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 Chuck Schaeffer Social Products For Financial Services Institutions

 

How Financial Services Leaders Are Making Social Business Profitable Business

Financial services institutions who advance their customer relationships and business success with the prior social strategies may want to consider making their financial products social. Is there a customer benefit if your products deliver performance reporting, progress updates, customer statements, administration messages, renewals or other messaging to your customers or their designees (i.e. their accountants, lawyers or financial advisors) in a social way or over a secure social network?

When helping a financial services client design a social strategy, I asked a group of executives, "why can’t my 401K be my friend?" They kind of chuckled, so I asked again, "no really, why can’t my 401K, checking account, investment account or other financial product be my friend?" Why can't these financial services products deliver private and secure alerts on a social network when they incur gains or losses, when they release or reinvest a dividend, when they are awaiting a decision from me or when other things happen which I indicate I'd like to know about. Why can't my accountant or my tax attorney subscribe to my social page so I can indicate which of these notifications I also want them to be alerted?

Do you think consumers prefer to go to financial services company web sites to see their product information and updates? They don't. They would rather their information be delivered to their social networks, with security, so they get the information in real-time, and don't have yet another place to go.

This type of creating thinking, and in this case enhancing financial services products to become social financial services products has led to increased customer engagement, more frequent reinvestment transactions, increased customer share, lower customer churn and new found differentiation that matters to customers and is aiding marketing campaigns and new customer acquisitions.

Crowdsourcing By Financial Services Institutions

As product commoditization accelerates, financial services institutions are under pressure to deliver innovative and differentiated financial products and services that are embraced by customers.

A social technique that builds upon social products is crowdsourcing. Sometimes grouped with ideation or idea management, this social strategy involves engaging public and private online communities to discuss, assess and vote on ideas to create or improve products and services.

Crowd sourcing supplements social market research, test concepts, product prototypes, product trials and new product launches. The volume and diversity of virtual participants' permits product manipulation and modeling (i.e. bundling, fee structures, pricing elasticity, related services) and flexible customer segmentation analysis.

Using crowdsourcing to supplement social market research for new financial products and services is a proven method to increase market acceptance and customer adoption.

A financial services crowdsourcing example is Barclays use of crowdsourcing to design the terms and benefits for its BarclayCard Ring MasterCard and based on that success, its subsequent creation of the crowdsourced site called Your Bank in order to continuously acquire new ideas for products and services.

Aly Bank found crowdsourcing support for a virtual bank. Based on customer feedback and an advertising slogan that promoted "no branches" it became one of the fastest growing banks in North America. Crowdsourcing spawned mobile-based neobanks such as GoBank and Moven which have shown enough success that American Express and T-Mobile have entered the space with Bluebird and Mobile Money. Peer to peer lending and crowdsourced websites such as Kickstarter or Indiegogo are now taking measurable business away from commercial banks and institutional investors.

Or in insurance, consider The Climate Corporation's insurance for farmers based on weather data, or Oscar Insurance's healthcare coverage fees based on wearable technology, or Metromile's per-mile car insurance fees. Some of these virtual and pay-as-you-go insurance companies are highly successful and now worth billions.

Crowdsourcing is a powerful form of product innovation that delivers demand-side ideation, near real-time customer feedback, recognition of demand drivers and measured acceptance testing for many product combinations and across customer segments.

But how do you know whether your idea is the next big thing or a big waste of time and money?

When part of an overarching social business strategy, crowdsourcing permits new thinking and early customer feedback which improves product fit and more controlled test launches that increase the likelihood of customer adoption. Crowdsourcing changes the all too common inside-out analysis based on small groups of researchers, limited data and lots of speculation and instead uses online ideation to engage and solicit consumers for their ideas and their critiques on the ideas of others.

This process permits faster testing of R&D concepts with larger volumes of customer feedback. Near real-time access to large volumes of customer opinions also allows one-off test conditions and accelerates successive iterations so that new product innovation cycles can be substantially reduced. When consumer feedback can be acquired in minutes instead of weeks, FSIs are afforded more testing scenarios and valuable What-If analysis.

Introducing new financial products is a high risk venture for FSIs. However, using crowdsourcing and online ideation reduces this risk, accelerates new product innovation, lowers R&D expense, accelerates time to market and grows revenues by delivering products that customers most want.

Next: Reputation Management for Financial Services Institutions >>

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As financial product commoditization accelerates, financial services institutions are under pressure to deliver innovative and differentiated financial products and services that are embraced by customers.

 

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