Essay: Social networking

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  • Subject area(s): Marketing essays
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  • Published on: July 4, 2019
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  • Social networking
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Due to the fast technology development, many changes in social areas and business life have arisen as a result of increase in internet use and availability. New concepts have been introduced into our life because of these changes. One of these concepts is “social networks”. It is one of the fastest and the most effective way of communication and sharing information. The use of social media has increased significantly in the previous years which led many companies to be more interested in social media Where millions of people can be reached through it. Therefore, they have started to give importance to it. Social media is a great way for customers to learn more about financial institutions and deepen relationships, as I see it like a platform that will decide many of the winners of tomorrow’s connected enterprise. Major aim of this search is to analyze and evaluate the relationship between financial performance and efficient use of social media.

Social networking is the use of internet-based social media programs to communicate with friends, family, customers and clients. they can create their own contact groups and watch videos or monitor posts shared by their contacts in an open or half-open system which is surrounded by rules (Ellison, Steinfield and Lampe, 2007). Kim, Jeong and Lee (2010). Social networking can occur for social purposes, business purposes or both through sites such as YouTube, Facebook, snapchat, Twitter, LinkedIn, and Instagram and so on. In order to meet the components of this definition an application or a website must have users independent from the publisher, have a user generated content, there must be interaction among users and there must not be limitations of time and space (Erkul, 2009). As a result of this, enterprises which intend to increase customer communication and interaction must manage their operations based on internet increasingly. The use of social media makes the communication between organizations and stakeholders easier. In providing this communication, social media platform has a faster and more effective position, and it is cost efficient (Schniederjans, Cao and Schniederjans, 2013).

financial sector uses social networks to improve their client engagement, management initiatives and business processes( Morales,2012 ). For financial service providers (FSPs) it would be more benefit to integrate social with existing customer relationship management programs (Social CRM) to leverage the “big data” available in social engagement. in the Finance Industry applying Social networks is the understand of customer experience which is very important to analyze how social media is actually being applied in Social Marketing, Social CRM and the financial sector ( Morales,2012 ). financial institutions must define the purpose of using social media , is it for brand recognition, reputation management, or connecting with consumers? Approve business-related content before it is posted on social media, employees training and user groups Identified to post, and define approved channels. Involve various departments – Sales and Marketing, IT, or HR – to do policies, and ensure that the use of social media is within limits In order to adopt social media strategy and to prevent social media risks.

Social marketing: Using social tactics, media, tools, and technologies across all components of the marketing mix: product, price, promotion, placement. Social CRM: Expanding CRM systems from optimized customer-facing transactional processes to include simultaneous interactions and conversations that customers have among them; in order to improve business processes and supporting technologies in: targeting, acquiring, retaining, understanding, listening to, and collaborating with customers. ( Morales, 2012 ) Sales, product development, account managers, all the way up to senior executives would be able to use data mined from social CRM to increase market understanding and incrementally speed up decision making. Therefore, financial service providers must moving to the use of Social CRM to have a deeper, measurable impact on undermost-lines ( Morales,2012 ). Social Marketing and Social CRM both share similar Key Performance Indicators (KPIs) though Social CRM KPIs are by nature more the benefits of social marketing are more difficult to monetize. Customer-oriented and often more Given that social marketing actions can hardly be measured by tangible to measure than those of direct ROI ( Morales,2012 ).

social media has also given light to a whole new way of conducting business in and financial services. New business models Use Cases P2P lending / financing Creating a platform that both lenders and creditors can access to post and select their needs and find suitable matches will reduce the need and cost of intermediation when investing in or acquiring unsecured personal loans. Mainly run as non-bank Financial Social Networks (FSN) platforms, they are replacing banks in certain niche areas that will grow in size Creating a P2P lending platform that and importance, and therefore must be tracked closely ( Morales,2012).

Financial Performance and Social Media
it might be said that social media use is focused on researching and developing, marketing and selling (Hoffman and Novak, 1996; Neti, 2011), customer services (Schultz and Peltier, 2013), human resources (Hauptmann and Steger, 2013; Slovenskyand Ross, 2012) in regard to enterprises. Furthermore, it is seen that finance and financial relationships are not included and they are ignored in domains where social media is employed. In fact, today, an infrastructure which would provide a contact between enterprises and investors, and which would attract small investors to the enterprise might be presented through social media (Ozmen and Villi, 2014). many investors discuss stock purchasing and their portfolios on social networks, a number of niche communities dedicated specifically to money and monetary concerns have sprung up in recent years. financial performance indicators were used to determine the relationship between financial performance and social media. The Financial Performance indicators are chosen as following and hypotheses are developed in accordance with them. (A, & A, 2016) Net Profit: The profit which is calculated by subtracting all expenses related to an operation from the revenue obtained by enterprises (Harrison and Horngren, 2008). Net Profit averages of the enterprises having social media relations are different from those which do not have.
Net Sales: It is the value obtained by subtracting sales discounts and returns from gross sales (Porter and Norton,2010). Net Sales averages of the enterprises having social media relations are different from those which do not have. Market Value: It is the value obtained by multiplying the number of stock shares that an enterprise owns by the value of one share (Waren, Reeve and Duchac, 2014). Market value averages of the enterprises having social media relations are different from those which do not have. Price/Earnings Ratio: it can be calculated dividing share price by net profit per share (Ozmen and Villi, 2014). Price/earnings ratio averages of the enterprises having social media relations are different from those which do not have.
Market Value/Book Value: It is calculated by dividing share price of an enterprise by book value per share (Weygandt, Kimmel and Kieso, 2014). Market value/book value averages of the enterprises having social media relations are different from those which do not have.
Market Value/Net Sales: It is value which is obtained by dividing firm value which is the total of all debt and claims of an enterprise by net sales of the current period (Harrison and Horngren, 2008). Firm value/net sales averages of the enterprises having social media relations are different from those which do not have.

net profit averages of the enterprises having social media relations are higher in comparison with those not having social media activities, in addition to the fast and effective of social media usage, when the number of people reachable by means of social media is considered, it is among the most effective communication platforms of recent times. Particularly, enterprises have recently been showing an interest in social networks as they are cost efficient, along with other qualities of social media. Enterprises generally prefer using social media for several purposes.

Consumer Use of Social Media is Still Growing with their ability to influence corporate behavior and impact business planning in unanticipated way. therefore, it has become the need of the hour for financial services organizations to set a policy concerning social media. Getting it wrong could mean significant reputational damage, (V, K,2014) ignoring it could mean being left behind. understanding what customers feel, think and say about company is very critical. Financial services companies need to harness the great power of social media in order to enhance customer service, manage their reputation and obtain a competitive advantage. Social media makes information attainable, it humanizes customer service, brings businesses closer to their stakeholders. Financial institutions will have to address the diverse needs of their customers in order to provide various financial services, while preserving the trust and security of the customers.
Social media describes the customers preferences and opinions. the endless amount of available data allows the crafting of customer profiles with a level of detail. for example, the availability of advanced analytics, abundance compute power and cheap storage, advanced search and scanning capabilities will allow a bank to offer not generalized but truly customized offers to their customers. Successful financial institutions will be able to take customer delight and satisfaction to new levels. customers can do most of their banking online and even though mobile devices. The financial services sector uses social media platforms to create the value that was once found physically in local branches. For example, through their Facebook page, a bank may post a snapshot of one of their employees with a brief blurb about his/her job duties and values. This strategy replicates the human to human interaction a customer would receive at a local branch and humanizes larger financial institutes.
The financial institutions need to communicate to people in the language they understand. Customers use social media to buy organizations offerings and at the same time they try to comment and seek recommendations on company products and services. they also can post complain or problem and the financial institutions can solve the same through social media. This will help the financial institutions in retaining the business and creating a brand for themselves social media presents unparalleled opportunity, in requite customers for desired behavior, such as bringing friends to a bank branch or becoming a loyal customer, and in develop brand awarenessIt also it helps with predilections, past buying behaviours and tastes ( Morales,2012 ).

Conclusion
Financial services companies are focused on increasing the integration of their products with established social networks. The ever-growing influence of social media on consumer behavior presents companies with opportunities and risks while the massive amount of content enables the identification of previously unknown patterns, preferences and trends. To put it simply, using social media analytics to inform business strategy is just good business. Social media offers significant upside in terms of customer/employee engagement and feedback and can be utilized to reinforce relationships with internal and external stakeholders. Social media has affected the financial services sector by allowing for a global reach, improving customer service, advancing marketing strategies, and even creating new products and services offered to customers. Financial institutions are able to beat geographical difficulties and reach customers globally by connecting with their customers by using social network. Being an integral part of everyday life, social media and technology have also led to the development of a new industry, financial technology (fintech).

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