Pigs can't fly, but there's one that can tweet.
Smarty Pig LLC says Twitter Inc.'s microblogging service is an effective marketing tool, and it is encouraging users of its online savings service to broadcast short messages — "tweets" — about its rates and other perks.
Smarty Pig's success with Twitter is in contrast to many other financial companies' experiments with the medium.
Twitter's service limits messages to 140 typed characters, and banks have been selective in their messaging — many large banks scour Twitter users' messages for customer service issues and then offer one-on-one help, or use the service to promote their rates.
Smarty Pig uses Twitter for contests that have proven popular with users and also reach many nonusers.
"We started doing these Twitter contests a year ago and we've had a ton of success," Mike Ferrari, a Smarty Pig co-founder, said in an interview last week. "It's a good way for us to virally put the message out."
Smarty Pig's Twitter account has 3,520 followers — that is, 3,520 people have chosen to read what Ferrari "tweets" online about his company's savings account services. This approaches, and in many cases exceeds, the following of many major banks. As of Friday, Bank of America Corp.'s "BofA_help" customer service Twitter account had 2,366 followers; Wells Fargo & Co.'s "Ask_WellsFargo" account had 1,666 and its "Wachovia" account had 3,828; and JPMorgan Chase & Co.'s "chasebank" account, which simply broadcasts current loan rates, had 973.
Smarty Pig's Twitter promotions typically take the form of a monthly trivia contest about Smarty Pig. The Des Moines company offers participants the chance to win a $100 Smarty Pig gift card.
On Thursday the question was: "What is the current Annual Percentage Yield (APY) as of 5/28/2009 for SmartyPig and ING Direct's Orange Savings Account? Two answers needed."
Participants must reply through their own Twitter accounts, ensuring that the answer is sent to Smarty Pig and all of the respondents' followers.
The result: more than 200 people broadcast to their friends that Smarty Pig's 3.05% APY is more than twice that of ING Group NV's online savings account in the United States. The number of new accounts opened that day rose 49% over the daily average for the month of May, and it was also the largest day for new savings goals created on the Web site.
Ferrari said a story about Smarty Pig that CBS TV broadcast 10 days before the contest may have helped boost results.
George Tubin, a senior research director at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said Smarty Pig's approach to Twitter is rare among financial services companies.
"I don't think anybody's used this for actual comparative marketing, and it's almost at a more personal level of marketing," he said.
That many large banks have fewer followers speaks to their strategies, but it also speaks to the youth of the Twitter service, he said.
It's important that Smarty Pig is communicating in a way that is meant to get it new accounts and new deposits, Tubin said.
"The endgame is going to be to get new customers and new deposit dollars in there," he said. "Ultimately, that's the measure. You can get as many people following you on Twitter as you want, you can have a million people, but unless that does something to change how they're interacting or opening accounts or moving money over or increasing the amount of money you have in your account … what did it really do for your business?"
Ferrari said last week's contest was the first to use a question designed to attract new customers. Usually the contest question is meant to alert customers to certain features of their accounts.
However, it was not the first time Smarty Pig's fans have promoted its rates online, Ferrari said. "We've had a number of bloggers blogging about Smarty Pig and many of them have been customers of other financial institutions that have switched over to Smarty Pig based on … our APY," he said.
Though Smarty Pig is only open to residents of the United States and Australia, the contest drew participants from Canada and other countries. Ferrari said many of the contestants know they are not eligible to win the $100 prizes, but they enjoy being in the contests and telling others about Smarty Pig.
The company offers a high-yield online savings account. Account holders have the option of making their balances and savings goals public, inviting encouragement from their peers to reach their savings goals. Smarty Pig is not a bank; the accounts are actually provided by West Bancorp Inc. of West Des Moines for U.S. customers and New Zealand Banking Group Ltd. in Australia.
Though Ferrari considers his Twitter contests a success, he said the service still has a lot of untapped potential. It plays a small part in Smarty Pig's overall marketing strategy, he said, but over time "I think it could be huge."