Investors are influenced by research they find in social media—and companies that reach out can create relationships and a competitive advantage.
Moreover, this strategy is likely to become more, not less, important as younger digital natives become wealthier, because they rely on and are influenced by social media more.
Having said that, it’s a myth that social media is a young person’s game.
According to Cogent Research, 90 percent of high net worth investor groups use social media to inform personal investment decisions , and up to 70 percent have changed relationships or reallocated investments as a result.
If that sounds like an opportunity, it is. Yet many businesses have not integrated social media into business strategy.
This is unfortunate because a company that has direct access to the community can tell its own stories.
Right now, companies that rely on others (like brokers and financial advisors) to share their stories have no control over how it changes through various layers. This increases the risk that key information drops out or is distorted. A direct relationship with the community overcomes that barrier.
Companies need to consider:
- What valuable information they have that they could share
- What information they should be producing
- Where to publish it
- How to extend connections formed with readers offline
- How to identify and leverage new business opportunities using a social media salesforce as an integrated part of sales
Why the gap?
One reason businesses don’t leverage social media is because many senior decision-makers in regulated industries still believe it’s entertainment for kids—a fad, destined to pass.
Instead, these are some of the facts:
- The professional business network LinkedIn is 12 years old and has almost 300 million users from 200 countries.
- Facebook is over 10 years old and has 1.25 billion users.
- The fastest-growing demographic on Twitter, Facebook and Google+ last year was 55-plus.
Unfortunately, the myths have become entrenched, meaning many businesses have failed to adequately invest in social channels.
The growing importance of virtual trust
Do the relationships formed in social media matter? Absolutely.
The Edelman Trust Barometer, which in 2014 surveyed 33,000 people from 27 markets, has recorded a decline in trust over many years in institutions and leaders; at the same time it shows high and growing levels of trust among peers.
Personal recommendations are important whether they are face-to-face or virtual. Already 72 percent of consumers trust online reviews; but if the buying preferences of millennials are something to go by, this will grow.
New research by Bazaarvoice and Kelton Research shows millennials trust the expertise of strangers even more than that of family and friends. What expertise is that? User-generated content.
- 84 percent are glad they have access to opinions of strangers.
- 64 percent believe businesses should offer more ways for consumers to share opinions online.
That business is you.
The socially emerging billions
Those professionals who diminish social media because they say they and their peers are doing well without it need to consider what is coming over the hill.
The billions of new consumers about to enter the market have never lived in a world without it. They are social-first and will expect to find you on these platforms as a default.
Do you really want to risk not being there or giving a competitor that advantage?
In the US nearly 10 percent of all affluent investors are under 30 and yet lack even basic awareness of financial institutions such as mutual fund companies. Investor Brandscape found investors over the age of 30 were 9X more likely to develop relationships with asset managers via social media than the over-30 group.
Additionally, they were twice as likely to depend on advisors for recommendations because of their lack of experience.
Industries will need to rethink the relationship with social media and how it can be used strategically throughout the business to:
- Capture sentiment
- Share information
- Form relationships with suppliers, clients, and employees
- Provide customer service
- Enable collaboration
- Drive marketing and sales
It matters now, but it will matter even more in the years to come.
Enjoy my work? There’s more in The Social Executive – how to master social media and why it’s good for business. This article first appeared in Forbes.