It’ll come as no great shock to those that know me that my intimate knowledge of FCA rules that apply to UK based insurance brokers is fairly sketchy.
That said, over coffee and Biscotti with a good friend of mine recently who is ‘in the know’ on such matters, he mentioned that insurance brokers, as regulated businesses, are required to maintain a business ‘risk register’.
This information made me think about how this might apply in the context of Social Media and as I began writing, it dawned on me that the thrust of what I was writing could equally apply to any reasonably sized business using Social Media.
Notwithstanding the best practice regulatory stuff, Marketers should as part of their marketing planning be factoring in and identifying the risks as part of a PESTLE analysis. Anyway that’s enough of the waffle, here’s the meat and gravy of my blog…
Assess the financial risks of Social Media…
It’s great to see that the social media penny has well and truly dropped in Insurance-land. All those evangelists, and yes I have to admit to being one of them, are no longer looked at as being quite so left of field and bonkers. Heavens, CEO’s in the industry are regularly taking to lecterns and actually talking about it and espousing its use, whatever next?
So there we have it - Social Media is now cool in insurance, God is in his firmament, England are going to win the World Cup in the summer and everything is right with the world, isn’t it?
Well actually, no it’s not. In the melee and scramble that has ensued since Social Media became de rigueur in insurance, I suspect that some business basics have been forgotten in and around the thorny subject of risk assessment and good governance.
Now the type of risks I’m talking about here are not the risks that the Social Media naysayers have historically used as the excuse for not giving the channel a ‘go’, namely reputation and lack of message control, etc. The risks I’m talking about here are the Commercial Business Risks. Let me give you an example:
You own a company that has spent time, effort and energy (hard cash) investing and building a footprint in various Social Media channels with a view to enticing companies/people into the top of your sales funnel. After much effort and resource it’s finally beginning to work and deliver results and then from out of the blue BANG:
- A government in a marketplace/territory your Social Media activity is focused on pulls the plug on one or all of your Social Media channels. Seems far-fetched? Just look at the recent example of the Turkish government’s handling of Twitter and YouTube. Could that happen in an EU country? If so, what are the commercial risks for brands operating in those territories?
- Your Social Media channel changes the way it works or operates and takes away some features. Social Media channels are making modifications to their platforms all the time. Some are publicised, some are not. Were one of these changes to prove seismic, what financial damage could it do?
The plain and simple fact is that a business doesn't actually own the Social Media platforms that they may have sunk gazillions into developing a presence on. In most cases, they are merely content providers that help the channels work. The trade-off for their participation is that in most cases their usage, apart from the amazing amount of data that they give up and the credibility they give to the channel, is free.
The Social Media channels themselves own their platforms lock, stock and barrel and as many of them are listed businesses, their first duty is to turn a profit for their shareholders.
Good corporate governance would suggest that this fact is something that should be assessed and considered in the risk register of any business, particularly if the business has become reliant on a channel as part of its marketing mix.
Key takeaway – Social Media can be great and if it becomes as good as you hope it will be or perhaps you are already there, you should assess the risks and vulnerabilities to your business if the platforms you use change or withdraw the way your business interacts with it
Social Media should be an essential part of most insurance brokers marketing mix. If you are successful at it and can start to link it to ROI, then it’s probably just as well to assess and measure the impact of a particular channel no longer being open to you.