Whether a believer or disbeliever in the power of social media, it is important to see the trends and know how business will be impacted. This article shares three things to keep up with as the industry evolves.
Trend #1: Communications Are Exploding In The Social Space
Whether it be for information or entertainment, individuals are going to social networks in droves. So much so that studies show that social media is the leading communication method.
Jim Steele, the chief customer officer at Salesforce.com, agrees, saying, "Social media has exploded over the last few years, and the number of users on social networking sites like Facebook, Twitter and YouTube has surpassed the number of people using e-mail."
People are watching less TV, reading fewer newspapers and magazines, listening to the radio less, and even communicating in person less. The country is getting "infotainment" through one's computer, which is a big social shift.
How does this trend impact advisors?
Communications are going online and advisors that want to be more successful will be there too, as this trend is only expanding. It is not that advisors need to stop sending e-mails or using the other traditional means of communicating, they just need to expand their efforts into using social media to complement their current communications, integrating social media into their overall strategy.
Trend #2: Mobile Technology Is Making Social Media Adoption Easier
Smart phones are getting "smarter." They are quicker and have much more functionality. The day of the minicomputers is here and it is revolutionizing the way people get and share information.
The social network Twitter was actually born from mobile phone advancements. Ever wonder why they chose 140 characters as the maximum size for a message? It was so a tweet could fit in the mobile phone industry's standard text message constraints.
Steele says, "Facebook and Twitter have shown us the power of profiles, status updates, and real-time feeds in staying connected with your social circle, on any mobile device. This is what Salesforce.com calls 'Cloud 2,' the next generation of cloud computing that is social, mobile and open. This shift to Cloud 2 and social media technologies is changing everything from the way companies engage with their customers to the way they collaborate internally."
How does this trend impact advisors?
Advisors themselves will start to see how easy it is to use social media through laptops, tablets (like the iPad) and smart phones, if they do not already know. The earlier adopters will be at an advantage, as they will be able to discover new ways to communicate with clients and find prospects.
There is also a correlation with mobile technology and social network adoption. Those embracing technology are taking full advantage of the benefits of social media.
Visit www.fa-mag.com and read "Why Social Media?" to learn "ten ways advisors can benefit from social media."
Trend #3: Social Search Is Changing Buying Behavior
A clear benefit of being active with social media is that it is much easier to be found online when individuals look up a key word or even a specific name. To be found at the top of the list delivers instant credibility. On the other hand, if one is not found, it might be a loss of business that there is no way to track.
Online search is now even more sophisticated and that will continue to advance in the coming years. To understand this, ask a simple question. "Do I trust the recommendations of strangers or the recommendations of people in my social network?" More times than not, individuals trust the people they know more.
This is the foundation of "social search." Andrew Davis, chief strategy officer of Tippingpoint Labs, defines social search as, "A system's ability to have a finite list of results based on your online interactions." To clarify it even more, social search is when an individual searches on a topic online and the search results that appear are partly based on who that individual is connected with, through e-mail contact lists and social networks.
Here are three good examples of how social networks are becoming more powerful:
Google: Google's new social search delivers relevant content from your social connections. In other words, content from those you know can be more relevant and meaningful to you than content from any random person. For example, a movie review online is useful, but a movie review from your best friend can be even better.
Google's new "+1" button is another tool that allows individuals to endorse what they like on the Web. It is new and will be appearing in search results and sites across the Web.
NYTimes.com: For years, when you went to read the news online, the editors of the paper decided what the news was. There is limited space on a homepage, so they had an important job to filter what was the most important. Now, not only do those editors decide what to read, but so can your friends on Facebook if you use their interface to connect with your network.
LinkedIn: The importance of quality online networks becomes very clear in searching a person's name. Often, it is not just the individual's Web site that comes up at the top of the list, but the person's LinkedIn profile, and many times it is listed higher in the results.
Krista Canfield, spokesperson for LinkedIn, explains why that happens, saying, "While I can't say I know what the secret sauce is to the search engine algorithms, I do believe that a page that is self-generated by an individual shows up higher. Fresh content, connections to groups, online discussions, LinkedIn answers and completely filling out a profile in the words of your clients, including the new skills section, are all things that come into play."
She also says it is not based on the total number of connections-it is more about quality than quantity. She went on to discourage those that blindly add connections, suggesting, "You wouldn't give your Rolodex to the person on the street." It makes sense to avoid doing the same thing within LinkedIn.
How does this trend impact advisors?
"I am a big believer that everything old is new again. Take all the knowledge of the offline world and use it in the online world. Social media can scale what has always worked. It helps build the referral engine that delivers deep and effective results," says Davis.
Most advisors get a majority of business from referrals. Traditionally, these have been given in person. Now through social networks, a person can ask not just one person, but hundreds of people for recommendations by simply posting a quick update like, "Any recommendations for a good advisor?" The discussion will result in referrals and it will be shared with many to see.
Blane Warrene, CEO of Arkovi, agrees, saying, "Recent developments in social search are motivation for advisors to truly study and know how to effectively use social media. A client has been able to refer business by word-of-mouth for years. Now they can refer clients, without it being a testimonial, through a new additional channel that never existed before."
Recognize the trends and be active using social media
"The loudest voice in the social world isn't necessarily the best voice," says Davis. It is a good point; however, a voice that is not heard is one that is wasted.
Advisors should stay ahead of these three trends-if they do, they will gain a competitive advantage. We are just seeing the tip of the iceberg of how an individual's networks will help a business be found and indirectly sell products and services.
Visit the "social media" section of FA-Mag.com to read other articles Mike Byrnes has written for Financial Advisor on the topic of social media. If you are just starting out, there is also a good "how to" video to help develop simple strategies for using Twitter, Facebook and LinkedIn.
An Industry Limitation Worth Keeping?
It seems that the compliance rules on testimonials might be behind the times. Although they do possibly protect the public from getting scammed, they actually hurt prospective clients from learning from the experiences of others. Even if the limitations stay in place, advisors can only control so much (like turning off recommendations on LinkedIn profiles). The industry will have a hard time stopping the public from sharing opinions online. It will be interesting if FINRA and the SEC figure out a way to embrace the social shift that is taking place.
Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at www.byrnesconsulting.com.