Industry logs on

1 August 2011 | By Samuel Dale

Social networking began as a glorified chat room for students to upload photographs and talk to friends. Those days seem a long time ago as websites such as Twitter and Facebook have already provided the medium to bring down governments in the Middle East and fuel campaigns against companies.

The closure of the News of the World was caused in part by a Twitter campaign to convince advertisers to stop doing business with the paper in the wake of the phone hacking scandal.

Its power was demonstrated when Co-operative Financial Services initially declined to drop its advertisements in the Sunday paper. After a deluge of consumer complaints and other companies withdrawing their adverts the firm quickly reversed its position.

One of the nation’s biggest companies, Lloyds Banking Group, was another that felt compelled to drop its News of the World advertising slot.

This demonstrated that even the biggest companies in the UK are finding it increasingly necessary to engage with social media. This year the number of FTSE 100 firms using Twitter has so far increased by 25%, meaning 56% now have a Twitter account, according to research by marketing firm The Group. A total of 38% have a Facebook page, up 50%, and 44% have a YouTube channel, up 12% since last December. Two-thirds of all FTSE-listed firms have some social media presence - 9% having a presence on YouTube, Twitter, Facebook and a blog.

A survey by web content management provider EPiServer shows 69% of firms have appointed or plan to appoint a social media or community manager in the next year.

The EPiServer study finds that with almost three-quarters of businesses now running online communities or hoping to do so in the next 12 months, there is a greater need for specialist knowledge of these mediums. Currently, 51% of companies’ social media is managed by a marketing manager, 21% by a PR executive and 21% by someone in IT.

But 28% of businesses employ someone dedicated to social media inhouse and a further 41% said they intended to appoint one in the next year.

“These results show social media is no longer the new kid on the block,” says Maria Wasing, vice-president of marketing Europe and sales operations at EPiServer.

“But while an increasing number of businesses are embracing social media, there are areas for improvement if they are to take full advantage of these channels.

“Managing social media can be challenging and time-consuming so it’s vital to put in place a dedicated team and provide the right tools to ensure multiple channels can be updated with ease.”

Marketers have cited the biggest challenges of social media to be attracting members, 32%, generating content, 28%, and dealing with criticism or abuse, 27%.

A total of 44% said properly engaging with customers was their main aim. This was closely followed by the opportunity to conduct customer research, which came in at 43%, and increase customer retention, 36%.

As well as the biggest companies, government and regulators have been keen to reach consumers and voters through new mediums. Housing minister Grant Shapps is a regular tweeter of housing news, using photographs of his work and commentary on industry issues.

The Financial Services Authority has been getting in on the act too, using a YouTube channel to show people how to protect themselves against investment scams. A video guide on land banking investments was also launched last month but with only two subscribers and 716 hits, it has not proved hugely popular with the general public.
Mortgage lenders have also started using Twitter accounts to make product announcements and forge links with the industry. Coventry Building Society has just started to use Twitter but others such as Ipswich and Saffron building societies are active tweeters.

Trade bodies such as the Council of Mortgage Lenders and Building Societies Association regularly update their Twitter pages. Michael Coogan, former director-general of the CML, used to regularly commentate on industry topics. The Association of Mortgage Intermediaries is poised to open a Twitter account following in the footsteps of its sister body, the Association of Independent Financial Advisers.

Larger brokerages, such as Coreco and Private Finance, have set up regular blogs linked to their websites.

But if you want to start using social media and haven’t blogged regularly in the past, taking that first step can be daunting. Stories about Facebook contributions or Twitter updates that have been misinterpreted or poorly thought out are now a regular occurrence in newspapers (see the box overleaf by Melanie Bien, director at Private Finance).

So where does the social media virgin start? Marketing consultant Ian Giles says the best way for financial advisers to use social media is to start with their website and make it interactive and dynamic.

“This can be done by writing a blog each week and linking it to Facebook for your customers to be able to interact with you,” he says. “Then you can use Twitter and Facebook to drive traffic to the site by recruiting followers and tweeting the highlights of your blogs.

“LinkedIn can also be used to take part in industry debates which raise your brand profile with lenders, networks and others. I’ve set up this type of thing for a few of my clients.”

Giles says there are three key points to remember when using social media.

“First, it is just another channel with which to communicate with your customers and other stakeholders in your business - just like the telephone,” he says.

“Second, it is here to stay so don’t ignore it. And finally, content is king so if you haven’t got something original to say, or a fresh perspective on other people’s view, then don’t say it.”

Writing blogs and engaging in industry debates may be fun and attract traffic to websites, but can this increased interest be converted into new business?

Dale Jannels, managing director of All Types of Mortgages, says social media is great, but you need to put a lot of time in to it. “The major accounts appear to be Twitter, LinkedIn and Facebook,” he says. “We have had business from all these mediums in some shape or form. Twitter is the most public and generates a lot of hits to our website. Facebook is more personal and a closed environment, but if you get the right followers this too can work for you.

“LinkedIn is more business to business, or where someone can sell themselves to new employers. We’ve gained new lenders from this platform and I know others have managed to get new business from here.”

All platforms are serious marketing tools so be prepared to have what you say splashed across the front pages of a newspaper or magazine

Jannels adds that all platforms are serious marketing tools and can be used to engage with customers.

“But every person or account is a brand, so be prepared to have what you say splashed across the front pages of a newspaper or magazine,” he says.

“Also, all the platforms require you to build up followers. If you’re purely a sales message machine, you’ll lose people. You need to be yourself because people buy in to an individual’s personality, not the data they’re regurgitating.”

Jannels insists social media is definitely not a fad and will be around for the long term.

“This is not the first generation - gone are the days of Myspace and Friends Reunited,” he says. “The days of Twitter, Facebook and its competitors could also be numbered but you can be sure other mediums and social platforms will come along and replace them.

“Social media needs effort, time, your honesty and transparency. If you can put all those in, with an open mind, you may be able to make it work for you.” Industry consultant Jonathan Cornell says it is possible to win new clients through Twitter but it is more about engaging and communicating with existing clients.

“Brokers can use Twitter to update followers on new products and also to communicate news and events in the industry,” he says.

“They can also express their views of events and news. Followers don’t necessarily have to agree but by expressing a view you are putting your head above the parapet.

“I think Twitter is easy to dip in and out of,” he adds. “It is easiest to use when you are at your computer but almost everyone has smart phones so you can post something wherever you are.”

Cornell agrees social media will be part of the marketing landscape for the foreseeable future, but while it is free it does cost time.

However, Dominik Lipnicki, director at Your Mortgage Decisions, says social media is unlikely to drive business directly.

“The majority of our clients come via lead generation and in the short term I can’t see social networking making a significant difference in obtaining new clients,” he says.

Kit Thompson, operations director at Brightstar Financial, says it has had no direct business from social media.

“However, we’re in contact with brokers through it, so it’s difficult to quantify what that means in terms of business,” he says. “It’s useful for raising brand awareness. We plug exclusive deals and offer teasers about what is coming up. It also links to our website and we talk to brokers through it. I have met people via Twitter who I wouldn’t have known otherwise.”

Lipnicki points out that Facebook has just increased the cost of advertising on it by more than 70%, which is proof of its popularity.

“Unlike journalists, the financial services industry is slow to embrace social networking, which is a shame. I find Twitter useful, especially for business to business activities,” he says.

“Brokers must be proactive and be prepared to invest time in social networking, even if that means choosing only one outlet, such as Twitter or Facebook.”

In a Mortgage Strategy straw poll conducted in August 2010 , 75% of brokers reported having a website. Obviously three-quarters of brokers operating some sort of website is great news, but there is concern about the quarter who are not engaging with the internet at all. The online medium is increasingly important to brokers’ ability to promote themselves and how the mortgage market adapts will be crucial.

Google’s decision to pilot a mortgage comparison website in the UK is the latest in the now established trend of consumers turning online for financial products.

Moneysupermarket.com and Unbiased.com have long challenged brokers’ supremacy for an independent search of the best deals. The speed with which consumers turn online is going to be a big test for the industry and it will need to innovate.

One option suggested by Robert Sinclair, director of AMI, is to use Skype and internet video services to offer advice. Sinclair says advice is best given face-to-face and that new technologies could help keep that while embracing the internet.

Andrew Montlake, communications director at Coreco, says Skype is a good way for brokers to use the internet.

“I use Skype to speak to overseas clients,” he says. “It’s never going to replace face-to-face meetings because that is important but it is useful for clients who you couldn’t otherwise reach.

“It’s better than the telephone because if you are advising or selling it is better to have visual contact.”

Innovations such as this can help brokers vie with the online comparison sites in speed and accessibility. There has already been a variety of other innovations from brokers using social media to boost business.

Montlake and Lea Karasavvas, a broker at Mortgageforce, have pioneered a networking event for the mortgage market called the Mortgagetweetmeet.

The inaugural event in June was hosted at a London bar and organised entirely through the Twitter hashtag of mortgagetweetmeet. Planning for the second mortgagetweetmeet is underway and a sponsor is lined up.

“It’s a way of meeting people in the industry who you would not normally meet,” says Montlake. “There has been lots of interest and many people who couldn’t make it last time are keen to attend. It has given us tangible benefits in terms of business, good PR and meeting up with journalists.”

Montlake adds that social media has been useful for his business.

“We’ve started to get mortgage enquiries and have set up a referral agreement with an estate agency to introduce business,” he says. “We are meeting some interesting people and it is benefiting our business.”

But he says brokers have yet to fully embrace the media and treat it as seriously as they should.

“There is a lot of apathy around social media and not many in the broker market understand how it can be used,” he says. “Lots of people view it as unnecessary time-wasting, which is a shame.”

Another concept was developed by brokerage Independent Mortgages Direct NE when it set up Facebook and Twitter accounts to help schoolchildren learn about finance and mortgages.

Gary Howe, broker at Independent Mortgages Direct NE, says the accounts were created by a student doing work experience at the firm and they have increased traffic to its website.

The firm uses its Twitter account to tweet news and updates on the industry and it also invited economics students to its offices and took them to local mortgage processing centres to teach them about finance. Howe says its account has raised the number of hits to its website and improved its ranking on Google searches.

Whether it’s teaching youngsters or bringing the industry together, social media has changed the landscape of communications. It has rocked the business world and changed the way companies promote themselves and manage crises.

Speed of communication is more important than ever and the mortgage market has to embrace it as a serious marketing method.

As consumer-facing businesses, brokers cannot afford to sit on the sidelines while technology moves on. The opportunities and challenges it poses must be considered, even if some businesses decide it is not for them.

Whether it is Twitter, Facebook or offering advice through Skype, the internet is shaking up the financial services industry. If brokers aren’t engaging with it already, now is the time to dip a toe into social media and see if it can help fuel your business.

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