On a panel discussion about banks in social media this spring, Bradley Leimer was in the minority.

Executives from Citibank, First Mariner Bank and USAA talked about how they dove in and learned as they went along. But Leimer, vice president of the online services group at the $2.9 billion-asset Mechanics Bank in Richmond, Calif., represented the 95 percent of financial institutions that have yet to interact with customers using social networks like Facebook and Twitter.

"We're really just starting, and we're scared to death," Leimer told the audience at the Celent event.

Though wary of the risks, many banks are intrigued by the potential of social media, and observers say the pace of adoption is accelerating.

Some of the most active are unabashedly enthusiastic about the business value, touting the use of social media for everything from customer service to product development to strengthening community relations. JPMorgan Chase & Co. got a lot of attention for a contest last year in which it gave away a total of $5 million to charities that received the most votes from Facebook users; at one point, its Facebook page had more than 2 million fans.

Yet banks often struggle with figuring out what the best approach is and how to get started.

There's no shortage of advice out there—social media consulting has become a cottage industry of its own—and these experts generally suggest banks do some market research before starting to engage with people online.

The truth is that not all banks are cut out for social networking, and even those that are should view it as "part of your overall marketing strategy, like direct mail or billboards or holding cookouts," says Jason Kincy, vice president and marketing manager for alternative delivery at the $11.3 billion-asset Arvest Bank in Fayetteville, Ark. "You wouldn't want to put a disproportionate amount of resources into it."

Not scared off yet? Then here's how experts recommend you get started.

LISTEN

Before engaging in social media, monitor what people are saying about the bank and its competitors.

Michael Rubin, who started in May as the social media strategist at the $113 billion-asset Fifth Third Bank in Cincinnati, says that during his job interview he asked what it had been doing so far. "When they told me they were in the listening phase, I was ecstatic," says Rubin, adding that he "wholeheartedly" thinks this is the best first step.

By tracking social mentions, Fifth Third hopes to learn more about which of its customers are active online, what they talk about, what concerns they have, and how the bank can best address those concerns.

After that, which types of social media to get involved in should be self-evident, says Rubin, who previously worked at a marketing firm.

Arvest's Kincy says banks might discover during this research phase that the conversations about them aren't positive or negative; people could be merely discussing where to find the nearest automated teller machine.

"But what that tells you is that customers are active in that space," Kincy says. "If your community and your bank are being discussed in social media, that's the first sign that you want to participate in that discussion."

There are two ways to go about tracking social mentions. Banks can pay for the service—either directly or through marketing firms—with numerous options to choose from, including Neilsen BuzzMetrics, Omniture, Radian6, SAS' Social Media Analytics, and Sysomos.

Or they can take the do-it-yourself approach and use free tools like Google Alerts. These can be set up to listen for any mention of the bank on the Internet, whether on blogs, Facebook or Twitter.

The $172 billion-asset SunTrust in Atlanta began listening last summer, before launching @AskSunTrust on Twitter in October as an extension of its customer service, says Bianca Buckridee, its social media engagement manager.

SunTrust used the time to compile information about the issues its customers tend to vent about and devise a general plan for when and how to respond.

Buckridee likens social mentions to overhearing people talking on a bus about a subject that you know well. "For us the listening portion was really crucial in helping us identify when to put ourselves into the conversation," she says.

Now she actively seeks out opportunities to interact with customers through social media, whether to assist with a problem or congratulate them on saving enough money to buy a new lawn mower.

KNOW YOUR OBJECTIVE

The hype aside, there's no real consensus on how crucial it is for banks to be involved in social media. But experts generally agree that if banks decide to take the plunge, they should know what they want to accomplish.

"You don't pick up a hammer and then walk through the house looking for something to fix," says Jeffry Pilcher, a marketing consultant and the publisher of thefinancialbrand.com "You say, 'What am I out to accomplish?' and then you look for the right available tools."

For Arvest, the goal is to enhance the brand, says Kincy. Its tagline is, "The perfect bank for your changing world." Its branches are open 12 hours a day, and it communicates with customers via email, offers mobile banking and even has iPhone applications to help customers find branches and ATMs.

"We brand ourselves as keeping up with technology, so social media was a natural fit for us," says Kincy. "But if your bank is really conservative—it focuses on history, it doesn't have extended hours—there may be some question about whether you are attracting the customer base that's active in social media."

Having an objective doesn't necessarily require mapping out an extensive social media strategy initially.

Ron Shevlin, a senior analyst at the Boston research firm Aite Group, says the goal could be as simple as wanting to have more interactions with existing customers or do a better job of attracting Gen Y. "Too many banks are jumping in and not looking at what the purpose is," he says. "Without a clear understanding of the problem you're trying to solve, you're spinning your wheels." 


EXPERIMENT

The best way for a bank to get familiar with social media is, quite simply, to experiment, even if through personal use.

"We started playing in the space before we had a strategy," says Kevin Lynch, a senior vice president at the $1.4 billion-asset First Mariner, a social media-savvy Baltimore bank that has a link to its blog right on its homepage and has put all of its branches on Foursquare, a location-based social networking site.

"You've got to try it first yourself individually to understand and see if there's any value. If you don't understand it, don't go into it," he says.

Lynch's team used sites such as Twitter, Facebook and LinkedIn for their own personal use to test if they might be a good fit for the bank.

"There isn't anything that replaces getting your hands in there and doing it yourself," says Troy Hall, the chief operations officer of South Carolina Federal Credit Union, who blogs both on behalf of his credit union and personally.

"You could hire a consultant to come in and tell you stuff, but then you're not owning it," Hall says. "You can't hide in social media behind somebody else."

With 5,600 fans on Facebook and 1,600 followers on Twitter, Arvest is more active in social media than most banks its size. But it started with just a blog, and even then tested it internally for a month before rolling it out to the public.

Blog readers expect sites to be updated regularly, so the purpose of the dry run was to determine if Kincy and his team could keep up with posting two or three articles a week.

"We wanted to make sure we were comfortable with that level of involvement," Kincy says.

Arvest launched the blog in June 2008 andstarted its Facebook page in the spring of 2009. Twitter came a few months later. 

FOCUS ON RELATIONSHIPS

Marketers must resist the urge to use social media as a channel to push sales or broadcast company information.

"If you're looking at it to sell products, don't waste your time," says Jim Kelly, the chief operating officer of ING Direct, which is the most followed bank on Twitter. "People won't listen." Kelly says ING's social media strategy has been to "talk a little"—but "listen more."

Fifth Third's Rubin says an appropriate pitch is not entirely off-limits, but the conversation cannot start there.

Borrowing an analogy from a friend of his, Rubin says being in social media is like going to a party in someone's living room. "When you meet new people at a party, you don't start off by pitching them," he says. "You start by trying to woo them."

Too often companies focus on marketing, to their detriment, Rubin says. "Then they ask themselves six months later, 'Why isn't this working?' And I think what they fail to see is, it's the approach they took."

The idea is to foster two-way communication. "You really want to build that relationship, and establish credibility and trust," Rubin says. "People don't respond well to brands that just push, push, push, and don't listen."

Aite's Shevlin agrees. "The problem is it really can't be much of a two-way conversation if all you're talking about is your bank. Well, it'll be two way, because the other way is going to be people complaining."

Done right, blogs can be an inexpensive way to strengthen bonds with customers, says Crystalyn Stuart, vice president of social marketing at Imre, a Baltimore marketing firm.

Many consumers are hungry for financial advice and one way for a bank to reach them is through a blog that offers money-management tips, she says. Plus, the more you blog, the more your bank's name pops up on search engines.

"Having a social media presence definitely helps the brand from an optimization standpoint," Stuart says.

DISCARD OLD NOTIONS

One of Shari Storm's employees at Seattle's Verity Credit Union—which claims the distinction of being the first financial institution to roll out a corporate blog six years ago—once emailed her to let her know that while Googling the bank's name, she'd found a YouTube video reviewing its checking account.

Storm, the credit union's chief marketing officer, was delighted.

"Some companies would say, 'What are you doing on YouTube during business hours?'"she says. "But here, we give positive affirmation."

That's because the culture at Verity is social media friendly. If social media is going to work for your company, it may require a paradigm shift, from dismissing these online networks as an unserious time-suck—a way for teens to tell their friends what Starbucks drink they just ordered—to seeing them as a potentially powerful business tool.

Verity launched its "Verity Mom" program, an interactive social media campaign specifically targeted at mothers, in hopes of attracting younger members. It includes a blog where moms discuss topics of interest to them. In the last 12 months, the average age of new members has dropped a full three years.

Leimer, of Mechanics Bank, says social media challenges the conservative mindset at many banks.

Last fall the board at his bank had a strategy session that included a discussion of social media, and the chief executive asked him to help make a case against it. "He wanted to convince the board initially that we didn't want anything to do with this."

Instead Leimer, who is active in social media himself, helped win over the skeptics at the 105-year-old, family-owned bank. Now it is studying best practices, with plans to be active in social media by yearend.

MEASURE ROI DIFFERENTLY

Jesse Torres, the president and CEO of Pan American Bank in Los Angeles, is often asked if his is a $1 billion-asset institution. It's a misconception Torres takes as a point of pride. In actuality, Pan American, California's oldest Latino-owned bank, has only $43 million of assets and three branches.

Torres credits his embrace of social media, including blogging, Twitter, and Facebook, with helping the bank to cast a long shadow that belies its modest size. A technology enthusiast, Torres wrote a free e-book several years ago titled, "The Community Banker's Guide to Social Network Marketing." Interestingly, Pan American doesn't even have a website yet, though it has a Facebook page.

Like many bankers and consultants, Torres acknowledges that measuring a return on investment for social media initiatives is tough. But he says things like reputation—which are hard to put a dollar figure on—should count. He recently engaged a critic on a community blog, and he says during the two-week exchange the bank added more new customers than usual. "I have to believe, because this blog is widely read in our community, that some people kind of saw our side of the story and became believers."

Other bankers agree that you might need to take a leap of faith that a well-thought-out venture into social media can strengthen your brand and your customers' loyalty, which can ultimately improve your bottom line. "The power of the medium is that it connects you at a much more intimate level with your customer, and I don't know that anyone has figured out how to measure that," SunTrust's Buckridee says.

Some contend the exposure trumps traditional marketing. "You get eyeballs on that company brand name," Torres says. "It's not paid advertising. It comes off as more genuine, because it is more genuine. By virtue of that, you get more buy-in. The message is digested a lot deeper than if it were just a paid advertisement. There's tremendous value in that." 

CONSIDER THE CONTENT

Once a bank sets up a Facebook page or Twitter account, the next obvious question is: What will it say?

The bottom line is, social media is about connecting with people. If a bank doesn't have anything worth sharing, that will soon become painfully obvious.

Luke Owen, who recently moved from Truebridge, a Boston marketing firm that focuses on financial institutions, to HubSpot, an online-marketing firm in nearby Cambridge, believes that while contact is the ultimate goal, it's content that can make or break a bank's social media efforts. It's simply not enough to tweet about your branch hours.

Owen suggests that "some sort of entertainment value" is needed to draw people in and keep them coming back.

ING Direct has gone with offbeat humor, a good fit with its unconventional brand. A recent Facebook post read: "Things we can't live without? Coffee, the Internet, and those footy pajamas. How about you?" with a link to a US News & World Report story entitled "10 Things We Can't Live Without."

The $579 million-asset Nicolet Bank in Green Bay, Wis., launched its blog as a direct response to the banking crisis, and uses it as a way for the bank's senior management to communicate with the public, explaining complex financial topics in plain language.

"Content is king. That's what people want," says Nicolet's chairman and CEO Bob Atwell. "If you're saying something relevant and something people find useful, it's so easy to get to people."

Pan American's Torres suggests keeping content fresh by talking about community events the bank is involved in. Have an employee take a camera, snap some photos and post them on Facebook, he says. Or take a video and post it on YouTube. 

BE AUTHENTIC

Soon after the late Washington Mutual rolled out its Facebook page, it began to crow about the impressive number of fans it had amassed, which piqued the interest of Aite's Shevlin. So he did a bit of research, clicking on the names of each of the 200 or so fans listed; he "conservatively estimated" that at least three-quarters of them were actually employees of the ad agency that had designed the page.

That's precisely how not to behave in social media, where authenticity and transparency are critical. And at this particular moment in banking history, says Shevlin, "banks are in no position to get caught 'deceiving' the public. It's not even worth stretching the truth over how many Facebook fans you have."

Others also warn against ever trying to misrepresent yourself online, be it by hiding negative comments, planting positive ones, or fudging the numbers of true fans your institution has.

"Any time someone is not honest about information they're providing, it diminishes their ability to build that trust and be a source for people to come to," says Hall, of South Carolina Federal Credit Union. "We, as financial advisers,have a fiduciary responsibility and a social responsibility to be honest about who we are."

Pilcher, the marketing consultant, recommends letting things happen organically: "If your brand is worth talking about, people will be talking about it. If your brand isn't worth talking about, you can't try to make it look like it is." 

DECIDE WHO'S IN CHARGE

A growing number of financial institutions—like Fifth Third—are hiring full-time social media strategists.

While that isn't possible for many, particularly smaller banks strapped for resources, the fact remains that blogs and tweets don't write themselves, and even the simplest Facebook pages need at least minimal maintenance.

Figuring out who's going to oversee the effort before embarking is crucial.

First Mariner's Lynch estimates that he and two other employees spend a combined total of an hour a day working on the bank's social media initiatives, which he finds sufficient. "We make it part of our daily activities," he says.

One crucial tip: Don't relegate social media projects to interns or junior staffers simply because those projects don't cost anything, or because your bank's youngest employees might be the ones most familiar with the technology behind them.

Banks active in social media say it requires a seasoned employee. They also generally designate others in different departments to help behind the scenes as needed. SunTrust's Buckridee says she has roughly 30 people who she goes to with questions as they arise—covering everything from fraud to mortgages—so she can get back to customers quickly with accurate information. "A lot of my job relies on stakeholders to understand the sense of urgency," she says. "On Twitter and on Facebook, we don't have the luxury of time."

Technology analyst Jack Vonder Heide, whose clients include many major banks and financial service firms, suggests that compliance officers be part of the social media team to avoid running afoul of privacy regulations.

He worries in particular about Facebook and the many kinks in its privacy settings. "Some regulatory compliance people would go crazy if they knew what their own bank had out there," says Vonder Heide.

Arvest's Kincy points out that, because everything said in a social media forum is public, the bank has to be comfortable that the person in charge is representing it well.

"It's as if you are talking to the media, so you need to be comfortable with their ability to stay within the brand, stay on message, to make good decisions about how to respond to a customer or help a customer who is in trouble," he says.

BE REALISTIC

Anyone expecting social media efforts are going to provide instant payoff should think again. It can take a while for momentum to build.

After launching its blog in 2004, Verity Credit Union sat back and... waited."We heard crickets for a long time," says Storm. "It's been my experience that the only way to get a social media campaign off the ground is to do additional traditional marketing around it. It is never a 'build it and they will come' thing."

When Verity launched the Verity Mom campaign, it did so in conjunction with print and radio ads, branch signage, paid search marketing and community events.

Hall, of South Carolina Federal Credit Union, says he looks at social media as "a 30-year mortgage."

"I'm not getting into it to reinvest in the first one or two years," he says.

In the end, a financial institution is a financial institution, not a pop star or a brand of beer; banks and credit unions need to be realistic about the amount of attention they will attract in social media—even under the very best of circumstances. "You don't go to a rock concert with 100,000 people and see your banker get up on the stage," says ING Direct's Kelly.

"People just aren't that passionate about financial brands and they never will be," adds Pilcher, the marketing consultant. And with so many things teeming to grab attention, "there's only so much bandwidth we have personally. If I've got 10 minutes in the airport, am I really going to load up the bank website or ESPN.com?"

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