The online communities offer small-business owners a way to communicate with one another. The sites also dispense advice on topics ranging from managing a company and juggling finances to finding appropriate banking products.
Bank of America Corp., Capital One Financial Corp., HSBC Holdings PLC, and other banking companies say these virtual watering holes enable them to build closer ties to desirable customers and find out more about their financial needs.
Data Over Revenue
B of A was one of the first banking companies to explore the world of social networking, launching its Small Business Online Community Web site in October 2007.
Inder Koul, the Charlotte company's senior vice president of small-business e-commerce, said the site has no advertising and does not charge users a fee. The goal is not to generate revenue, but to learn more about the users, he said.
"We need to have that deeper understanding of our relevance to small-business owners," Mr. Koul said. "We want to really understand how their business is changing and what is appealing. That's our hope."
The site provides business owners a place to get tips and feedback from their counterparts, along with suggestions from business experts and coaches.
For example, it regularly hosts online seminars and Q&A sessions on topics such as starting a home-based business, converting online traffic to sales, developing marketing plans, and "using technology to appear big," Mr. Koul said.
The bigger draw for users is letting people trade stories, solicit opinions on new ideas, and ask for advice from others who may have encountered similar situations, he said. "It's those immediate answers from their peer group, … that forum to network and share," that attracts people to the Small Business Online Community.
To that end, the site features members' business stories. Some recent topics include how one person established credit in the name of a business and the unexpected resources another user found in an electronic Rolodex.
"The content is often stories, lessons learned," Mr. Koul said. "And that part of it is self-policed and moderated by community members themselves."
In January the site had 30,000 registered users and 130,000 visits.
All the traffic has benefits for B of A, Mr. Koul said, because it can fine-tune its strategy for the small-business market and develop products the users need.
"Clearly, we needed some way to share our learnings and ideas with a community of similar businesses across the board," he said.
Local Versions
Capital One is using a slightly different approach to reach small-business owners online.
Instead of building a single site aimed at anyone, Capital One has created a network of sites for businesses in specific cities.
The Slingshot network went live in February of last year with mini-communities for businesses in the Denver and Raleigh markets. In October, Slingshot expanded to include Richmond, Va.
"We found each of those cities has a thriving set of small businesses, a strong sense of community, and we believed these cities would accept this type of social networking site," said Todd Kennedy, a Capital One vice president for small business.
The McLean, Va., company wants to cultivate a "Yellow Pages type of marketplace," Mr. Kennedy said. Registered users can create a free online profile for a business, including the location, details about available products and services, photos, and coupons. A popular feature is a monthly listing of featured deals offered by users.
Slingshot currently has more than 4,500 users, according to Capital One.
Other Efforts
HSBC introduced its Business Network for small-business owners and entrepreneurs in August. Much like the B of A site, this one offers online forums for users to chat and share stories, along with expert insights and videos.
Neil Brazil, an HSBC spokesman, would not discuss its goals for the site, because it is "at just too early a stage."
Alan Maginn, a senior analyst for the New York market research company Corporate Insight Inc., said a handful of other financial companies have tried to reach small businesses through social networking.
In June, Visa Inc. set up the Visa Business Network on the social networking site Facebook. As part of that effort, Visa promised to give away $2 million of Facebook advertising to small-business owners; Mr. Maginn said the promotion helped Visa enroll 20,000 users quickly, and the community has since expanded to more than 70,000 users.
American Express Co. and the personal financial management software developer Intuit Inc. have also set up their own small-business communities, he said.
Targeting business owners makes sense, Mr. Maginn said, because they are desirable bank customers who would benefit from an online forum where they can communicate with one another. "The experience of being a small-business owner is universal."
Some financial companies have experimented with social networking to reach other customer segments.
Royal Bank of Canada created a person-to-person online site for students, and it hired a half-dozen college students to write blogs for the site.
In 2006, JPMorgan Chase & Co. was one of the first financial companies to create a page on Facebook; the page was designed to pitch a student credit card. At that time the vast majority of Facebook users were in their teens or 20s, but the user base has shifted dramatically since then; now about half of all Facebook users are 35 and older, according to comScore Inc.
Axa Financial Inc. and TIAA-CREF have even created online communities aimed at retirees, Mr. Maginn said.
According to Mr. Kennedy, the idea that social networking "is all geared toward a younger audience isn't quite a reality."
Feedback
Some early results show that bankers are attracting a diverse but generally well-positioned following for their small-business community sites. Seven out of 10 of the users who use B of A's Small Business Online Community employ other people, and 40% of respondents to a poll of members last spring said they own more than one business.
Mr. Koul said 64% of the site's users run their businesses full-time, so it has attracted more than just "hobbyists" who may be running a business as a sideline to another job.
Perhaps the poll's most compelling finding: 70% of respondents said that the site "improved their perception and image of the Bank of America" — a valuable and tangible result at a time when the banking industry's reputation has been tarnished by the financial crisis.
Though the sites do not generate revenue, observers said that the small cost of developing and maintaining them is paying off in increased awareness of a bank brand and an increased chances of selling to a customer group that has already shown an affinity for dealing with bankers online.
In turn, bankers can act as a virtual fly on the wall and find out what issues are most pressing to a customer group that is accustomed to paying regular fees and tends to use more banking products and services than consumers, according to observers.
Ron Shevlin, a senior analyst for the Boston research company Aite Group, said the tangible return for online communities is relatively "squishy," but they do deliver an important payback by creating stronger bonds with these valued customers.
By offering a forum for small-business owners to exchange stories and tips, bankers are establishing a connection that will make it more likely for people to visit their sites when evaluating various financial services, he said.
"To develop a customer relationship is no different than building a relationship with acquaintances or family," Mr. Shevlin said. "It's about frequent and strong engagement," which is the entire point of an online community.
Ms. Hoffman, a former American Banker technology reporter, is a freelance writer in Poulsbo, Wash.
