Social Media role and impact on financial products’ strategy

We believe that competitive advantage in financial products and services is hard to get from product based innovation because this advantage is short lived. Additionally, the entry barrier is low which is evident from the number of new entrants in the space every year. Mostly, competitive advantage in financial services is coming from the following areas:

  • Trust / Reputation
  • Relationships

Our hypothesis is that network externalities do play a big role in trust and relationships and that can be enhanced using social media technologies. Even if financial services firms are behind in using social media, it will overcome its challenges, as it will learn more about social media from B2C business.

 In B2B2C scenario, mediator maintains the relationships. So, firms will have to proceed in a way that their social media efforts strengthen not only their relationships with the mediator but also mediator relationships with the end customer.

To understand the impact and role of social media on financial services product strategy, we have used the following model:

Model to analyze social media role in financial products strategy

 

The section below uses the characteristics of social media technologies, financial services to understand the social media role and impact on financial products’ strategy:

Business Area Sub-Business Area KPI (Key Performance Indicators) How social media can impact? Applicability to B2C products Applicability to B2B products
Marketing – Analysis

Customer Insight

Originality of insight Strategic value of insight

Sentiment analysis* for data aggregation. Influencer analysis*, and trend analysis for needs, perception and motivation finding.

 

Reviews, blogs, micro blogging to generate awareness and customer learning.

 

SMT for collecting satisfaction data and customer support.

Very High

High

Competitor Analysis

Market Share %Perception maps of products

 

Market share growth

 

# of product launched

Share of voice* in comparison to product market share. Time series data of changes in sentiments and share of voice about competitor products.

Very High

Medium.

The competitors are not many in B2B space. But at the same time, it is hard to get competitor information in financial industry.

Market Insight

Demand forecastSupply forecast

 

Value

Forecasting based on intensity and volume of social media discussion about certain product.

Very High

High 

One interviewee believed that volume of social media discussions about certain product could predict next bubble.

Marketing – Creating Value

Customer Segments

Segment Value Market share %

 

Market segment growth %

Social profiling to estimate the size and growth of market segment.Understanding life style of customer segments.

Very high

High

Products and services positioning Value Chain Position product based on the customer segment customs, values and lifestyle.

Very High

High

Marketing – Capturing value

Features Selections and prioritization

Innovative /differentiated productsBetter positioning in perceptual map Profitability

Using social media in the same way focus groups and surveys have been used.

Very High

Very High.

You can hear not only from immediate customer but also from end customer in B2B2C cases.

Channel selection Outsourcing effectiveness

Social business process management, supplier ideation

Medium

High.

Social business process management in B2B area has direct impact on cost effectiveness and quality of service.

Pricing Net Profit Incorporating supply and demand analysis in pricing

High.

Medium.

Promotion Promotion effectiveness Better way to cross-sell and up-sell.

Very High

Low

 

 

 

3 replies
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