I am currently leading ”Financial Services Social Business Adoption 2013,” a research engagement in which my firm is assessing how banks, insurance firms, and other FSIs are using social technologies and their plans for next year. Here I’ll share emerging insights because they will be widely applicable to most other industries, even nonregulated ones.
The Regulatory Factor
When digging for hidden potential, it’s often useful to re-examine assumptions and definitions, so let’s consider some of the key elements of regulated businesses:
- They are ”serious” businesses. Financial services, healthcare, and professional services are three of the most well known.
- They deemed of highest importance because they are often core to life and sustenance.
- They are complex and impervious to the average person, so they involve a high degree of confidence that, when violated, is hard to detect.
- Many of the limitations on promoting and marketing are focused on preventing firms from making false claims about the outcomes of using their products and services – and about privacy.
- Due to complexity and confidence, the people and government decided that regulation would best serve the country.
- Regulations affect all participants of a category equally.
- Given these characteristics of regulated businesses, their practitioners are very conservative.
4 Assumptions about Social Business
Assumption #1: Product Focused
It is understandable that most CMOs lump social business/social media with websites under ”digital,” but it carries false lessons. The most pernicious lesson is that the purpose of communication is to explain products and services, so prospects understand them better and decide to buy. Regulated businesses talk about themselves online.
Assumption #2: Social Media Is Out of Control
Given their conservative DNA, practitioners of regulated businesses are naturally aghast at social media, which many perceive as glib, fast-moving and out of control. Most have had very limited experience with social technologies.
Assumption #3: Social Business Is Promotional
The firm’s/brand’s main purpose when their CMOs think about social business is to promote the firm, principals, and products.
Assumption #4: Privacy Prevents Interaction
Discretion is core to regulated businesses. Safeguarding the details of clients’ identities and activities is critical, so practitioners believe that spontaneous online interactions are very risky.
Firms’ Track Record with Disruptive Technologies
I have led the adoption of disruptive technologies and behaviors by regulated businesses over the years, so I appreciate why practitioners shrink from new technologies until they have been proven out by businesses and industries they consider relevant.
However, one outstanding fact is that all regulated businesses do end up adopting.
Take advertising and websites as examples. How many significant firms and brands do you know that abstain from either or both? Did regulators change the rules? In most cases they did not. Adoption was possible earlier, but firms did not understand the disruptions well enough to understand how they could use them.
Social Business Adoption
You have undoubtedly anticipated that the assumptions about social business are all false; although the second one is literally true, in practice it rarely affects firms as they fear it will. Here’s how they stack up.
Although firms can use social technologies however they want, in most cases using social business to promote is leaving money on the table. Promotion led mass communications are losing impact across the board in general because most people have tired of the half-truths and self focus firms show when they promote.
Firms and brands that want to realize the highest returns on social business focus their interactions on the people they care about the most (”stakeholders”).
Not only that, but to maximize relevance, firms need to focus on the motivations that are driving stakeholders’ use of products and services. The reality is few stakeholders like financial services, professional services, or healthcare. They use them only as means to an end that has personal meaning to them.
This last point is crucial to understand. Most firms are so focused on themselves that they have a hard time seeing outside the product or service. This is understandable because, before social technologies digitized the social aspect of being human, there was no practical, affordable way to understand individuals’ personal motivations. Now there is, and that’s where firms need to go.
Out of Control
Depending on your physical size and training, in any crowd of people, a large portion of them could attack you and put you in the hospital. This is literally true, but how often does it happen? Social technologies are literally not controlled in most places and very difficult to control even when governments try.
In practice, social norms are the primary means of influence and control.
People fear social, and in some cases legal, consequences if they attack others, so few do even though they could. In addition, the way individuals and firms conduct themselves socially significantly influences their likelihood of being attacked.
Finally, unlike the physical crowd, firms need not be present to be attacked online; in many cases, by being absent they increase the chance of attack and the degree of social consequences.
Social Business Is Service
As social creatures, we cannot resist sincere caring and service from other people. Social business changes firms’ relationships with their stakeholders whether they choose to be aware of it or not. Social technologies make it economical to listen to stakeholders and care for them in full view of other stakeholders. As detailed under ”Network Communications Dynamics” in ”How Brands Fail: They Treat Social Business as Mass Communication,” networks make it economical to serve few people because you serve all people by example. Moreover, when firms interact correctly, stakeholders are driving most of the interactions, which increases relevance and credibility.
Serving others in transparent digital social venues will displace most mass communications, which are far more impersonal and therefore ignored. In social business, stakeholders share their situations, goals, and aspirations with other stakeholders and firms can be in the room, too. By serving others, firms can inspire the whole crowd. Listening, reflecting, and caring will build reputations and brands faster than any marketing campaign ever did.
Privacy Can Be Disclosed
As long as stakeholders are in control of how and when information about them is revealed, the firm remains within privacy limitations. People have shown repeatedly that they will disclose private details about themselves when they see a benefit of doing it. Firms need to follow stakeholders.