Millennials have now overtaken the baby boomers as the largest generation in America. As millennials mature and become the next generation of banking customers, it’s inevitable that banks adapt to their technology needs. Social media engagement and mobile banking are already quickly becoming the standard and not the exception.
Knowing your customer is one of the key components of profitability. Understanding their behavioral tendencies allows you to better service their needs. Equally important is having insight into who your most valuable and least valuable customers are. Differentiating your services and offerings in relation to a customer’s value is key to maximizing profitability. Without this insight you may be mis-allocating resources and under-serving valuable customers while over-serving non-valuable ones.
Today, social media provides banks with a direct line to customers. You can gauge their interest in new services, receive feedback on customer service, and educate them on industry changes. The challenge, of course, is identifying your most valuable customers. Only then can you leverage social media to identify new potentially profitable customers like them.
While it’s easy to tout the numerous benefits of integrating social media into CRM, it’s important to carefully consider costs and risks associated with doing so. Obviously, additional resources will be required to manage content creation, customer engagement and social event coordination. These instantly become additional expenses associated with servicing customers. In addition, we’ve all seen the social backlash a poorly implemented social media plan can have. Just as effective messaging can improve customer retention and acquisition, poorly presented messages can be misinterpreted and enrage the social community resulting in a loss of valuable customers.
The ultimate goal, of course, is to gain valuable insight which maximizes resource allocations, attracts new high value customers and lowers the costs of other customer service activities.
This is why it’s so important to have a cost management system in place that allows a bank to effectively analyze the impact of social media on their cost structure. Customer profitability analytics must exist to properly assess budget allocations, resource allocations, and develop a strategic approach to social customer engagement. Remember, a social media profitability initiative should be based on facts, not instinct.