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21 May 2013
The financial services industry, including insurance, has not come to grips with the use of social media.
But the industry has been warned: failure to embrace the new communication medium will be disastrous.
Blue Chip Communications Group MD Carden Calder says the financial services industry have been “laggards” embracing social media.
“The industry is a long way behind compared to other sectors, but there is an opportunity to catch up,” she told the Financial Services Council conference on the Gold Coast last week.
“But it is hard to see the big picture for social media as it is still evolving and there are not really any experts out there to help.”
Ms Calder says the key to a successful approach to social media is the quality and quantity of information available to the users.
“You do need to pay attention to both as well as being responsive,” she said.
“The social media product from a company also needs to be transparent.”
Ms Calder says people use social media like Facebook and Twitter for sourcing and recommending products.
“People also seek advice through social media and are not adverse to talking about subjects such as death and cancer on the sites.”
Ms Calder attributes this to the anonymity a social media site offers its users.
The negativity towards insurance that is often found in newspapers isn’t reflected in social media, where users are likely to talk about products and services in a more positive light.
BlueChip research found 91% of posts on social media were positive when talking about financial services rather than 53% on traditional media sites.
On Twitter, 74% of posts were positive compared to 25% being negative.
Bravura Solutions Asia Pacific MD Roland Slee told the conference customers and non-customers have become powerful voices for companies.
“When a customer says something about you on a social media site, it will be picked up by many people,” he said.
“But you can’t control what is being said and if you try and smother discussion, it looks clumsy.”
Mr Slee says a company needs a “proactive story” to counter any negative publicity.
An example cited was the attempt by Shell to threaten legal action against people who altered online advertisements to accuse the oil company of polluting.
The threat resulted in even more people condemning Shell.
“Nothing is worse than when an organisation is criticised and there is no connection,” Mr Slee said.
“Even when the response is passive, the company still needs to be listening to what is being said.”
He sees social media adding value to an organisation by generating sales leads and new business activities.
“It also produces stronger engagement with your clients and it can enhance customer service.”
A website must be easy for people to navigate to find the extra information they are looking for, he says.
This includes clear links to items such as a product disclosure statement, preferably by clicking on just one button on the screen.
“A company needs to be responsive because requests for information will come in at all hours of the day,” he said.
“This doesn’t mean a company has to have staff sitting around all day, but they should be prepared to respond to requests in a couple of hours rather than a couple of days.”
While financial services companies need to prepare for greater social media participation, the regulators don’t seem to have grasped how it works.
Ms Calder says the Australian Securities and Investments Commission’s response on financial services advertising “has lumped [social media] in with the advertising guidelines – and social media is not advertising”.
She agrees there will have to be some regulation of insurers’ use of social media, “but that won’t happen until they understand the concept better”.
She says financial advisers are embracing the concept to talk to clients, but the general insurance industry seems more reluctant.
An example of how social media can influence business occurred after last year’s floods in Queensland, when the community took a very negative view on insurers and used social media to express their opinions and detail their grievances.
The message to insurers is clear: next time, they should use social media to explain and counsel – and maybe turn around the online critics.
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