Facebook is a company that provides a personal experience through technology; that makes it a good company for community banks to study. Consider the Jan. 11 announcement by Mark Zuckerberg, Facebook’s chairman and CEO, that the company is changing its newsfeed algorithm to prioritize posts from friends and family. Public content – posts from businesses, brands and media – will appear much less frequently on the social network. Zuckerberg expressed concern those posts diminish the quality of the Facebook user experience. He actually said he expects this change to result in the amount of time people spend on Facebook to decrease, yet he expects users to get a better experience.
Zuckerberg knows what he is doing. While he says he is in the business of bringing together friends and family, he makes money selling advertising. By vastly reducing the stream of branded or commercial posts (e.g. free advertising), he reduces the clutter around his paid advertising and can increase his ad rates. He also wins major points with his audience by expressing concern over the user experience. How can you not like someone who is so concerned about your ability to connect with friends and family!
Many businesses, including banks, can learn three things from this example:
First: Focus on your core customers. Define your business and understand what your best customers want. Trying to be all things to all people just doesn’t work in banking or most other businesses.
Second: Don’t be afraid to make it difficult for unwelcome customers to work with you. Many companies saw Facebook as a free advertising platform. At your bank, you’ve probably got customers who expect all kinds of services for free. While no one likes losing a customer, it may be good to lose customers who cost far more to serve than you could ever realistically hope to make from them. Remember that about 20 percent of bank customers typically generate 80 percent of the profits.
Third: Tension between inertia and discipline will likely require occasional course corrections. It isn’t likely the Facebook long-term strategic plan anticipated the explosive growth of public content on the service. Zuckerberg’s team studied the issue and responded. A banker needs to be prepared to do the same. If customers suggest your business is drifting, study the problem, consider the options and plot a corrective course.
Be clear about your bank’s mission – who it services with what kind of services – and periodically verify that you are on course. Your core customers will appreciate your focused attention.