Do The Math

Posted by Ron Shevlin, Senior Analyst, Aite Group

Unless you live under a rock (which might not be such a bad idea these days), you can’t help but be exposed to the constant barrage of hype about Twitter. Inevitably, when a new communications-oriented technology comes along, early adopters and evangelists extol its virtues as a tool for reaching – and in this case, servicing – customers and prospects. There’s (seemingly) no end to the number of gushing blog posts congratulating Bank of America and Wells Fargo for handling service requests through Twitter.

Should your credit union follow suit? My answer is NO – at least, not for now. To make my case, let’s do some math. I’d like to share with you the results of research my firm, Aite Group, recently conducted with the Participatory Marketing Network, which has yet to be published.

Marketers generally segment US consumers into four age-based generations: Gen Yers, Gen Xers, Boomers, and Sen… uh, Pre-Boomers. Aite Group and the PMN surveyed Gen Yers to learn more about their social media and financial services attitudes and behaviors.

On to the math: Assume for a moment that your CU’s member base is equally distributed across the generations (this is, of course, a wildly unrealistic expectation, since you’d probably give your right arm to have 25 percent of your member base come from the Gen Y community).

Next, here’s the first data point from our research: Just 22 percent of Gen Yers currently use Twitter. Could this percentage go up? Of course, but since this group is the most avid users of technology, and many see Twitter as something “older” consumers use, it’s anyone’s guess how high this percentage will go, and how fast. And by the way, of those Gen Yers that do use Twitter, 85 percent follow their friends, 54 percent follow celebrities, and just 29 percent follow companies (which, by the way, include credit unions).

More importantly – as far as I’m concerned – is Gen Yers’ response to another question asked in the survey. Of those Gen Yers that use Twitter, just 9 percent said that they’d have no problem sending service-related tweets to the financial institutions with which they do business. Granted, 24 percent said they might do this, but would need more information about how it work. But 65 percent said they wouldn’t use Twitter for service because it’s either not the right channel or they don’t trust their FI to reliably handle the tweet.

Shall we put our math equation together now?

25 percent of members from Gen Y times 22 percent who use Twitter times 9 percent who would use Twitter for service = ONE-HALF OF ONE PERCENT of your member base that you will be creating a Twitter-based service capability for. If your CU has 50,000 members, that’s roughly 250 members.

Now I realize that the Twitterati will counter this argument by telling me that I’m wrong, it’s about the future, about attracting Gen Yers, about establishing a brand image of being innovative, etc. And those aren’t bad counterarguments. But they all fail to address the question that any good credit union executive should be asking here: What are the other alternatives available to the CU to “attract Gen Yers”, “establish a brand image”, etc.?

In other words, could the same objectives be achieved by offering a personal financial management capability online, like Delta Community CU and Stanford FCU are doing with Wesabe and Geezeo?  Or is there another department or function within the credit union that could better use someone’s skills instead of having them focus on Twitter?

And let’s really think through the Twitter service process: Will service tweets have to be re-entered into the CU’s service or CRM apps? If a member calls the CU or walks into a branch, will other CU personnel have the ability to see what was tweeted?

One blogger writes:  “Think about how text banking works.  I text bal to MYCUBAL or whatever and 10 or 20 seconds goes by and my balance comes back. Why don’t we do the same thing with Twitter?  Log into online banking and link your Twitter username to your online banking account.” No security issues or concerns there, eh?

For now, Twitter is like a yo-yo. They both go up and down, they’re fun to play with, but if you’re not careful, you can get hurt. If you want to know how Twitter can hurt, ask the people whose Twitter IDs have been hijacked and have seen vile and disgusting tweets go out under their name.

If your CU’s goal is to attract and retain Gen Yers, providing service through Twitter is not going to be very helpful. I did the math.

Comments

[Roger Conant]

Ron--hope I'm the first to welcome you back to blogging! I've missed you!
We're having fun at CUTweetTrack watching the banks and CUs dipping their toes in Twitter.

My take is that we give this a bit more time before we rush to quantify so closely. We're tracking over 200 CUs and it's exciting to me to see the CUs showing off their collaboration nature with each other. And one application we are tracking is that of employment--watching 3 CUs now testing it. Looks to me like it might have possibilities [opinion].

Again--great to have you back---Roger

[David Gerbino]

Please see my comments at Media Post.

From my Tweet from 6/3

MediaPost: Millennials Among Those Who Don't Appreciate Twitter http://bit.ly/tgaav #mediapost Please read and comment.

@dmgerbino

[Ron Shevlin]

Roger --

Thanks for the kind words and comment. I think that where "time will tell" relates a lot more to what extent Twitter will prove to be an effective tool for communicating with members (please note that I used the words "communicating with" and not "marketing to").

And yes, you can argue that "time will tell" if Twitter could be an effective service channel. But it won't just happen by itself. An effective service channel requires a lot of investment. And what I'm arguing against is the investment (on the part of CUs) of scarce funds into trying to make Twitter into an effective service channel.

For every investment a firm makes, there's an opportunity cost. And I find it very hard to believe that CUs don't have better places to put their money than trying to make Twitter a service channel.

[Jeffry Pilcher]

My theory is that Gen-Y doesn't need Twitter because they have Facebook -- they can already share short messages with people they are connected to. With all the professional networking and B2B opportunities on Twitter, it wouldn't surprise me to see Gen-Y start to embrace it as they get deeper into their careers. What percentage of Gen-Y is using LinkedIn?

Ron's point is very narrowly focused: credit unions should not invest in Twitter as a service channel to reach Gen-Y. I don't think Ron is saying credit unions shouldn't use Twitter -- period, end of story -- because, as Roger pointed out, there are a lot of really good opportunities to network-, collaborate with- and get ideas from other credit unions.

At the very least, every credit union should do its best to "squat" its own name on Twitter. Go secure a few obvious combinations to help combat the brandjacking Ron mentions. You can't 100% protect yourself, but you'll feel better having the obvious names reserved for your use should you choose to actively engage on Twitter. Examples:

AB_CreditUnion
ABCU
AB_Credit_Union
Acme_Bravo_CU

[Roger Conant]

Well said, Jeffry. Hey--I listened to your interview with Tim a while back. Didn't even know you had left Seattle. Now you're closer to Houston! Take care of your Mom!

[James Flores]

Great discussion here.

I think there are two main issues that need to be explored when dealing with Gen Y and Twitter. The first is determining why the site isn't embraced by the youth segment. The second is what (if anything) can be done to reverse that. I've covered both of these issues in recent posts on my blog. In a nutshell:

1. Microblogging is already built into social networks that ARE being accessed by youth (i.e. Facebook, MySpace). In the case of Plurk, there is at least some functions that Twitter doesn't have and that makes it attractive.

2. Twitter has already been co-opted by adults. It's lost it's youth allure. Even Larry King tweets for godsake.

3. Although Twitter is a transparency tool, it may be too transparent. Follow any credit union, and you'll see agencies, marketing staff and other credit unions following them. My gut says this raising the authenticity flags in the eyes of a Gen Y member. Is this an actual experience, or a marketing experiment?

As to what you can do with Twitter?

1. Give stuff away. Every study we do with the youth segment say they'll listen if you give them something. Twitter isn't any different.
2. Target the real gatekeepers: mom and dad.
3. Use it to learn about Gen Y, not to reach them.

Thanks for the post. This is an important conversation to have.

[Ron Shevlin]

@Jeffry: I'd like to think (maybe I was unrealistic) that I was making a couple of points. You nailed one of them with "credit unions should not invest in Twitter as a service channel to reach Gen-Y."

But there was another angle I was aiming at here: Do The Math. I don't advocate, nor do I believe, that a CU can do a detailed ROI analysis on any specific Twitter effort. But that doesn't mean a CU shouldn't apply some basic math to estimate the relative size of the opportunity.

I had another point in mind, but I'll let that go for now.

[Ron Shevlin]

@James: Regarding your comment that there are "two main issues that need to be explored when dealing with Gen Y and Twitter...the first is determining why the site isn't embraced....the second is what (if anything) can be done to reverse that."

My question to you is: Why should a CU do anything to reverse it? When the online channel came along, there were (at least) three good reasons why a bank or CU would want to get customers to bank online: 1) It was a more convenient channel than some other channels; 2) It was a "better" channel for many transactions and interactions; and 3) It was a cheaper channel from the bank/CU perspective.

Does Twitter meet these criteria? Or better yet, for what transactions and interactions does Twitter meet these criteria?

[FredericBaud]

Hi Ron,

If we take the technology adoption curves displayed at http://news.bookweb.org/graphics/articles/200903/adoption.jpg we can see that AM Radio took less than 5 years to go from almost 0% to 20%. More importantly, it took less than a year and a half to go from 10% to 20%

18 months is a very short time for an organization to learn how to use a new medium. And if you're the last one learning how to use it, there may not be much benefit left learning it anyway.

Putting into account the fact that financial institutions have both to climb adoption and learning curves at the same time. What is in your view the percentage that should trigger them to start running: 1%, 5%, 10%?

[Ron Shevlin]

@Frederic I would like to address your question, but after viewing that chart, I think I have temporary blindness.

Seriously...I don't think a bank/CU should care what the adoption of Twitter is, for two reasons: 1) The more important question is what the adoption of the type of service that Twitter represents (not Twitter itself), and 2) If a channel/service/whatever is worthwhile (take a look at the criteria I laid it in reply to James), than a FI should be proactive about DRIVING adoption, not waiting for it to happen.

Considering point #1, what type of service does Twitter represent? Micro-blogging? What the hell is that? Instant messaging? If it's the latter, then why don't banks/CUs try to provide service through Skype? I think Skype has more users than Twitter, it's not limited by 140 characters, and I can slap a pair of headphones on and have an excellent quality voice conversation. (Does anybody remember voice conversations?)

[James Flores]

Ron,

Don't get me wrong - I'm actually right there with you. I'm not entirely convinced that Twitter should be used to reach Gen Y - but I could be swayed if I find the right strategy. As a marketing professional, I HAVE to ask certain questions before I simply rule out a particular tactic.

In response to your question: "why should a CU do anything to reverse it?", I think you misunderstood me. I was simply saying it’s my role to explore certain avenues and investigate new marketing channels. I think you did this with your study. You did a great job of uncovering findings that are consistent with a number of similar studies I’ve recently read. The conclusion that you reached was that Twitter isn’t really utilized with Gen Y. Great, but that isn’t the end of the story.

I couldn’t, in good faith, walk away from that conclusion without further investigation. We need qualitative information, not just quantitative. For instance, by looking deeper into Twitter’s usage, we can determine that maybe the medium would be better utilized to reach parents. Or, perhaps we can learn that teens would use Twitter if the service was used in conjunction with something else like a giveaway or contest of some sort (just speculation on my part). Or, we may just reach the conclusion that there isn’t any viable usage at the moment.

Whichever conclusion is drawn, we just won’t know for sure unless we experiment, explore and question. Posts and comments like these are a critical part of the process, so I thank you for addressing the issue. But with all due respect, simply walking away after doing the math won’t get us to the next point.

[mike lawson]

Howdy Ron:

I'm sure your math is spot on regarding Gen Y's usage of Twitter. But I don't think that's a sole reason at this point to drop kick the micro-blogging service. Twitter has hardly matured at this point. It has a ton of potential on the horizon.

I'm sure many of us remember when we were building our first websites. I don't think we had any idea of the depth that these "online ads" could have. Now we're seeing it -- and continue to see this online platform evolve.

Nobody ever said Twitter is the end-all-be-all marketing channel to reach our audiences. We certainly shouldn't stop our traditional marketing efforts. Twitter and other social media channels merely complement them being another cost-effective means to get the word out about your credit union, slowly building, maintaining, and motivating a community of members who will be your ambassadors -- and receiving immediate feedback from them at the same time. Who wouldn't want that?

I agree with you that Twitter's hype is truly overblown within the media. But removing that hype and looking at it as a practical application to achieve continuous two-way communication with you and your members is hard to beat. Now is a prime time when credit unions should be exploring and leveraging other avenues to get the word out. Why would you ever limit yourself?

Check out Lance Armstrong's tweets -- @lancearmstrong. Like the guy or not, he uses Twitter so effectively. He provides a behind-the-scenes look at professional cycling and his life to hook people while promoting the fight against cancer. Whoever thought Twitter would be a tool to fight cancer? It's very well done. Credit unions can do the same with their particular goals. Don't limit yourself.

[Jodi Torres]

Ron we missed you and I also am happy that you are here. I hope it is for more than this one post. I agree with Jeffry regarding grabbing your own name. I also think that CUs need to learn about and understand these new channels and to monitor their name and brand. I just can't seem to forget the Pizza Hut mess. Social media such as Twitter is certainly evolving....and I can't wait to see what happens next!

[Ron Shevlin]

@Mike: Back in 2000 I advised banks to stop investing in mobile banking. Some people said "oh, Ron, you've got it all wrong, these investments are for the future, the channel will mature, etc."

A year later I got emails from 2 senior execs at two of the largest banks in the country thanking me for convincing them to stop their mobile investments. Why? Because they had better things to invest in.

I'm kicking myself for apparently not making my points clear enough. The key part of the 2nd sentence of the 2nd paragraph is "not for now". Please don't tell me how little investment Twitter requires. It isn't simply the outlay in funds -- you have to include the "costs" of focusing resources on "this" versus something else. It's about the opportunity cost.

I already hear the voices in my head from the "innovation" advocates who want their CU to innovate and experiment with new approaches, etc. I'm all for that -- when there's a good business rationale for those innovations and experiments. The business rationale for providing customer service through Twitter is weak (I'm open to opposing arguments).

This doesn't mean I don't think there aren't other opportunities to use Twitter. I think it could be a great tool to find ways to communicate with -- and build stronger relationships -- with CU members.

BUT, let's be honest here. FIs (CUs less so than banks) have largely done a terrible job of figuring out how to simply communicate -- i.e. have a conversation -- with members and prospects. Marketers want to sell, push marketing messages out. If that's how you're going to use Twitter, than members are going to tune it out -- just like they have with banner ads, email, etc.

So now the voices are telling me "oh, but Twitter is a much better tool to do that." And to that I say "giving me a better golf club doesn't necessarily make me a better golfer."

I gotta do something about these voices in my head.

[Jeff Schroth]

To be frank, I find the opinions of retail banking market research firms on the pure-ROI marketing value of social networking systems completely uninteresting and likely to be wildly out of touch with the true nature and the value proposition these systems/networks may represent.

Simply put, those actually using these networks day-in and day-out for the purposes inherent in their design would find this conversation laughably out of touch.

While I appreciate that it may be wasted effort to try to point out the mountain to the ant, here's one thought that might illuminate my point:

Yes, the "early adopters" of such systems are often young people - mostly because they need not be convinced that yet-another way of "being social" might be interesting, or at least might just be fun to use (and they have more free time and motivation to try these things out.)

Even so, the simple reality - easily demonstrated to those who are not mired in marketing old-think - is that age-based segmentation of the user base for these systems is simply inappropriate.

Not knowing that means that the foundations on which the above opinions and propositions are based are flawed, and any recommendations made are inapplicable.

[Roger Conant]

I hope this conversation keeps going--thanks Ron for prompting it! I just posted this on CUTweetTrack:

From CUTweetTrack: A must read and comment for CUTweetTrack followers: http://bit.ly/tdevz And please read ALL of the comments for a well rounded overview.

I would love to hear comments from the CU TweetMasters! :)

P.S. Right on James about connecting with Gen Y parents...especially the Moms!

[Sonya Mills]

"BUT, let's be honest here. FIs (CUs less so than banks) have largely done a terrible job of figuring out how to simply communicate -- i.e. have a conversation -- with members and prospects. Marketers want to sell, push marketing messages out. If that's how you're going to use Twitter, than members are going to tune it out -- just like they have with banner ads, email, etc.

So now the voices are telling me "oh, but Twitter is a much better tool to do that." And to that I say "giving me a better golf club doesn't necessarily make me a better golfer."

I gotta do something about these voices in my head."

Amen! IMO, it's time to rethink everything you know about marketing. How do *you* react to marketing messages? How do *you* react to genuine connection? Don't you think your current and future members react similarly?

One way to think of Twitter is as "an event sponsored by". Use it as a venue to help others shine. The preliminary results of these polls: http://twtpoll.com/kme75c & http://twtpoll.com/tyl7ut show that current Twitter users most want their FIs to share community events in their tweets. In doing so, you build genuine connections. Connections that will think of you, the helpful credit union, the next time they need to open an account.

Also, realizing that I'm neither a banker nor a bank/CU marketer, the fascination with *only* marketing to Gen Y, and labeling them, seems rather narrow minded. If Gen Y isn't using Twitter, and my personal experience confirms this, is that a reason to dismiss it completely? (NOT that Ron is trying to communicate that message.)

[Denise Wymore]

Great conversation! But I"m having major deja vu..

In 1993, a trade association I worked for conducted a survey of credit union members. They asked this question: "Do you own a computer?" Overwhelmingly members answered. "No."

Conclusion: Credit unions shouldn't waste money on building websites because the majority of their members do not own computers. They won't use your website. And "back in the day" websites were crazy expensive to start up.

Today: Ron's company asks Gen Yers how many follow Credit Unions on Twitter. 29% responded they follow "companies."
CUTweetTrack shows a mere 200 credit unions being on Twitter.

Conclusion: Don't bother with Twitter. He did the math.

What is the ROI on your webiste? On your phone? On Twitter? On social media anything.

It's hard to calculate - but who cares? You can't do business in the future without these things.

I did the math. : ' )

Good to have you back Ron - your serve!

[Ron Shevlin]

@Denise: Don't misquote me, please. I said that CUs shouldn't be looking to Twitter as a tool to "reach" Gen Yers, nor should they be using Twitter as a channel for customer service. I didn't say "don't bother with Twitter."

The point I'm making has to do with a concept called "opportunity cost" (http://en.wikipedia.org/wiki/Opportunity_cost). Just because an idea is a good idea, doesn't mean it has to be invested in NOW.

For example, a credit union that developed a web site in 1993 probably did waste its money, since it was likely nothing more than an online brochure, they generated no learning from the experience, and they had to redevelop the site anyway. Was it worth developing a site in 1993, or could they have waited, watched to see what other CUs did, learn from that, and THEN develop one?

I'm all for CUs using Twitter -- if they have no better opportunities to deploy the funds and resources it takes.

Aced. Game, set, match.

[Roger Conant]

I think I'm going to continue the efforts with CUTweetTrack! :) (you'd better believe it!)

And we're going to make every effort to help drive traffic to this stimulating post beginning on Monday with the CUTweetTrack community. We've already heard from one TweetMaster(thanks for that)...I want to hear from more. Thanks to all!

P.S. And the hits just keep on coming! Look for Twitter on the cover of this coming week's Time!

[Roger Conant]

I just checked! This is already the "most commented" on post EVER on Nexus. And we're going all the way back to May 22,1977! (that was a good year, wasn't it!)

You might not agree with Ron, but he sure knows how to peddle tickets to a main event!

[Denise Wymore]

Advantage Shevlin.

...but before you go all jumping the net Billie Jean, let's look at one more thing.

Credit unions are notorious for wait and see and R & D (rip-off and duplicate). Isn't it time to pioneer?

I agree that marketing to Gen Y on Twitter is probably a waste of time.

Sonya Mills said it best:

"Amen! IMO, it's time to rethink everything you know about marketing. How do *you* react to marketing messages? How do *you* react to genuine connection? Don't you think your current and future members react similarly?"

The first CUs to build a website - Stanford and Advantis (then PACE CU) They were definitely pioneers in the CU world - received TONS of press and paved the way.

So who will be our Twitter pioneers? Or better yet - our Social Media pioneers? Because I think Twitter is just the weapon of choice today - something else will eclipse it.

Deuce.
Nice game.

[Roger Conant]

Want to witness the essence of the power of Twitter? Something very special played out last night between 3 tweet-ers...a Community Banker CEO (@rcaplice ), Credit Union champion (@cjcubs ) and Community Manager (@SonyaJMills ).

I'll let you track it down, but you'll understand what I mean when you access it. And it wasn't a debate. I suspect the fact that all three were women might have been a key element, but that's another discussion. Check it out...

[Roger Conant]

Sorry...I think my demographic is showing. In my post about this being the most commented on post ever on Nexus, I meant to say "And we're going all the way back to May 22,2007!"

[Colin Henderson]

Nice post Ron, and nice to see you back again blogging btw.

Twitter reminds me of wiki's. Back in the day, when 'web 2.0' was the next big thing, and we searched around for tools that would mean you were officially in web 2.0 land, everyone should have a wiki. Well now that prediction looks a little silly. Wiki's have there place, and their place is not to solve every problem. The expression that 'when all you have is a hammer, every problem looks like a nail' springs to mind. Twitter will not solve every problem.

Another analogy we can draw with wiki's btw is the participation rate. Read by many, but content origination by a fraction. Sounds like the same applies to Twitter. Again a highly useful tool, that will find its place in time.