MASTER THESIS
MSC BUSINESS STUDIES – MARKETING TRACK
WHAT DO CONSUMERS EXPECT FROM RETAIL
BANKS ON SOCIAL MEDIA?
AN EXPLORATORY STUDY
Thesis February, 15th 2015
Version: final
Author: Peter Vos Studentnumber:10317392
Supervisors University of Amsterdam First supervisor: Dr. V. de Graaff Second supervisor: Dr. K.A. Venetis
Table of Content
Table of Content ... 2
List of figures, models and tables ... 3
Abstract ... 4 Preface ... 6 1. Introduction ... 7 1.1 Research Question ... 9 1.2 Structure ... 10 2 Methodology ... 12 2.1 Exploratory research ... 12 2.2 Literature review ... 13
2.3 Testing ideas on consumers ... 14
2.4 Testing ideas on professionals ... 16
3 Literature review ... 19
3.1 Social Media ... 19
3.1.1 Social media landscape 2014 ... 21
3.1.2 Facebook ... 23
3.1.3 Twitter ... 24
3.1.4 LinkedIn ... 25
3.1.5 Implications of differences between platforms ... 27
3.2 Branding ... 29
3.2.1 Brand Loyalty ... 30
3.2.2 Social Media Marketing ... 31
3.3 Retail Banking ... 34
3.3.1 Definition ... 34
3.3.2 Retail banking in The Netherlands ... 35
3.3.3 Presence of Dutch Retail Banks on Social Media ... 37
3.3.4 Analysis of social media postings ... 38
3.3.4.1 Analysis on frequency of postings ... 39
3.3.4.2 Analysis on direction of postings ... 39
3.3.4.4 Summary of analyses ... 45
4 Consumers ... 47
4.1 Findings ... 47
4.1.1 Motivations ... 47
4.1.2 Connections and expectations ... 49
4.1.3 Brand loyalty ... 52
4.2 Summary of findings interviews consumers ... 54
5 Experts ... 55
5.1 Expert Findings ... 55
5.1.1 Viewpoints on Social Media ... 56
5.1.2 Purpose of Social Media ... 57
5.2 Summary of findings interviews experts ... 60
6 Discussion, Limitations and Further Research ... 61
6.1 Discussion ... 61
6.2 Limitations and future research ... 63
7. References ... 66
Appendices ... 69
List of figures, models and tables Table 1: Coding approach ... 17
Model 1: Social Media Landscape 2014 ... 22
Model 2a: Psychological distance between user and platform based on core purpose of the platform ... 27
Model 2b: Expected acceptation of proactive behaviour on Social Media by Retail Banks ... 29
Figure 1: Market concentration Dutch Banks ... 35
Table 2: Number of connections Retail Banks in The Netherlands on Facebook ... 37
Table 3: Number of connections Retail Banks in The Netherlands on Twitter ... 37
Table 4: Number of connections Retail Banks in The Netherlands on LinkedIn... 37
Table 5: Number of posts per platform in one month ... 38
Figure 2: Analysis of postings on direction per platform ... 40
Figure 3: Distribution type of content on Facebook ... 42
Figure 4: Distribution type of content on Twitter ... 43
WHAT DO CONSUMERS EXPECT FROM RETAIL
BANKS ON SOCIAL MEDIA?
Peter Vos
University of Amsterdam, The Netherlands
Abstract
The mass acceptance of social media has tempted brands to get involved in social media in order to build brand loyalty. Marketers have experienced that social media has empowered consumers (Fournier & Avery, 2011). Consumers decide what to read, see, like, discuss or ignore. While existing literature about branding and social media is mainly from the viewpoint of the brand and literature about brand communities tend to focus on brands who offer tangible products or services. This research will create a deeper insight in consumer preferences concerning retail banks on social media. In contradiction to previous research about brand communities retail banks offer intangible products and services. The financial crisis, started in 2008, exposed problems and scandals within the banking sector. As a result thereof retail banking suffers under critics by consumers. This makes the industry extra interesting to do research on. Retail bank’s current social media content strategy seems not to be structured and differentiated per platform. This research will answer questions which type of activities and content consumers expect from retail banking firms on social media and if a social media platform differentiated strategy is required. This insight is obtained by interviews with consumers which were then tested by interviews with responsible professionals in
service information and related information are most expected content. Professionals have consumer engagement as primary objective. Engagement is measured by the number of likes, shares and comments. This might explain why entertaining content is used a lot. Although proactive behaviour on social media is currently not common, consumers’ acceptance is high. This can be a chance for social media professionals to create engagement on a more personal level and can truly influence brand loyalty.
Preface
The master thesis in front of you is written as a completion of my Executive Master in Management Studies (MSc), specialization marketing at the Amsterdam Business School. As a private banker and social media addict I could not miss two phenomena over the last decade. Firstly the growing physical and psychological distance between retail banks and customers. Automation and virtualization enabled retail banks to close branches in small and medium sized villages in order to raise profitability. The financial crisis started in 2008. Customers were confronted with a large number of scandals in the financial industry which undermined confidence in retail banks. In the same decade social media entered in to the daily life of most of us, the second phenomenon. I wanted to combine these two phenomena in my thesis. Brands, including retail banks, entered into social media in order to build and retain brand loyalty. In order to know how social media can contribute to brand loyalty I asked myself the question
“
What do consumers expect from Retail banks on social media?” I figured out this would be a great subject to do research on. Not only it would fill a research gap, but also because it is a subject I could indulge in. For a long process like writing a thesis, enthusiasm is needed. Support is needed as well therefor I want to thank some people in particular. First I want to thank my supervisor Mr. Vincent de Graaff for his help, patience and encouragement. It was very valuable to me! Thanks to my family and friends for their understanding I could not always be there for them or make fun together. Thanks to my employer for facilitating me to do this study. Last, but not least thanks to all who were willing to cooperate in this research! Enjoy reading!1. Introduction
Five years ago the question was “What to do with social media?”. Today brands cannot deny social media anymore. The mass acceptance of social media has tempted brands to get involved in social media in order to build Brand Loyalty. This changes the question in to “How to use social media in order to add value to the marketing strategy?”
Recent research about branding in social media is mainly descriptive. Mangold and Faulds (2009) described different strategies which brands can choose if they participate in social media. Kaplan and Haenlein (2010) provided an overview of the different forms of social media applications and how these applications can be used. Research shows that brand equity is more important for highly intangible service purchases than for more physical goods (Brady, Bourdeau & Heskel, 2005). Laroche, Habibi, Richard, and Sankaranarayanan (2012) showed that a brand community on social media enhanced Brand Loyalty.
Brand Loyalty is one of the central themes of researchers in the field of marketing and one of the four dimensions of brand equity. Brand Loyalty is a driver for price premiums and market share (Aaker, 1996). In the research by Laroche et al. (2012) participating consumers were asked to answer the questions with a brand they were following on social media in mind. It is not made clear to what extent results differ between industries. The research project described in this thesis will focus on the retail banking industry.
Retail banking is that part of banking that deals with individual customers and small businesses. Retail banks play a critical role in their home economies, and their
activities have implications for the global economy as well. They offer critical credit functions, which largely fuel the engine of economic growth in their economies. The financial crisis, started in 2008, affected the profitability of banks directly but also to the future. This is caused by growing regulatory costs and the introduction of transparent rewards for complex products.
Besides the economic importance of retail banking this industry is a relevant industry to do research on in the context of the use of social media by brands for several reasons. Firstly, in contradiction to previous research about brand communities, retail banks offer intangible products and services. Secondly the financial crisis, started in 2008, exposed problems and scandals within the banking sector. As a result thereof retail banking suffers under critics by consumers. Their trust in banks has been damaged by abuses around rewards in the sector and fraud issues like the LIBOR-case. It is therefore of great importance for retail banks to regain trust and brand loyalty.
The technological development in the banking sector is the third reason which makes the industry relevant for research. The fierce margin pressure accelerated the virtualization of retail banks. After transactions shifted earlier from branches to web and mobile based solutions now advisory services will follow. As a result it is possible for banks to close branches in a rapid pace. Personal contact will diminish, which can affect brand loyalty. In addition the technological developments which made virtualization of retail banking possible diminished barriers to entry for new entrants. The new entrants include online banks, online loan providers, online savings banks and crowdfunding platforms. With increased competition for retail banks building brand loyalty has become more important.
Marketers have experienced that social media have empowered consumers (Fournier & Avery, 2011). Consumers decide what to read, see like, discuss or ignore. Social media are a recent phenomenon in marketing. Social media take many forms and is permanently evolving. Norms and beliefs in this new environment are evolving. Little is known so far what consumers on social media expect from retail banks.
This research will create a deeper insight about consumer preferences concerning retail banks on social media. It will answer questions which type of activities and content they expect from retail banking firms on social media and if a social media platform differentiated strategy is required.
1.1 Research Question
Existing literature about branding and social media is mainly executed from the viewpoint of the brand. Literature about brand communities tend to focus on brands which offer tangible products and services or research has been done on brands in general without a comparison of different industries. This thesis will address this gap by researching the use of social media by the retail banking industry. Retail banks offer intangible services and the industry they operate in suffers from criticism. Consumers may feel less connected with the brand or have negative feelings about banking in general. This will imply that for retail banking a structured strategy in social media is required in order to build and regain brand loyalty. The aim of this research project is to offer a deeper understanding of consumer preferences involving brands in the retail banking industry on their activities on social media. In order to reach the aim of this research project the following research question is formulated: “What do consumers
expect from Retail banks on social media?” To answer the research question the following sub questions are formulated;
What type of content do consumers value most?
Do consumers appreciate proactive personal contact on social media?
What is the influence of the used platform on consumers’ content and contact preferences?
How do the outcomes of the previous sub questions relate to the current approach on social media by retail banks?
Do current social media activities contribute to brand loyalty in the retail banking sector?
1.2 Structure
The remainder of this thesis is organized as follows. In the next chapter the methodology by which the research has been done will be described. It will provide an argumentation of the used research design, an explanation of the process of data collection and data analysis.
In chapter three the literature review is provided. The literature review is intended to create understanding of the phenomena which are relevant for this thesis namely Social Media, Brand Loyalty and Retail Banking. It will show what is already known in academic literature on these topics, individually as well as their relation to each other. The last section of the literature review is an analysis of activities on social media by retail banks. The observed differences in approach by different banks in combination with the theoretical part of the literature review indicated the gap on which
this research is based. The analysis has been done to underpin the differences observed. Therefor the analysis is part of the literature review chapter. From the research gap investigated followed the research question “What do consumers expect from Retail banks on social media?” It is the intention to answer this question from two points of view; the view of the consumers themselves and the view of the professionals on social media for retail banking.
The findings of the interviews with the consumers will be discussed in chapter four. In chapter five the findings of the interviews with the professionals will be discussed. Finally in chapter six, the implications of the findings from both points of view are discussed and limitations and directions for future research are provided.
2 Methodology
The aim of this research project is to offer a deeper understanding of consumer preferences involving brands in the retail banking industry on their activities on social media. This research project is set up exploratory as it is intended to test the first ideas about the use of social media by retail banks. Further support for the choice of exploratory research is provided in paragraph 2.1.
The ideas used in this research are based on the literature regarding social media and an observation of the use of social media by retail banks in practice. This research project is structured in three steps which will be described in chronological order: the literature review in paragraph 2.2, testing first ideas on consumers in paragraph 2.3 and testing first ideas and outcomes of interviews with consumers on professionals in the last paragraph.
2.1 Exploratory research
An exploratory study is useful to seek new insights and assess phenomena in a new light (Robson, 2002). Exploratory research often relies on qualitative approaches that, in turn, are flexible, allow one to take advantage of the richness of data, and thus, obtain more meaningful results. It offers the opportunity to examine the ‘why’ and ‘how’ (Ali, 1998). The ‘how’ refers to how variables are related (i.e. corporate branding and social media) and the ‘why’ are the underlying dynamics that justify the selection of those factors and their relationship (Wright, 1995). Thus, qualitative methods focus on dynamic processes with the aim of explaining or understanding, rather than predicting, phenomena. For this research the formulated research question is “What do consumers expect from Retail banks on social media?” Qualitative research will help not just to
know what consumers expect, but also how and why their preferences are formed. This is valuable information as this research is intended to test the first ideas about the use of social media by retail banks.
2.2 Literature review
The first step in this research is the literature review. This review can be seen as a descriptive research that portrays an accurate profile of the current situation. It has been noted that, while much descriptive research has been undertaken in the domain of social media marketing, most research has been done on brand communities for brands who offer tangible products or services. Less is known about branding by social media for brands which offer intangible products or about retail banking brands in particular. Social media are a relatively new phenomenon. This implies that this literature review can be seen as a precursor to exploratory research (Saunders et al. 2009).
The last part of the literature review is an analysis of the current approach on social media by retail banks. As mentioned before the observation of the use of social media by retail banks in practice combined with the literature regarding social media formed the first ideas for this research. The observation has been formalized with an overview of the activities of retail banks on social media and an analysis of the content. For this step in the process it was needed to select the retail banks to do research on. The market in The Netherlands is dominated by four banks (ING, Rabobank, ABN Amro and SNS Bank) who together are responsible for 90% of all assets. A multitude of banks are responsible for the remaining 10% of all assets. Between these other banks are niche players who offer one ore just a few products, online banks and banks with a small target group. With the selection of the four banks the largest part of the market is
mapped. These retail banks offer a full range of consumer products and have adopted a multi-channel strategy. Further these banks have in common they are in a transition from personal contact to web based solutions. By selecting the four largest retail banks niche players which are only active in one market (for example investments) are excluded. Main reason for this exclusion is the fact that all of their consumers have one common interest. Retail banks who only offer contact possibilities by telephone and internet are excluded as well.
2.3 Testing ideas on consumers
The second step of this research project is to test the findings of the literature on consumers. Having established that a qualitative methodology was most suitable for this study, interviewing was deemed a particularly suitable tool. According to Cooper and Schindler (2008), it is likely to include non-standardized (qualitative) research interviews in the design where exploratory research is undertaken. Completely unstructured interviews were considered inappropriate due to the risk that it would fail to glean the desired information (Easterby-Smith & Lowe, 1991). On the other hand, a structured interview could inhibit the flow of information and prevent the emergence of useful and revealing insights (Jones, 1985). Therefore it is chosen to conduct semi-structured interviews in which a list of themes and questions to be covered guide the interview. This is imperative for this study in order not to dwell from the subject, namely corporate branding in relation to social media, but at the same time to probe answers, ask for further explanation and to build on the interviewees responses (Saunders, Lewis & Thornhill, 2011). With this method, both flexibility and structure are achieved. Ten consumers who actively use social media and follow at least one
retail bank on social media have been interviewed. To select the interviewees a non-probabilistic sampling systematic has been used. It was not the intention to establish a random or representative sample drawn from the population of retail bank consumers. Systematic non-probabilistic sampling allows a researcher to include a wide range of types of informants and to select key informants with access to relevant sources of knowledge.
For the sample criteria for participants have been formulated in advance. The participants to interview needed to be consumers of a retail bank, who are experienced users of all three selected social media platforms, actively use these platforms and follow at least one retail bank on one social media platform. Consumers have been defined to be experienced and active when they use each platform on at least a weekly basis for over two years and have at least 100 connections on each platform. By these criteria a large number of consumers are excluded. For example consumers who use social media but are not connected with their bank. This was a conscious choice as these consumers have not experienced the current approach on social media by retail banks. Consumers who do not use all three selected platforms are excluded as well as consumers who did not meet the criteria of the frequency of the use of the platforms, the number of connections and the minimum of two years registration on a platform. Excluding consumers that are less experienced and/or less active on social media ensures that selected interviewees have experienced the differences in the use of the platforms and the norms and believes of the platforms. No criteria have been formulated on gender, ethnicity or education as the use of social media in general does not differ significantly (Centraal Bureau voor de Statistiek [CBS], 2013). The selected consumers
will not be representative for all consumers of retail banks but will best able to form first ideas of consumers’ preferences on social media activities by retail banks.
In order to obtain willing interviewees who met the requirements invitations to cooperate have been placed on the selected social media platforms. On this invitations 23 positive reactions were received. Only 6 out of 23 respondents met the requirements. In order to achieve the number of at least ten respondents snowball-sampling (Goodman, 1961) has been used. The six selected interviewees have been asked to invite someone from their social network who would meet the requirements to cooperate. Seven candidates have been put forward, four out of seven candidates met the requirements and were willing to cooperate.
2.4 Testing ideas on professionals
The third step in this research project is a confrontation with professionals in social media marketing for retail banks on the findings of the interviews with the consumers. The intended professionals to interview were social media managers of the selected retail banks; ABN Amro, ING Bank, Rabobank and SNS. The social media managers needed to be responsible for the social media strategy of the organization. LinkedIn has been used to identify the social media managers of all four banks. The managers of ABN Amro and SNS bank were invited by a personal invitation on LinkedIn in which the research question was shortly explained as well how they could be helpful for this research. One manager responded positively and replied with an invitation to contact him by phone to make an appointment. One manager did not respond on the invitation on LinkedIn and was sent a Tweet on which he responded very fast and positive. A fellow student was willing to introduce the social media
manager of ING Bank. He was contacted by telephone and agreed for an interview. The social media manager of the Rabobank was contacted directly by telephone as he was an existing contact of the researcher. He responded positively as well.
Both the interviews with the consumers and the professionals are held in Dutch, the native language of the interviewer and interviewees. All interviews were face to face, most of them at the office or home of the interviewee. Two consumers preferred the office of the researcher for an interview. The interviews have been transcribed in Dutch. All of the qualitative analysis have been conducted in the native language as well. This allows one to analyse not only what was said (i.e. the content), but also the way in which it was said. This last point gives a depth to the analysis that is not possible through simultaneous translation, and allows a more sensitive, emotional read of responses.
Essential parts of the interviews and quotations which lead to the conclusions are translated to English and are included in this research paper. After transcription the interviews have been analysed by reading the transcripts at least twice. A second reader was asked to do this as well. Differences in interpretation were discussed. This enabled to identify themes emerging from the data, while reading notations were made to record ideas. Then the themes were described and developed from the data to answer the major research questions. With the themes in mind the interviews were read again and categories were formulated (Bernard & Ryan, 2010). The open coding approach was applied in order to analyse illustrative quotes. For coding the software of NVivo has been used as this provided the opportunity to read and code in one system. Table 1 provides an example of this method.
Table 1: Coding approach
First order codes Second order codes
Examples - Use of social media
- SM Channel of information and communication
- Motivation different platforms - SM as influencer in purchases
Social Media “On LinkedIn I add almost anyone I work with or with whom I have worked in the past. I work as a self-employed worker and for me that's the way to keep up with my business network contact. LinkedIn I really see as my Facebook for business” – Interview consumer MG
- Emotions and feelings of retail bank
- Functions of retail bank
Retail Banking “That people feel connected to their bank is an illusion of the past. You control it online, as an individual you have not so much contact anymore.” – Interview consumer BV - Motivation for connecting
- Expectations content - Platform influence - Expectations interactivity - Expectations proactivity Expectations of SM by RB
“A lot of my clients are banking also at Rabobank so then it is useful for me to know what they are doing” – Interview consumer IK
“In principle, we do not think in the channel, but in what we want to achieve and in the way you bring something you need to differentiate” – Interview professional AA
- Social media as a marketing tool for RB - Community - Brand Loyalty - Brand Awareness - Brand Satisfaction - Brand Trust Impact of SM on RB
“I think it's nice that they do it, I prefer this above a newsletter. That forces you to completely read at that time, but I often scroll, see it through and throw it away” – Interview consumer AV
“I think it's an abstract institution. They come with an icon on my phone and that's it. Social media has no changed that” – Interview consumer CA
“I think it should be a digital copy of the role the Rabo also has in the physical world. That means in the middle of the people, not above, not next to it, just in between” – Interview professional RB
“I think the Rabobank is stronger on LinkedIn than ABN, which then draws me to it. So yeah ... there might
unconsciously now be a bigger chance I choose them if I need to arrange something, when we buy a new house or something. - Suggestions improvements
by consumers
- Planned improvements by professionals
Improvements “At this time they do only send and not listen. That makes me think it's less interesting to continue to follow them” – Interview consumer MG
“The link between what happens on social media and personal contact that may be stronger I've noticed” – Interview consumer KM
“More content marketing, content with answers to real questions that real people talk about topics such as housing, employment, gifts, divorce which we call advice topics” – Interview professional AA
3 Literature review
This chapter provides an explanation of the terms which are relevant for this thesis namely Social Media, Brand Loyalty and Retail Banking. Next to that, an overview of what has been researched in this field so far will be provided. In the first paragraph, the concept and history of social media will be explained including the most used social media platforms. The second paragraph focusses on about brand loyalty, to explain what it is and why it is important for brands to invest in brand loyalty. In the next paragraph, on social media marketing, will be explained how companies use social media in order to obtain their goals on brand loyalty. Finally, the term retail banking will be explained and an overview of the investigated Dutch retail banks will be provided.
3.1 Social Media
The term social media and the term social network sites are often interchanged. Kaplan and Haenlein (2010) provided an overview of the history of social media and defined it as “a group of internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content.” Social Networking Sites are just one of the many forms of social media. Ellison (2007) was one of the first who formulated a definition for social network sites. “These sites create possibilities for individuals to make a personal profile within a bounded system, create a list of connections and view and scour their list of connections and the lists of others within the system.” Since 2007 the possibilities to create a profile have been expanded which is reflected in the definition of Kaplan and Haenlein (2010) “Social networking sites are applications that enable users to connect
by creating personal information profiles, inviting friends and colleagues to have access to those profiles, and sending e-mails and instant messages between each other”. These personal profiles can include any type of information, including photos, video, audio files, and blogs.” For this thesis the definition of Ellison (2007) is followed. When the term social media is used in this research, it refers to social network sites.
Social network sites as a phenomenon are still in their early days. SixDegrees.com was one of the first sites (Ellison, 2007) and launched in 1997 in the USA. Many sites followed with varying degrees of success. Major players of the first years are lifted and their places have been taken by entrants who offered new possibilities or focussed on specific target groups. Domestic sites like Hyves in the Netherlands lost to international sites like Facebook. Social Networking Sites are developing rapidly. This becomes obvious in the overview of characteristics that is provided by Kaplan and Haenlein (2010) which includes new possibilities like instant messaging and the diversity of types of information which can be shared like photos, video, audio and blogs.
In the description of social network sites by both Ellison (2007) and Kaplan and Haenlein (2010) brands are not involved although Kaplan and Haenlein (2010) mention that some companies are already using social network sites to create brand communities for marketing research, promotion of new products or as a distribution channel. This has changed rapidly in the last few years: at this time most brands entered into social media, in the United States about 87% according to research by research firm eMarketer (“The Year Of Social”, 2013). A large number of brands have set up media campaigns in order to gain hundreds of thousands of friend on Facebook, followers on Twitter and fans on
YouTube. Employees are encouraged to actively use social media to create positive buzz and create connections on LinkedIn for potential business. Social network sites however, were originally set up for individuals to connect, not for brands. Nowadays marketers are confronted with the fact that social network sites empowered consumers (Fournier & Avery, 2011). These sites enable consumers to communicate about and with brands. They review, like and discuss about companies and brands with others in a semi-public or public environment.
3.1.1 Social media landscape 2014
As mentioned before the social media landscape is dynamic and diverse. There is no uniform classification of different forms of social media available. Different sources use different classifications. One example is the yearly overview of the social media landscape (figure 1) by Fred Cavazza, a French authority on social media.
Figure 1. Overview of the Social Media landscape. Reprinted from [Social Media Landscape 2014, Fred Cavazza] (2014), by F. Cavazza. Copyright 2014 by F. Cavazza.
Retrieved from http://www.fredcavazza.net/2014/05/22/social-media-landscape-2014.
The model by Fred Cavazza contains the following elements: in the outer circle of the upper half are the social media divided on primary characteristic. “Publishing” social media focusses on creating and publishing content. This category includes blogging platforms as Blogger and knowledge sites like Wikipedia. “Sharing” represents social media platforms that mainly focus on sharing primarily visual content. Pinterest and Instagram for pictures and YouTube for video are the most known examples. “Discussing” is a separate category and includes dedicated discussing platforms like Reddit, but the most used are the more general forms Skype and
Facebook Messenger. At last, “Networking” can be separated in business like LinkedIn and private social media as Badoo and Tinder. The third circle of the upper half shows the social media that focus on mobile use. Examples are Snapchat and WhatsApp. The bottom half of the circle symbolises the role of social media, general media, commerce, service and technology in a worldwide market. The core of the model is formed by Facebook, Twitter and Google+. The author of the model states that these social media contain all four main characteristics of social media; publishing, sharing, discussing and networking.
As most models can be discussed this model can be discussed as well. The author has not made clear why LinkedIn is not included in the core of the model as well. All four main characteristics described come together in LinkedIn. Respected influencers as Richard Branson, Bill Clinton and Deepak Chopra are actively publishing blogs. Members share information, are discussing in network groups and networking by creating a list of connections.
The selected social media platforms for this research are Facebook, Twitter and LinkedIn. These platforms have been selected as they all integrate the four main characteristics of social media but differ on purpose. In the next chapters the social media platforms will be described followed by an explanation of the differences in purpose and the possible consequences of these differences.
3.1.2 Facebook
Facebook was founded in the United States in 2004 by Mark Zuckerberg. His mission was “to give people the power to share and make the world more open and connected”. According to Facebook ten years after the launch the number of monthly
active users were 1.28 billion as of December 2013 an increase of 15% year-over-year of whom the number of dailyactive users were 757 million, an increase of 21% year-over-year (Facebook, 2014). Revenues of Facebook in 2013 amounted to $7,872 million. The revenues consisted for approximately ninety percent of advertising and ten percent of payments and other fees (Facebook, 2014). These numbers reflect the importance of Facebook for brands. In 2008 Facebook launched a Dutch version of its platform. In 2014 the number of monthly active users were 8.9 million 2014 and the number of daily active users were 6.1 million (Newcom, 2014).
Facebook is primarily used to stay in contact with relatives, friends and acquaintances (Lampe, Ellison & Steinfield, 2006). Most connections, Facebook calls them friends, are met in real life before adding them online, this in difference with most other social network sites (Ross et al., 2006). Users can share opinions, join groups, hold events and participate in contests. Facebook has been under large attention for its privacy policy in mass media and in research. Privacy settings have been changed over time. For example in 2007 when Facebook shared product preferences of users with advertisers it had to change the automatic privacy settings because the users did not accept this kind of use of their information (HBR, October 2008). Comparative issues did not happen for Twitter or LinkedIn which illustrates the difference of the use of the platforms.
3.1.3 Twitter
Twitter is a social networking and microblogging service which was created in 2006 in the United States. Twitter was originally conceived as a mobile status update service. An easy way to keep in touch with people in your life by sending and receiving
short, frequent answers to one question, “What are you doing?” Over time the use of Twitter changed to “What is happening”. Besides sharing what they are doing users share what is bothering them, breaking news, knowledge, events and ask questions to known or unknown users. Messages are called tweets and have a strict limit of 140 characters per post. Tweets are publicly visible by default, but senders can restrict message delivery to just their followers.Retweeting is when a tweet is forwarded via Twitter by users. Both tweets and retweets can be tracked to see which ones are most popular. When you choose to follow another Twitter user you are called a follower. In difference with Facebook and LinkedIn it is possible to be followed by another user and not to follow back. The tweets of followed users appear in reverse chronological order on your main Twitter page.Kwak, Lee, Park and Moon (2010) did research on the use of Twitter. Based on the average path-length of a tweet they concluded that Twitter, besides being a social network, acts the role of news medium.
In 2014 the number of monthly active users in The Netherlands were 8.9 million 2014 and the number of daily active users were 6.1 million (Newcom, 2014).
3.1.4 LinkedIn
LinkedIn is a business-orientated social networking site launched in 2003 in the United States. It focusses on professionals, users connect primarily with people from their business network. On LinkedIn a contact network is built up consisting of direct connections, the connections of each of their connections (called second-degree connections) and also the connections of second-degree connections (called third-degree connections). The idea behind these different levels of connections is that users can ask connections to introduce them to someone from their network they want to know. On
LinkedIn the shared information is primarily business-related. A LinkedIn page is relatively static. Sites of friends are not frequently visited (Skeels & Grudin, 2009). LinkedIn also supports the formation of interest groups. Interest groups may focus on topic, region or for example employees of a specific company. Groups offer the ability to reach a wider (and targeted) audience then the users’ private connections. In 2014 the number of monthly active users in The Netherlands were 4.1 million and the number of daily active users were 0.3 million (Newcom, 2014).
The role of LinkedIn in recruitment has become an important aspect. Many companies use LinkedIn to communicate their job openings, recruiters use it as a search engine to recruit candidates and private persons to find new career possibilities. The style of communication on LinkedIn is more formal and less impulsive (Magno et al., 2012).
3.1.5 Implications of differences between platforms
The differences between the three platforms, Facebook, Twitter and LinkedIn presume that a differentiated strategy for these platforms is required. On Facebook users have the most extensive profile, users actively show to friends and relatives what they like and dislike and join groups. For consumers Facebook is a private profile. On LinkedIn users have a professional profile like a curriculum vitae. Activities on this platform are related to profession or business and the connection with other users is primarily pragmatic. For consumers LinkedIn is a professional profile. On Twitter users have the least extensive profile. In contrast to Facebook and LinkedIn it is common that the profile name of the user is not the first and the last name of the user but a nickname. Twitter is faster and with the strict limit of characters most suitable for news. Another contrast with Facebook and LinkedIn is that the basic settings allow to follow others users without prior permission. A Twitter account can be seen as a public profile. Figure 2a visualizes the psychological distance between the user and the platform based on the core purpose of the platform.
The distinction between a private, professional and public profile requires a differentiated strategy for content. The nature of the content should be consistent with the nature of the user activities on the platform. On Facebook the nature of the activities is private which indicates that the content should be directed to the consumer as a private person. On LinkedIn the nature of the activities is professional. This will ask for information that is relevant for the professional activities of the connections of the brand. Twitter is a public profile primarily used for reading and distributing news. For Twitter it is not possible to make a distinction if followers have private or professional intentions to follow the brand. Therefor it is not necessary to make a distinction in content relevant for private of professional activities. Followers make their own selection for what is relevant and ignore what is not relevant. The news can be seen as public information. Twitter as a platform is fast by nature, and this requires that the communicated content should be focussed on news relevant for that particular moment in time.
The distinction between a private, professional and public platform requires a differentiated strategy for proactive behaviour as well. On all platforms users can send public messages which directly or indirectly have a connection with the brand. This can be positive or negative word of mouth but can also be messages which create a sales opportunity for the brand. Specialized software to identify relevant tweets for brands is already available and used by most large brands, which is not yet the case for Facebook or LinkedIn.
As Facebook is a private profile brands should be cautious with proactive behaviour on this platform as they might enter personal environment too much.
LinkedIn as a professional profile is further away of the personal environment of the user. This offers better opportunities for retail banks for proactive behaviour. Based on the professional use of the platform it is assumed that consumers expect that proactive behaviour by the retail bank will be limited to professional related subjects.
On Twitter as a public profile users are used to the fact that people they don’t know can respond to their tweets. Proactive behaviour of other users including retail banks is accepted. Figure 2b visualizes the expected acceptance of proactive behaviour.
Figure 2b: Expected acceptation of proactive behaviour on Social Media by Retail Banks
3.2 Branding
Brand loyalty is one of the central themes of researchers in the field of marketing and is one of the four dimensions of brand equity and a driver for price premiums and market share (Aaker, 1996). In this paragraph, a further explanation of brand loyalty is provided, followed by the role of social media marketing herein.
3.2.1 Brand Loyalty
Price premiums; how much extra is a consumer willing to pay extra for the brands’ product compared to competitors’ products, and satisfaction are loyalty measures (Aaker, 1996). Chaudhuri and Holbrook (2001) examined two aspects of brand loyalty; purchase loyalty and attitudinal loyalty. According to their study purchase loyalty leads to higher market share and attitudinal loyalty leads to price premium. Reicheld (2003) states that loyalty is the ultimate key to success and there’s only one question to find out if a consumer is loyal “would you recommend us to a friend?” The effectiveness of the Net Promoter Score (NPS) introduced by Reichheld (2003) as a predictor for company performance is questioned by researchers like East, Hammond and Lomax (2008). These researchers made a distinction between positive and negative word of mouth and the impact on purchase behaviour. One of the findings of their research was that respondents resist NWOM on brands they already prefer, and resist PWOM on brands they dislike.
Oliver (1999) researched the connection between satisfaction and customer loyalty. He concluded that satisfaction and customer loyalty are often linked but although the majority of loyal consumers are typically satisfied, satisfaction is not always translated into loyalty. For some firms satisfaction would be the only feasible goal to strive for. In his research Oliver (1999) describes four stages of loyalty development; cognitive, affective, conative and action. Four loyalty strategies for brands are introduced. The strategies are based on two dimensions; individual fortitude and community/social support. Both dimensions have two possible values: high or low. When both dimensions are valued as high, immersed self-identity will arise; the highest
possible form of loyalty. Engaged consumers would exhibit enhanced consumer loyalty, satisfaction, empowerment, connection, emotional bonding, trust and commitment (Brodie, Ilic, Juric & Hollebeek, 2011).
Bloemer, De Ruyter and Peeters (1998) investigated the drivers of bank loyalty; image, perceived service quality and satisfaction. They concluded that image is indirectly related to bank loyalty via perceived quality. Service quality is a main driver for satisfaction which is both directly and indirectly related to bank loyalty. Beerli, Martin and Quintana (2004) state that in bank loyalty the outcome is more the result of a cognitive process than an affective process. Floh and Treiblmaier (2006) did research about the drivers of loyalty in e-banking. They conclude that loyalty of e-banking customers is directly affected by satisfaction and trust in an online bank. Service quality was a determinant factor.
Since this research social media have become an important part of consumers’ lives. Brands followed their consumers and became active in social media as well. Little is known how the activity of brands on social media can contribute to the loyalty of consumers. According to the results of the research of Floh and Treiblmaier (2006) and Bloemer et al. (1998) it is expected that consumers will value service the most of retail banks’ activities on social media, which fits with the findings of Beerli et al. (2004) that in banking loyalty is more the result of cognitive process than an affective process.
3.2.2 Social Media Marketing
Social media marketing is marketing that focusses on people instead of on products (Diamond, 2008). The products or services can be presented with all qualitative features and promotional tools, but what matters is how consumers think and
feel about the brand. On social media not only the brand but also the consumers provide the content. Consumers leave comments, appreciations, recommendations and reviews. This aspect makes social media marketing challenging for marketers. A growing part of content is not in control of marketing anymore. Social media brings brands and consumers closer which can have both positive and negative effects. Consumers can promote a brand by showing their friends they like your brand. A negative experience can be spread by negative word-of-mouth worldwide in a few minutes. The explosion of messages on social media are influencing many aspects of consumer behaviour such as awareness, consideration, information gathering, opinions, attitudes, purchasing decisions and post-purchase evaluation. Marketers need to recognize the power and critical nature of the conversations being held by consumers on social media. The main quality needed by the marketing team is the ability of influencing the crowd effectively (Evans, 2008)
Previous research on branding related to social media focused on the possibilities of social media. Which social media are available and what are their characteristics? (Kaplan & Haenlein, 2010). Kietzmann, Hermkens, McCarthy and Silvestre (2011) introduced building blocks how to use different elements of social media. Negative consequences of the phenomena social media are enlightened as well. Where consumers used to share negative experiences with friends and relatives they are now sharing this with the public through social media (Ward & Ostrom, 2006). Brand communities are an often used instrument. These brand communities can be hosted by the brand or by their fans.
Research about the role of social media in de consumer decision process has been done in the online travel information search (Xiang & Gretzel, 2010). In this industry consumers are the primary source for information instead of the industry itself since the mass-adoption of social media. The use of social media by particular brands is investigated as well. One example is Starbucks and their customer dialog management (Gallaugher & Ransbotham, 2010). Other researchers focus on the return on investment side of social media activities by brands.
Schau, Muñiz Jr. and Arnould (2009) investigated how online brand communities can contribute to create value to the brand. This research introduces twelve practices that brands can adopt. Although nine different brand communities representing brands in different industries were included, financial services were not represented. One aspect all brands had in common was that they all deliver tangible products and services. Some of these products reflect a lifestyle users have in common, like owners or admirers of the Mini Cooper or players of Xena, The Princess Warrior. This arises the question if these practices are adoptable to brands who deliver intangible products and services.
Kietzmann et al. (2011) examines seven building blocks for social media: identity, conversations, sharing, presence, relationships, reputation, and groups. Two implications of the sharing block for firms are the need to evaluate what objects of sociality connects its users, or to identify new objects which can connect them.
“The first is the need to evaluate what objects of sociality their users have in
these objects, a sharing network will be primarily about connections between people but without anything connecting them together.” (Kietzmann et al., 2011)
Based on these findings it is expected that retail banks who serve a broad range of consumers should create different brand sites for different target groups in order to be able to build a community.
The ability to create engagement by the use of social media has been researched by Vorvoreanu (2009) among students. Students become fan of a brand on Facebook out of self-presentation. It is seen as a way to show others who they are. As Facebook is seen as a personal space students showed no interest in engaging with large brands on Facebook.Facebook relationships between themselves and large brands are seen as not possible or not desirable. Although students understand that the purpose of the brands is to maintain loyal customers Facebook is not seen as the right place for it. In contradiction to large brands students embrace small companies out of a personal relationship with the owner and non-profits.
3.3 Retail Banking
This paragraph starts with a description of what Retail Banking entails, followed by an overview of Retail Banking in the Netherlands and their presence on social media. The final part of this chapter consists of a comprehensive analysis of retail banks’ activities on the investigated social media platforms.
3.3.1 Definition
Retail banking is a term in banking used to describe a customer segment. The definition of retail bank is interpreted in different ways in theory and practice. A general
valid definition is not available (Müller & Jöhnk, 2005). A common used practical definition is formulated by Tschoegl (1987) “Retail Banking is the offering of banking and other financial services to individuals and Small and Medium Sized Enterprises.” By this definition and in practice Retail Banking is responsible for service and sales to the majority of the customers of a bank. To be able to do this in an efficient way the offered services and products are homogeneous and need little explanation (Swoboda, 2001).
3.3.2 Retail banking in The Netherlands
In The Netherlands the banking sector is large. The Total Assets of the banking sector to GBP ratio is above four. The sectors offers more than 100.000 jobs and among the top ten of employers three banks are listed. As visualized in Figure 3 the Dutch banking sector is highly concentrated. The market is dominated by four banks (ING, Rabobank, ABN Amro and SNS Bank) who together are responsible for 97% of all assets. Briefly the four largest banks will be described.
Figure 1. Representation of the Dutch banking sector. Reprinted from Nederlandse bankensector (2012) by Banken.NL. Copyright 2012 by Banken.NL.
Retrieved from http://www.banken.nl/bankensector/bankensector-nederland/
ABN Amro is a Dutch state-owned bank re-established in 2009. After the acquisition and break-up of the original ABN Amro by a consortium of banks (Royal Bank of Scotland, Banco Santander and Fortis) followed the collapse of Fortis. Fortis who acquired the Dutch banking activities was nationalized by the Dutch Government together with Fortis Bank Netherlands. The two brands were merged and in 2010 the brand Fortis was dropped.
ING Bank
Founded in 1991 as a merger of the banking business of NMB Postbank and the insurance business of Nationale Nederlanden. In 2008 ING took a capital injection from the Dutch Government as part of the financial crisis. As a condition of the state aid the European Union demanded changes in company structure and divesture of businesses. The insurance businesses are separated from its banking businesses through two IPO’s.
Rabobank
Rabobank was formed in 1972 by a merger of the Raifeissen Bank and the Boerenleenbank (farmers’ bank). Rabobank is set up as a federation of local credit unions. The unions are shareholder of the central organization.
SNS Bank
debt the financial crisis had large impact on SNS Bank. In 2013 the bank was nationalized by the Dutch government to rescue it from failure. The banking, insurance and property division are split up in separate entities after nationalization.
3.3.3 Presence of Dutch Retail Banks on Social Media
The four largest retail banks in The Netherlands are all active on the platforms Facebook, Twitter, LinkedIn, Google+ and YouTube. Recently ABN Amro started a profile on Pinterest and ING on Instagram. Rabobank and SNS Bank both operate a brand community on a separated platform. Participation is reserved to customers only. At SNS Bank customers can apply themselves, where at Rabobank an invitation by the bank is needed. The purpose of both communities is to improve products and processes of the bank. This research is limited to the use of Facebook, Twitter and Linkedin. Tables 2, 3 and 4 present the number of connections of the investigated retail banks on the selected social media platform is presented. For Facebook and Twitter the ranking number of the brand in the sector financial services based on number of connections is included. A ranking for LinkedIn based on the same criteria is not available.
Table 2. Amount of fans on Facebook.
Reprinted fromFacebook stats in Netherlands – Finance (2015) by Socialbakers. Copyright 2015 by Socialbakers. Retrieved from http://www.socialbakers.com/facebook-pages/brands/country/netherlands/tag.finance/
Reprinted from Twitter statistics in Netherlands – Finance (2015) by Socialbakers. Copyright 2015 by Socialbakers. Retrieved from
http://www.socialbakers.com/statistics/twitter/profiles/netherlands/brands/finance/
Table 4: Amount of connections on LinkedIn.
Retail bank Number of connections
ABN Amro 129.810
Rabobank 108.829
ING Bank 67.532
SNS Bank 6.724
Number of connections Retail Banks in The Netherlands on LinkedIn. Retrieved from http://www.linkedin.com. 18-01-2015
3.3.4 Analysis of social media postings
In the following paragraphs the results of the analysis of the social media postings by the investigated retail banks will be presented. An analysis of frequency of postings has been made in paragraph 3.3.4.1, in order to show the level of activity of the retail banks on social media. This will be followed by an analysis of the direction of the postings in paragraph 3.3.4.2. This will clarify to what extent retail banks adapt the direction of the postings to the main audience of the social media platform. The last step of the analysis process is an analysis of content per platform, as explained in the last paragraph.
3.3.4.1 Analysis on frequency of postings
As shown in table 5, the number of posts varies greatly by brand even as the distribution of the posts over the different platforms.
Table 5: Number of post per platform in one month
With exception of SNS Bank, all brands post the most on Twitter. SNS Bank posts the most frequent on LinkedIn. Facebook is the second most used platform for both ABN Amro and ING. LinkedIn is the second most used for Rabobank where Twitter is second for SNS Bank.
3.3.4.2 Analysis on direction of postings
Regarding content there are differences per brand and platform. Two types of differences have been analysed: the direction of the posting and the type of content. First the direction of the posting will be explained and analysed. After that, the explanation and analyse of the type of content will follow. For both analyses the equitation has been made on the posts over a period of one month. In case a bank has posted less than 20 posts on a platform an expansion of posts has been made to this number. This expansion has been made in order to provide a representative view of the brands’ posts on a platform. It was not possible to make this expansion for posts of SNS Bank on LinkedIn as only the last eight posts were visible.
By direction of a post is meant to whom a post has been placed. A distinction has been made on individuals in private, individuals as a professional and when it was
Face book Twitt er Linke dIn ABN Amro 30 34 13 ING Bank 23 31 12 Rabobank 9 31 19 SNS Bank 2 4 8
not possible to distract this from the content a post was classified as directed to the public in general.This distinction has been made in order to see if the direction of the posts meet the nature of the platform. An overview of the classification of the posts is provided in Appendix 9. Figure 4 visualizes the distribution of the postings over the directions by retail bank on the investigated social media platforms.
Figure 2: Analysis of postings on direction per platform
As shown in Figure 4, Facebook is mostly used to post messages directed to individuals in private by ABN Amro (24 out of 30), ING Bank (16 out of 23) and SNS Bank (14 out of 20). Posts of Rabobank were mostly directed to the public in general (9 out of 20) followed by posts directed to individuals in private (7 out 20). The publication of the half annual results of Rabobank and the large number of failures in internet banking may have been of influence. Posts directed to professionals have only been done by Rabobank (4 out of 20).
Twitter is primarily used for posts directed to the public in general by ING Bank (15 out of 30), Rabobank (16 out of 31) and SNS Bank (16 out of 20). Only ABN Amro mostly posts are directed to individuals in private by ABN Amro (28 out of 34). Further it is noticed that Rabobank has posted content directed to professionals eleven times and ING one time. ABN Amro and SNS Bank did not post content directed to professionals at all.
On LinkedIn ABN Amro (12 out of 20 posts) and ING Bank (9 out of 20) seem to focus on individuals in private. In contrast no posts by Rabobank on LinkedIn are
specifically directed to individuals in private. Rabobank (16 out of 20 posts) and SNS Bank (8 out of 8) focus on professionals.
3.3.4.3 Analysis on type of content
The final step of analyse of the postings was to classify on type of postings. This step has been made in order to assess to what extent the content meets the expectations of the consumers in the findings chapter of this research.
Identified categories are service (for example information about failures on internet banking), product information (for example new features), related information (for example information about taxes or background information), corporate information (for example annual reports), Corporate Branding (for example CSR activities) and entertainment (for example best wishes for public holidays).
Figure 3: Distribution type of content on Facebook
As visualized in figure 5, half of the content posted on Facebook by ABN Amro can be classified as related information. Content which provides background information about products or helps to make financial decisions. ING Bank in
contradiction posted no related information. Posts containing entertainment and posts containing corporate branding messages both counted for 39% of all their posts. The posts of Rabobank on Facebook can be classified as entertainment for 35% and for 30% as service messages. SNS Bank is the only bank that has not posted product information. Service information counts for 45% followed by entertainment for 40%.
Figure 4: Distribution type of content on Twitter
On Twitter (visualised in figure 6) the content posted by ABN Amro is fairly comparable to their content posted on Facebook. ING Bank is the only bank that did not post product info. On Twitter 19% of their content is related info. The content of Rabobank seems to focus on corporate branding (42%). For SNS Bank Twitter is primarily for posting service information (80%).
Figure 7: Distribution type of content on LinkedIn
On LinkedIn (figure 7) SNS Bank has only posted vacancies on its’ timeline. All three other banks place vacancies on LinkedIn on a secondary tab of their profile. On LinkedIn 60% of all content by ABN Amro is related information. ING (15%) and Rabobank (35%) have posted related information as well, but their posts are more diversified as both ING and Rabobank also posted product information (both 5%) and entertainment (ING 35%, Rabobank 10%).
3.3.4.4 Summary of analyses
Several differences have been found on all three subjects. First, the frequency of postings vary from 77 per month (ABN Amro) to 14 per month (SNS Bank). In the distribution of the postings over the platforms stands out that Twitter is the most used platform, except for SNS Bank which is most active on LinkedIn.
Secondly, differences in the directions of postings were found. Except for Rabobank there are no postings directed to professionals on Facebook. On Twitter there are no postings directed to professionals by ABN Amro and SNS Bank. Although LinkedIn is a platform for professionals the majority of postings (12 out of 20) by ABN Amro is directed to consumers in private.
At last, the analysis of the content shows notable differences as well. On Facebook entertainment is a frequently used type of content (35%-40%) for all banks except for ABN Amro (7%). Only ING Bank uses Facebook for corporate branding content (39%). On Twitter SNS Bank focusses on service (80%) where ING Bank and Rabobank both 42% of postings contained corporate branding. ABN Amro (50%) focusses on related information on Twitter. This is interesting because Twitter is a fast medium and related information is often more background information. Background information is less time critical and asks for more effort by the receiver as it often contains links to external information. The postings on LinkedIn by ING Bank contains entertainment for 35%. This is interesting as LinkedIn is platform for professionals. On all platforms the number of postings containing product information is low and varies from 0%-9%. Social media managers might think that it is not appropriated to send product information on social media as the medium is not meant to sell products.
These findings will be further discussed in chapter 6, along with the findings of the interviews with the consumers and experts in the next chapters. The next chapter, consumers, will show how the results of the analyses of the postings fit consumer expectations.
4 Consumers
In this chapter the findings of the interviews with the consumers are presented. This part of the empirical research consists of ten semi-structured interviews with consumers. In the first paragraph, research findings will be discussed in three sections. First, the motivation of participants to connect is explained, followed an analyses of the connections made and the expectations. At last, perceived brand loyalty will be discussed. The second paragraph offers a short summary of the findings.
4.1 Findings
The interview started with questions concerning the role of social media in the life of the interviewee and their motivation to connect on social media with a retail bank. All participants use social media on a daily basis. The use of social media is a part of their personal and professional life. The interviewees are active on all three selected social media platforms. Besides these platforms three users have additional profiles on other platforms, two on Instagram, one on Google+ and one on YouTube. WhatsApp is mentioned by one interviewee and Skype is not mentioned at all, this might indicate that interviewees do not see these platforms as social media.
4.1.1 Motivations
The motivation for interviewees to connect with their retail bank is primarily functional. Six interviewees, when asked about their motivation, mention that they want to stay updated about failures in internet banking. One interviewee connected out of curiosity to stay informed and mentions a personal connection with the brand as she is a member of the counsel of members. One interviewee connected to stay informed about product solutions, while another connected with the bank as she is working as an asset
