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This was about Social CRM and its application to Retail Banking in Germany.
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Social CRM in German Retail BanksGoethe Business SchoolGlobal Consulting Project 2010
BearingPoint - Frankfurt
September 6, 2010
Shridhar Dharne| Vijay Gaikwad| Gaurav Sharma| Venkat Srinivasan| Laura Vantellini | Martin Wellnitz
Agenda
2
German Retail Banks – Post Crisis
What is Social Media
Power of the Community – Examples of Social Media in Corporations
Social CRM for a German Bank
Implementation Steps
Q & A
3
Financial Crisis led to loss of trustGeneral opinion that banks make profit at customers’ expenseBanks are trying to rebuild their image after the crisis
German Retail Banks – Post crisis
“Most banks make money by keeping their customers confused” -- BankSimple
Changes in Customer Relationship
Higher Customer Advocacy leads to more repeat business
1 2 3 4
Need to maintain customer loyaltyBuild fundamentals for cross sellingRegain customer trustNo hard-selling
Urgent Need for Customer Advocacy
5
4
German Retail Banks – Post crisis
“Banking is necessary, banks are not” – Bill Gates, 1994 BankSimple was born out of our frustration with
banking. We were fedup with our bank: the fees, the constantly changing rules, the crappy customer service.”. –-BankSimple website.
Changes in market conditions
Fierce Competition Competition to get new customers Competition to retain existing customers
Reasons for changes in market conditions
Difficult business landscape Lack of differentiation New ‘non traditional’ players demand
a piece of the pie P2P Banks Social Banks Direct Banks
1 2 3 4
Focus on differentiation strategy & build stronger relationship with existing customers
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5
Internet usage for financial productsin Germany
Top 4 Retail Banking products researched online by Germans
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2
Savings/ Deposit Accounts
Stocks and Shares
3 Current Accounts
4 Personal Loans
Top 4 Retail Banking products bought online by Germans
1
2
Savings/ Deposit Accounts
Stocks and Shares
3 Credit Cards
4 Current Accounts
25% of consumers researched at least 1 financial product online
11% bought at least 1 product
1 2 3 4 5
Agenda
6
•German Retail Banks – Post Crisis
•What is Social Media
•Power of the Community – Examples of Social Media in Corporations
•Social CRM for a German Bank
•Implementation Steps
•Q & A
7
Online communities are interactive group of people joined together by common interests or friendship
Characteristics include:ReachAccessibilityUsabilityRecency
Social Communities
“A group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content. It transforms and broadcasts media monologues into social media dialogues” – Andreas Kaplan
Social Communities
Family
Colleagues
Interest-groups
Friends
Blogs
SocialNetworks
Virtual World focused:“Online Social Communities”
Real World focused:
Forums
Customer
ON
LIN
E S
OC
IAL
CO
MM
UN
ITY
1 2 3 4
Banks
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8
German Banks don’t like Social Media
German retail banks are very traditional, conservative and risk averse.
Social media are unconventional, non-traditional, and carry some risks with them.
Skepticism towards user generated content
Less structured Less formal No single point of distribution
No measurable ROI
There is no simple way of measuring ROI of any social media initiatives.
Social Media initiatives cannot be ‘accounted’ for properly.
Power of communities
News travels very fast using Social Media
Bad news travels faster.
Legal Issues
Bank’s communication to the public has legal implications
Legal departments prefer to monitor fewer and less complicated channels of communication
Reasons why German Banks are not interested in Social media…
Reasons why German Banks are not interested in Social media…
1 Source: http://managementchords.blogspot.com
Half duplex Communication
Banks prefer half duplex communication not full duplex. They like to send out messages but not receive feedback simultaneously
Differentiation There is no way of differentiating
customers from non-customers.
No Cookbookrecipe
No Early Adoption
German banks are usually not early adopters of new technologies.
There are no established ‘Best Practices’ and there is no cookbook for social media.
1 2 3 4 5
Agenda
9
•German Retail Banks – Post Crisis
•What is Social Media
•Power of the Community – Examples of Social Media Usage
•Social CRM for a German Bank
•Implementation Steps
•Q & A
10
Social Media in Action
Some examples of social media use
Hornbach ING Direct USA
United Airlines “United Breaks Guitars” Bank of America
Negative Examples Positive Examples
1 2 3 4 5
11
Negative Example: United Airlines
“United Breaks Guitars”:
The power of the groundswell
10% drop in share price within 4 days from the day the video was released.
Twitter used as product promotion tool, rather than as a service portal
Facebook page not carefully taken care of
Social media: YES
Social media strategy: NO
Impact
1 2 3 4
Social media initiatives
5
12
Negative Example: Bank of America
Facebook page (4,400 followers) is completely empty and not maintained
There is a Facebook page called “Bank of America SUCKS” with almost 3,000 followers and a page called “I hate Bank of America” with 1,000 followers
No reaction from Bank of America’s side
Strong focus on Twitter: they have a portal on it (customer service and career information) which was opened early 2009
No holistic social media strategy
Bank of America
1 2 3 4
Social Media Initiatives
5
13
Positive Example: Hornbach
Numerous examples exist, on how companies managed to profit from the dynamics of existing social communities.
Strong Twitter and Facebook presence where they continuously build and support an engaged community
Strategic use of social media and all channels to support the “Make It Yourself” community
Social media (Twitter, YouTube, Facebook and own page) and its community used for viral marketing actions like “Das Grenzenlose Haus”
Integrated Social Media Strategy
1 2 3 4 5
14
Positive Example: ING Direct USA
Different business model: direct online bank – no branches, just “banking cafés”
All their customers already online
Easier online interaction and use of platform
“wethesavers.com”:
“The official blog of savers”
Creation of a community of savers with a 10 point “Declaration of Financial Independence”
Funny polls (funny but useful for sure)
20,500 followers on Facebook:
Useful information
Links to interesting money-related information
Strong community feeling
Mostly positive feedback
Successful Social Media Implementation
1 2 3 4 5
Agenda
15
•German Retail Banks – Post Crisis
•What is Social Media
•Power of the Community – Examples of Social Media in Corporations
•Social CRM for a German Bank
•Implementation Steps
•Q & A
16
German Banking 2.0 (Competitive landscape & innovations)
Whofinance.de: an advisory website where bank advisors create their own profile and offer advice. Customers rate these advisors based on their advice quality.
Consultants have to pay a fee to the website for commercial advice The site also sells leads They have a “Best Bank Contest” based on bank ratings and the results are published in the “Bildzeitung”
Quirn Bank: Uses ratings as a way to establish and show greater customer confidence, increase service levels and get more customers.
Socially responsible and sustainable banks.
Kd-bank.deethikbank.deumweltbank.depax-bank.debkc-paderborn.deligabank.denoabank.detriodes.de
Social bank Advisory Services
Source: BearingPoint Internet Research
Fidor Bank They are social media savvy and so are their customers Their motto is “What would google do” Social media is in their vision, strategy, and culture They co-create products with their customers They use all social media channels and use the ‘word of mouth’ strategy
Auxmoney.de
Smava.de
P2P Banks
1 2 3 4 5
17
Germany: Deutsche Bank
1 2 3 4
Present in several social media
channels but no social media strategy to
engage customers
5
18
How can a German Retail Bank benefit?
A chance for banks to add to their brand
Be seen as an innovative company
A chance for banks to add to their customer centricity drive
Provide support and fast and easy resolution to customer queries
Design better products
Reduction in customer acquisition and retention costs
Drive deposit generation
Opportunities for cross selling
Improve MROI
Reduce churn rate
Increase contribution margin per customer
Social media is a trend that every bank will have to adopt.
Generation Y and the generation of digital natives is becoming an important market segment
Banks will need to enhance their existing customer advocacy drive
Customers will demand faster solutions to their banking issues and seek answers through the social channels
The way banks traditionally communicate with their customers will have to change, banks will switch from half-duplex mode to a full-duplex mode.
Non-Financial Impact.Future trends in German retail banking
1 2 3 4
Social media can impact sales, maybe not directly but this is a good chance to influence the decision of online financial product researchers
Financial Impact
5
19
Opportunities in German Retail Banking
The communities already exist, they need to take the community online and to their social media assets
Organize communities around the local events sponsored by these banks (sports, cultural events, festivals)
Build special interest local communities by utilizing their local knowledge. For example: community of entrepreneurs, students wanting to study abroad, home buyers
They can be called social banks because they are involved with the community.
These Banks are deeply rooted in the regional economic life
They have excellent knowledge about the local market and personal contact with the people in the region and that is their main business strength
They support the local cultural and social activities in their respective regions
How can they leverage their strengths? Characteristics
Huge opportunities: Especially for Volksbanken, Raiffeisenbanken, Sparkassen
1 2 3 4 5
Agenda
20
•German Retail Banks – Post Crisis
•What is Social Media
•Power of the Community – Examples of Social Media in Corporations
•Social CRM for a German Bank
•Implementation Steps
•Q & A
21
Social Media Strategy for: a German Retail Bank
1 2 3 4
Establish a baseline before you begin
Create a time line for creative activities
Pick a small number of social media goals for the coming year and start engaging
Pre-cursors of a strategy Strategy
5
22
Listen
Who is talking What are they talking about
Needs & Complaints Customer perceptions Engagement platforms & channels
Facebook/Twitter/Blogs Engagement spread, level & diversity # Involved customers Identify influencers
Identify
Reach of one influencer
62
Tools
1 2 3 4 5
23
Engage
Full Duplex dialogue
Join the conversation discussions (e.g. blogs, Facebook, forums) and enhance the conversation
Build your own community on various social networking websites Facebook/Twitter/Blogger/Youtube External community driven websites focusing on common
interests Drive traffic to your social media assets using various sources Don’t be afraid of negative feedback. Responding appropriately to
negative feedback shows that you care Have a “call to action” in your communication
Invite the community to contribute or interact (e.g. ING Direct) Have engaging and creative posts/communications Have a URL to your other social media assets of your website in
your communication Interlink the social media assets for a seamless user experience
Radian Engagement console
1 2 3 4 5
24
Support
Support
Get employees to contribute to the channels, on which people are talking
Offer free advice about common questions and concerns in blogs, over Twitter or Facebook
Have some dedicated staff offers customer support over “verified” Twitter accounts
1 2 3 4 5
25
Measure (What is the ROI of a smile and a warm handshake?)
Dollars Earned
Costs
Cashflows
Risk
NPV
What the management wants to measure
Customer satisfaction
# of followers
Community Sentiment
Reduction in Call/email volume
Customer loyalty
Site traffic
# of comments
Community Engagement
Response speed
Post/ comment ratios
Available matrices
Customer satisfaction
# of followers
Community Sentiment
Reduction in Call/email volume. Savings
Reduction in acquisition cost
Increase in customer lifetime value due to reduction in acquisition and retention cost
Customer loyalty
What banks should measure
There is no straight forward way of calculating the monetary value of a social media initiative. There are some recommended methods but each bank will have to devise its own way of calculating the ROI from social media initiatives based on the social media initiative goals. Net present Value (NPV) of social media initiatives = (Cash inflows – Cash outflows)/Time
Cash outflows= Manpower, IT, Opportunity cost, Consulting fee, Miscellaneous
Cash inflow = Reduction in acquisition costs, Reduction in support cost
1 2 3 4 5
26
Innovate
Innovate
Gain customer insight through the listening process Identify their needs
Find creative ways to get feedback from customers Opinion polls Blog comments Facebook Analytics Website Analytics
Design new products and services based on the insights gained Improve service levels based on complaints
Provides a channel for community members to contribute new ideas through crowdsourcing and collective intelligence
1 2 3 4 5
27
Q & A
28
How are some banks using Social Media as a CRM tool?
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How are German Banks using Social Media as a CRM tool?
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Facebook is the fastest growing medium with over 20 banks on Facebook
Deutsche bank is the most active with more thatn 3000 followers
The next in line is GLS bank with 400 followers
Cortal Consors has a facebook page and a facebook app.
Youtube: Some banks are on youtube but it is mostly used for marketing.
Volksbank Raiffeisenbanken had a contest channel on youtube where they showed how human needs create the need for financial services. They got 300,000 visitors per day till mid Jan.
Fidor bank founder posts videos of himself and his vision for banking and the bank.
German Social media platforms: studi.vz ; schueler.vz ; werkennetwern.de ; lokallisten.de are there but they are not as mature as Facebook and thus are only used for advertising and not for dialogue
None of the banks have integrated their social media channels with their traditional marketing and support channels. Social media channels run alongside with their classical marketing and sales campaigns.
Customers going to the main bank website don’t see the social media activities. No german banks have their own newsrooms
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