Perfecting the Formula: Why Lenders Need to Harness the Power of Social Media

From June’s issue: Since the rise of Facebook, Twitter, and Instagram, consumers are increasingly turning to social media to view content, interact with each other, and communicate with the companies they engage with in business. Lenders in auto finance have started harnessing the width and breath of social media, but many are only scratching the surface of its potential.

Social media’s reach among the global consumer base is vast. In the U.S., 69% of adults use Facebook, according to an April 2019 report by the Pew Research Center. Of those users, 51% return to Facebook multiple times a day.

Younger consumers flock to other forms of social media. Of adults in the 18-to-24 age bracket, 71% use Instagram and 45% use Twitter, according to Pew’s research.

In addition, these same consumers are spending an increasing amount of time consuming this content online. Data compiled by Nielson Holdings Inc., a New York-based information, data, and measurement company, shows that adults aged 18 to 34 spent 47% of their time on a computer, mobile device, or tablet.

Yet, while these numbers point to increased opportunity to connect with consumers, auto lenders’ presence in the space is small. Of the five captive lenders with the largest auto finance portfolios ranked in Big Wheels Auto Finance Data 2019, only two — GM Financial and Toyota Financial Services — had social media presences on both Facebook and Twitter.

To be fair, many lenders in auto have social representation through their respective OEMs or parent companies, but Ally Financial’s Executive Director of Social and Marketing Innovation, Saloni Janveja, said lenders need to do more if they want to tap into the social media well.

“It’s just not enough to have a Facebook page, or have a Twitter account, or have an Instagram as a company,” she said at the Auto Finance Risk Summit in San Diego last month. “[Lenders] can’t ignore social. It’s important for it to be a part of any strategy for an [auto finance] group,” she added.

Proceeding With Caution

It’s no secret that lenders are under increased regulatory scrutiny compared with other industries as a result of the Dodd-Frank Act. As such, breaking into an unfamiliar landscape can be difficult for companies in finance industries. Lenders need to understand the compliance and operational risks when determining which social media strategy is right for their organization.

To that effect, one of the biggest considerations for Ally when engaging with customers on social media is how it responds to digital inquiries in a consistent and compliant way. To combat this hurdle, the Detroit-based lender created a response guideline toolkit to not only convey the brand’s tone of voice and philosophy, but also to outline words to avoid — such as “guarantee,” “ASAP” or “best”— to deter potential violations deemed by regulators as unfair, deceptive, or abusive acts or practices.

“The most important thing to keep in mind is if [a lender is] going to engage on social media and advertise a brand or a product, it is not any different than advertising
it in print,” Janveja said. “We view that with the same level of scrutiny.”

Instagram posts, for example, still have disclosure terms, trigger words, and a “one-click-away” requirement similar to other digital print advertisements. “It’s a matter of being aware that there aren’t any ‘special rules’ for social media that you can get away with,” she said. “All the typical compliance rules apply.”

In order to streamline this process, Ally’s social media team takes a proactive approach by working closely with the company’s legal and compliance departments. “We know that our legal, risk, and compliance folks are there to keep us out of trouble,” she said. “They’re there to make sure we’re saying the right things. If you put something out on a Facebook page, it is out there. It can be used. There are all these regulations [to consider].”

Welcome to the World of Social 

Ally Financial’s 14-member social media team oversees content strategy on eight social platforms, including Pinterest, Snapchat, Facebook Messenger, YouTube, and LinkedIn, along with the three platforms previously mentioned.

The lender determines the best way to communicate through each platform. For example, Facebook is for connecting and sharing, Twitter is for live moments and customer service, and Instagram is for visual storytelling. “When you’re building content, look to see how [customers] are going to view it on mobile,” Janveja said. “Is that going to be ‘thumbstopping?’”

But that doesn’t mean that social media has to be an all-or-nothing effort. There are millions of impressions on the internet every minute, so lenders have the opportunity to pick and choose which platforms best promote their brand and company culture.

Chase Auto, for one, uses Twitter for targeted marketing campaigns aimed at fostering community, Melinda Welsh, chief marketing officer and head of consumer lending, said during a fireside chat at the Auto Finance Sales and Marketing Summit.

In an effort to tap into social media, Chase Auto conducted research and found that 36% of Americans name their cars. “We launched ‘Name Your Car Day’ with Chase,” Welsh said. “People would submit through Twitter a picture of themselves and the name of their car. Then we had an artist draw renderings of [a customer’s] car and send it back to them.”

“It was one of the most successful Chase social campaigns we’ve ever had,” she added, noting that it only cost the lender $2,000.

Still, other lenders engage in more targeted social media campaigns designed to promote company culture, financial literacy, and product offerings. Santander Consumer USA uses its Twitter account to celebrate employee volunteer initiatives and recently posted a “cheat sheet for car buying” infographic to help educate customers.

Similarly, Toyota Financial Services shares information to help consumers understand their credit, while advertising its “iFi” financing for near-prime borrowers. GM Financial, too, promotes financial literacy and operational initiatives through its social accounts.

For lenders looking to take the plunge but don’t know where to begin, Ally’s Janveja has simple advice: “Start with Facebook,” she said. “It’s by far the furthest reaching platform that’s out there, and it doesn’t take a lot to get started on it.”

Further Down the Rabbit Hole 

No matter which platforms lenders use to create their social media presence, a plethora of resources exist to help financiers understand consumer sentiment toward their brands.

“If you’re looking to manage risk within your company and see what consumers are saying and see if there are any red flags, or if anyone has an experience that they’re talking about that could potentially be an issue [for your band], it’s not enough to just watch your own channels,” Janveja said.

Mobile app reviews are a great way to see what customers are saying about their experiences with lenders’ brands and online platforms, she said, adding that her social media team monitors activity on Google Play and Apple’s iTunes App Store, in addition to comments on Ally’s various blogs.

About eight months ago, Ally started to monitor financial forums and review sites such as Deposit Accounts and WalletHub, Janveja said. “There’s a ton of valuable discussions [through these venues],” she said.

Reddit, a social news aggregation and web content rating platform, “is a goldmine” for this sort of consumer insight, Janveja said. “If you’re not monitoring communications on Reddit about your company or your brand, you definitely should [be],” she added.