Is word-of-mouth or advocate marketing an effective differentiator in banking?
In a world where omni-channel digital banking is streamlining customer experiences and minimizing the impact of face-to-face customer service, it’s a question many banks are asking themselves right now.
Traditionally, advocate marketing was considered one of the most valuable ways to spread awareness. Today, however, many banks are wondering what the impact of word-of-mouth actually is in a world where ‘human’ communication is crowded out in favor of online community forums and social media.
The answer to that question is: a lot. Online meeting spaces such as social media and community forums have not detracted from the impact of word-of-mouth on driving new customers and awareness. In fact, they’ve made it even more important.
It’s a Matter of Trust
The main reason for this is that while the technology has changed, people have not. Using influencers and recruiting your passionate fans is disproportionately effective in banking because even in its increasingly digital form, it’s still an industry based on trust.
Customers want to know their money is safe and that it’s in the hands of people they can count on. Traditionally, getting a recommendation from a close friend or family member was a strong vote of confidence to that effect. It’s no different today. All that’s changed is who the customer allows into their circle of trust and how they interact with those in it.
That circle today includes the online communities in which customers place their confidence. This might be the word-of-mouth of comments on a preferred social media page or a thread in a community forum that’s known to be serious and reliable.
Regardless of how or where, the way a bank is perceived by the online crowd will go a long way towards building or tearing down a reputation. For this reason, it’s important that these areas are given the proper attention by banks with aggressive curation and meaningful, empathetic interaction.
Millennials Don’t Differentiate Between Online and Offline
Let’s get real. Online community referrals has become the norm and millennials expect it.
Tech-comfortable millennials and subsequent generations are not changing their habits when they become mature financial consumers. These are customers who are habituated to conducting their entire lives online. Unlike older generations, they do not hesitate to scan online resources for what the in-crowd is saying.
In some respects, online conversations are more important to these young consumers than face-to-face interaction. To them, crowdsourced information is a larger sample of how people feel about a brand, and they’re adept at using social media to uncover customer complaints.
Millennials see these mediums as a large, open, global conversation that represents ‘word-of-mouth’ more than what they would learn about a product or service from just a couple friends or family members.
Build Products and Services with Advocacy in Mind
Given the importance of online word-of-mouth, banks must create products and services designed to leverage its impact.
One strategy to consider is packaging value in a way which generates so much excitement that people can’t help but get the word out. For example, a bank that offers an industry leading interest rate must make the impact visible. A loyalty program that rewards customers a tiny bit each month might go unnoticed, but a customer who receives the same benefit as a large end-of-year reward will be excited to share their experience with friends, family and online social networks.
Digital Word-of-Mouth is Still Word-of-Mouth
The bottom line is that word-of-mouth remains one of the most productive ways for banks to build brand loyalty. The only thing that’s changed is the medium.
Banks which embrace that reality by taking their online presence seriously will be rewarded with strong brand loyalty from customers who get the word out to their digital communities. Online community forums and social media are now the water coolers and family dinners of yesteryear.