already good customers.
Customer engagement — engagement with one’s financial life — is what financial marketers should be encouraging.