Although social media has become a pervasive means of communication, businesses struggle to tie their social media efforts to demonstrable business results. This especially is true in professional services companies, which often are criticized for trailing behind other business-to-business industries in social business.
To explain the slow adoption of social media in professional services firms, conventional wisdom points to regulatory and brand constraints. In addition, social business adoption is believed to be hindered by a lack of senior management support, attitudes about the appropriateness of social media and concerns about the return on time invested to learn something different.
Although these barriers still exist, FTI Consulting identified in a recent study more pragmatic problems that professional services firms can immediately address in order to generate revenues with social media: a lack of training, best practices and content in social business.
We looked at the issues of social business in professional services through the lens of financial advisors . Understanding what drives their social media use has been a burning question for many companies over the years. Two years ago, for example, we partnered with leaders at LinkedIn to understand the drivers of social media adoption by financial advisors. The article herein reports on the results of our 2013 study with Putnam Investments that further probed adoption patterns and use.
Financial advisors provide a meaningful proxy to explore what professional services firms can do to boost the use and effectiveness of social business. For example, as is the case with financial advisors, attorneys and consultants build their businesses by cultivating individual relationships. The success of that cultivation relies on providing pertinent, fresh insights on the challenges clients and prospects face.
Similarly, many professional services firms must navigate an evolving landscape of regulatory demands and company compliance measures. The Financial Industry Regulatory Authority, for example, requires brokerage houses to document employee social media communications and company policies that assure those communications meet regulatory requirements. At the same time, several state governments have passed laws that prohibit employers from accessing their employees’ personal social media accounts.
Despite the regulatory flux, our survey found that the adoption of social media clearly is on the uptick. Although 25 percent of respondents currently are not using social media at work, only 30 percent of those respondents say social media will not be significant in their marketing efforts in the next year.
Of respondents who now are using social media for business, that usage has been rising steadily. More than 60 percent of those respondents, for example, have been increasing their use of LinkedIn over time. Nearly the same number of respondents have boosted their use of Facebook. In addition, financial advisors have become more avid tweeters — 57 percent of respondents presently using social media have been extending their use of Twitter.
Approximately 60 percent of respondents who now use social media expect that usage to climb in the coming year. A prime driver of this pronounced growth can be attributed to the results that users are achieving. For example, of the 60 percent who expect to up their social media use, the majority will do so because the people they are trying to reach are on LinkedIn or Facebook. Forty percent attribute their expected increase to the role social media has played in achieving desired results to date. A majority of current users also feel they now have a better understanding of how to leverage social media for business purposes. Only about 30 percent see loosening regulatory and compliance demands as a driver of higher usage.
The Emergence of Power Users
Social media power users (individuals with both the skills and enthusiasm to optimize social media tools and channels) add to their company coffers. Our study found that financial advisors who can be called power users are up to twice as likely as less savvy users to have won additional clients through social media: 73 percent vs. 30 percent. Similarly, the value generated by those clients is nearly twice as large: a median of $1 million in investible assets vs. $500,000. Given the nascent stage of social media in financial services, these results demonstrate the potential for helping advisors meet higher annual business targets that can range from $5 million to $10 million. Power users also are the most likely to say social media has helped them achieve their desired results and to agree that the people they want to reach are active on social media.
A key finding of our research is how power users are achieving these results. We specifically probed the relationship between seven common social business activities and the likelihood of winning valuable new clients:
- Building brand identity
- Improving effectiveness of referral networks
- Cultivating specific prospects
- Enhancing current client relationships
- Connecting with other financial professionals
- Cascading thought leadership
- Expanding professional knowledge
We discovered four distinct groups of financial advisors on a path that takes them from a passive to an active use of social media (see Figure 1). Passive users focus primarily on building brand identity and on improving their referral networks. Active users, on the other hand, create a virtuous circle by compiling and disseminating knowledge and using that information to cultivate prospects and enhance business relationships.
The four groups (and their salient characteristics) include:
In the Wings (25 percent) — Respondents who don’t use social media in business at all. However, they are active users of social media in their personal lives. For example, 62 percent of this group use Facebook, 33 percent use LinkedIn, 58 percent view or share videos on YouTube, 27 percent use Twitter and 24 percent use Google+.
Network Novices (38 percent) — Respondents who use social media passively. They use it to build their personal brands, enlarge referral networks and connect with other professionals.
Connectors (17 percent) — Respondents who use social media more actively to cultivate relationships with prospects and current clients.
Power Professionals (20 percent) — Respondents who use social media to deepen business relationships by gathering information and disseminating thought leadership. Power Professionals are more than twice as likely as Network Novices and more than 60 percent more likely than Connectors to use social media for business on a daily basis.
The path we found turns an old adage on its head: It’s not who you know, it’s what you know. Advanced social media users are doing more than connecting with others; they are adding value by creating, obtaining and sharing information. For Power Professionals, social business success is a matter of what they know and can share with the market. Network Novices and Connectors still are focused on the “who.”