How can financial institutions capitalize on viral marketing ?

Financial institutions are successfully using social media to promote their brands, but I am yet to see FS firms use viral marketing, a type of marketing that relies on consumers to spread information, often by social networks. Viral marketing is appealing because of the low cost distribution generated by individuals sharing information with one another. However, it can be challenging to figure out what message will resonate with a target audience.

FS firms have dedicated social media teams to cultivate positive brand awareness. Last spring, Morgan Stanley launched a program to spread the message that their work benefits society at large, not just their clients. Twelve months since this program began, the Morgan Stanley brand has increased by 6%.

Persistent themes in social content disseminated by financial firms are: current events, innovation, charity, and nostalgia. Current events include the Olympics or #FriendshipDay, and let the customer know that the company is current and relevant today. Twitter and LinkedIn are great forums to showcase new innovations in technology and by using social media, companies are inherently perceived as more tech savvy. Financial firms, particularly incumbents, who may have received the brunt of the negative PR after the Great Recession, can casually mention their charitable efforts while still coming across as authentic. Lastly, companies can create a warm and fuzzy spot in customer’s minds by making reference to a TV sitcom from yesteryears.

All of this is being done today, so what else can companies do? Viral marketing is a logical next step in a social media marketing strategy. Recently, I had several publications send me the same what-if scenario tool, which calculated the “true” cost of childcare when one parent chooses to temporarily or permanently leave the workforce. Given the upcoming elections in the United States and the fact that childcare costs are a topic of debate between the two candidates, the timing of the analysis tool contributed to its appeal.

It also got me thinking, “Wouldn’t it be cool if banks caught the attention of retail or mass affluent customers by way of viral marketing?” For example, if FS firms are trying to target millennials employed by start-ups, they could build a scenario analysis product that compared the value of a traditional stock option to the dollars sacrificed by taking stock instead of cash. Or even a simpler mass-market tool, like one that showed how diversified a portfolio would be if a customer selected 12 stocks of their choice, would appeal to a generation consumed by gaming. If the tool is initially shared with a select audience and proves to be likeable, it will hopefully gain traction and be spread from one individual to another. A share coming from a friend or via a publication that is credible in the eyes of the consumer is more authentic than social content shared directly from a FS firm. The creation of authentic endorsements is the main benefit of viral marketing.

This idea of sharing a product for free via viral marketing entails a “freemium” pricing strategy, whereby a company offers an initial good or service for free in the hopes that a customer will be hooked and pay for additional products or services. In this case, a freemium tool spread by viral marketing may encourage customers to open a self-directed account. There does not seem to be much downside risk if these individuals would have otherwise kept their money in cash or gone to another self-directed platform or robo-advisory service. The HNW/UHNW customers that would otherwise be paying for these what-if scenario tools would not feel slighted, because the full benefits to these tools are realized when they are used in conjunction with advice and with a holistic view of the customer’s assets and goals.