Why Social Networking Strategies Fail: A Cautionary Tale

With so many companies tightening their budgets in the midst of the tough, uncertain economic climate, there’s a tendency to look at social networking as the new, free panacea. I’ve seen a few financial services and insurance companies start social networking strategies, promising to be open and reach out to their customers — only to turn these strategies into yet another communication channel where they do all the talking and none of the listening.

One particular financial services company, which will remain nameless in this column, serves as a cautionary example. Friends of mine work in these companies, and their experiences also form the basis of this worst practices list:

Worst Practice #1: Lying About Your Financial Viability

Splashed across the front page of one financial institution’s Web site is the assurance of financial stability and of its financial viability being secure. The CEO of this firm also proudly states that he believes in “joining the conversation” with customers and has created a variety of interactive forms of online communication.

Insiders who help manage IT at this financial institution tell me that call center supervisors respond to the easy ones and the harder ones gets escalated up. The CEO hasn’t actually responded to a single inquiry yet.

With so much uncertainty about financial institutions today and the pledge of this CEO to “join the conversation,” followed by the hypocrisy of having call center supervisors respond, definitely makes this a worst practice.

Worst Practice #2: Corporate Blogs That Tell It Like It Isn’t

A subprime mortgage lender began a blog to also assure their customers that the firm was fine. At the time the blog was created, it appeared that the company would make it. Yet as the inevitable meltdown occurred when people quit paying their mortgages, the blog became a lightning rod for angry customers who had been promised every type of refinancing deal imaginable. Finally, Customer Service took it over and then shut it down.

The cautionary tale from this: If you have a corporate blog, keep it real. Blog comments became a litany of worst practices in telemarketing as customer after customer provided insights into what they had been promised and then what happened to them.

Worst Practice #3: Massive Redesigns With No Customer Feedback

As subprime mortgage lenders struggled with their financial positions internally, many cut back on program and product management staff who were responsible for making sure their electronic initiates stayed in touch with customer needs and requests. The result: Entirely new Web sites rolled out with no prior testing by customers and no launch process, even internally.

As a result, about a month ago, a well-known mortgage lender’s call centers were deluged with calls from homeowners wanting to know how to pay their mortgages online. The new site had not been tested with actual customers for usability, and there had been no regression tests on Firefox browsers, only Microsoft Internet Explorer 8. So, only customers running IE 8 could even see the site; those running FireFox received an Admin error that made it look like the site was gone. Chaos ensued. It took over two weeks to get mortgage accounts straightened out after this.

Worst Practice #4: Failing to Carry Over Functions

All the Account Alerts and RSS Feeds were also completely re-set with the Web site as well, which meant that those subscribers who were accustomed to getting e-mail alerts no longer received them. A mild inconvenience, yet the RSS Feeds for the old site had not been translated over to the new site either. This meant business customers did not get their updates on current rates and new information from the mortgage lender either. Again, this resulted in many phone calls and eventually was resolved, but just goes to show how social networking needs to be a definite forethought, not an after-thought.

Promising to listen and then ignoring the feedback of customers put this mortgage lender into an even more difficult situation, angering customers in the process. Unless a company is really willing to listen and serve, and even re-define processes to do so, it should stay away from social networking strategies.