Mark Huxley speaks to Post Magazine about Social Networking

As social media begins to shake off the stigma of being little more than a means to wile away time, Amy Ellis investigates whether, as some predict, 2010 will be the year this new medium becomes a quantifiable marketing tool. Referring to social networking and business in the same sentence can generate an air of distaste, with some seeing the former as merely a timewasting tool and many businesses blocking employee access to such sites during working hours.

Research into social media in financial services undertaken by Datamonitor in December 2009 revealed Facebook as the number one social networking site in 100 out of 127 countries. And figures from last July indicated that, while Facebook still dominates as a means of sharing content, Twitter is already about half as popular.

In the light of such numbers, it is not surprising that social networking is slowly losing its 'dirty word' status in the business arena. Companies are beginning to explore how social networking can strengthen their reputation, broaden their reach and, perhaps most importantly, grow their sales.

So, are UK brokers beginning to embrace sites such as Facebook, Twitter and Linked In on a commercial basis? Are they looking beyond a heightening of individuals' personal profiles and networking capabilities?

According to Bob Darling, franchise director at Coversure, you would have to be almost a Luddite to completely ignore social networking sites. "If insurance is meant to be a personality and relationship business, then the fact these sites are social means they are an important medium. In my opinion, they haven't really proved themselves as yet, but it doesn't mean they won't, of course," he suggests.

Mark Huxley, director of Lamb Creative Marketing & Consultancy, agrees — citing social networking as being about recognising the fact that insurance is still centred on the personal nature of the relationships you build and how brands have to generate trust, friendship and loyalty. "A broker dealing with an end customer in the very congested space of UK general insurance has got to have something out there to convince the customer why they should stay with them," he insists.

Future uncertainty

Being aware of new communication tools and exploring ways they can help in business should be the starting point for everyone, says Peter Elliot, head of marketing at Bluefin, which has reserved a number of sites in its corporate name but is not currently using them. "You can't ignore these major trends in communication, but at the same time no one can be sure of how they will develop. For instance, I ask myself: whatever happened to Friends Reunited? Like Rubik's Cubes and Sony Walkmans, once upon a time Friends Reunited was all the rage and it was almost impossible to imagine a world without it. That uncertainty surrounding the future of social media needs to be considered."

There may be something even more inherent that is holding brokers back from diving into social networking. As Paul Macbeth, managing director of Macbeth Chartered Insurance Brokers, points out, part of the problem in the insurance world is that it exists in a microcosm that is slow to adopt such developments until forced to.

This certainly seems to resonate with Kwik Fit Financial Services. Lisa McAndrew, e-commerce and marketing manager, says the company does not want to go in feet first and invest, preferring to monitor developments initially. Meanwhile, Matthew Clark, science and technology director at La Playa, points out that he is not aware of any brokers that have used social networks to produce tangible benefits. "They may be out there, but I would have thought it is not always easy to measure," he says.

This has not prevented La Playa from embracing social media and, despite some trepidation, Kwik Fit is also relatively advanced in this arena.

Katie Gouskos, marketing executive at La Playa, says: "Marketing generally is changing. The landscape is shifting and, as a small broker, we can't afford to spend millions on advertising; we are never going to compete in that arena. So social media is a brilliant opportunity for us to demonstrate our expertise, get among the bigger players and take it as a good opportunity, which I think it is."

La Playa is now planning to launch a blog, which it hopes will tie in with the Facebook and Twitter pages it already possesses. "We use Linked In to maintain relationships with other professionals, so hopefully once we have integrated all these forms of online marketing we will really begin to understand the power of social media," Ms Gouskos says.

Mr Clark adds: "We are not expecting social media, or our participation in it, to be some kind of magic bullet that will solve all sorts of problems and market us to our target audience almost cost-free. That would be quite naive.

"It will run alongside the other events we are doing, which include face-to-face networking, as well as the more traditional areas. We still do a bit of direct mailing but, for example, have moved away from mailing a hard-copy newsletter to contacts and instead send that electronically now.

"So, as things change, the traditional activities fragment and people move into more intelligent forms of communication, we will probably expect social media to gradually work more profitably for us, as opposed to the more traditional channels that increasingly won't work."

Finding time to tweet

Ms McAndrew explains that Kwik Fit has had a Twitter account set up for a year and has gained quite a large following considering its less-than-aggressive approach. One of the positives flowing from these sites, from a business perspective, is that they are free to use.

However she points to one cost Kwik Fit has predicted: "The big cost is from a resource perspective; it takes a lot of time setting these up and monitoring them. If you really want to do it properly, then you need to invest in resources and that's where we can see it becoming quite costly.

"So we need to weigh that up against the traditional media where we can see a return in our investment almost straight away. The question for us is whether we want to take resources away from the traditional; at the moment it is about trying to strike the right balance," she considers.

Julian Edwards, director at MCE Insurance, agrees that these sites require time and energy, as well as dedicated resources within existing operations that can manage and understand them. "The first route we have taken with Facebook is all about direct response marketing. Most companies that want to have a reach on Facebook will set themselves up as a fan page and this works incredibly well if you are a lifestyle brand.

"We use it because we are very niche and have a flag-bearer in the form of Big Ed - he has generated a following from the fan page we launched in the last quarter of 2009. But before we push on and try and get some serious numbers involved in terms of a fan base, we are taking time to learn about the medium, because you are trying to interact commercially with people's leisure time," he explains.

"Would we use Big Ed's fan base to pick up the phone and encourage people to take out their bike insurance with him? No. Fundamentally, this would be changing the relationship that you have with people in that media."

Mr Edwards considers that it is not about sales, but rather reaching your target audience in the right way. "When time is precious, you have got to give people something that they actually want to know about. It has got to be relevant; it has got to be two-way communication; and it has got to be frequent," he says.

As far as driving direct sales from socially interacting with people, Mr Edwards says only time will tell. "We haven't put that into our forecast, but it is new. Someone has got to master it somewhere down the line and, in five years' time, the model will have been well documented. That is the beauty of it.

"This is a subject I'm very interested in and do a lot of reading on. And I certainly haven't come across any case studies about how people have significantly increased their revenue from it directly. But I am not saying that is impossible. Unless companies that have invested heavily can see some results, however, they will lose interest and find other distributions," he insists.

Mr Huxley adds: "I don't actually think asking whether social networking is a fad or whether it is here to stay is the right question. These things are here; these are tools that can help businesses to communicate. So the question is: when are you going to embrace those tools to build your networks and communicate?

"If you had asked me a year ago whether people were engaging with this, I would have said absolutely not. Now Linked In is constantly being mentioned: everyone is getting onto it, some are realising what it can do for them as a business, but many others are not quite sure what they are on there for. People are engaging with it, at least in so far as realising there is a community sitting out there that they want to be in touch with.

"My entire career has been about the personal nature of networking, getting to know people and all the things that benefit my business life. That is what Linked In is for me at the moment," he says.

Ms McAndrew explains that most of the followers Kwik Fit currently has on Twitter are journalists, but following other competitors is where the broker is finding benefit. She has thought of a possible drawback with this use of social networking, however. "It will be interesting when we look at this from the customer perspective; that is where we have been holding back. Once we open this up to a lot of customers following us, we will undoubtedly get more people commenting. That could be from a good perspective, giving us positive feedback, but there is also the potential for negative responses if, for example, a customer has an outstanding complaint.

"Obviously, we could also view that as a good opportunity — as a company, we always want to show we are there to actively resolve complaints. But, again, this would require resources and could take up a lot of time because you simply can't predict how many responses you are going to receive."

Another potential downside — one identified by Mr Clark — is the risk of allowing staff to use these networking sites in a way that might be in contrast to the company's brand and image. "Some comments that are 'tweeted' can be unwittingly defamatory and that is a risk we have to acknowledge and blend into our existing electronic communications policies. We have considered this and I believe we are ahead of the game there; people are aware of what they ought to be doing and saying online."

A slow burner

Returning to the issue of generating sales from social networking, Mr Macbeth — whose firm is on Twitter and Linked In, but not Facebook — simply states: "You can't think that by sending out a few tweets, you will get a policy; it doesn't work like that. It is a slow-burning process that you have got to work at and stick with."

But it is not all doom and gloom. What social media can do is reach out to a huge audience, which the average broker would not be able to do otherwise, unless it is a huge firm or one prepared to spend a lot of money. According to Mr Macbeth: "That is where the potential lies — in the number of people you can connect with and the number of people you can start to build some form of relationship with online.

"We use social media to enhance our brand and raise our profile and reputation. In my view, the key to it lies in becoming a trusted source of information and advice. If you are just going to go on and try and sell things, it isn't going to work. Insurance isn't sexy enough to do that. It should be about building yourself up as a credible source of information.

"In the current climate, particularly, brokers should be doing everything they can to try and raise their profile," he adds.

Mr Edwards concludes that, in terms of target advertising, social networking has so far failed to prove itself. "So much hype has been spoken about it over the years; companies have invested time and resources in trying to understand it and the result has been minimal as commercial entities," he asserts. "But I really believe that 2010 will be the year that social media either makes it or breaks it in terms of media spend and marketing distribution."

First published in Post Magazine 06 Apr 2010