Advisor Success in Social MediaReturn on Influence and Managing Client

Relationships with Social Networking

Advisor Success in Social MediaReturn on Influence and Managing Client

Relationships with Social Networking

By: Mark Cohen – Assistant Vice President, Digital

Media, Cambridge Investment Research, Inc. and

Victor Gaxiola – Social Media Strategist, Gaxiola

Financial Group

As an advisor, it’s impossible not to get caught

up in the hype and promise surrounding

social media. “Ignore it at your peril” proclaim the

pundits. “Don’t do it” is the response from many

compliance officers. Where are you along this

continuum? Are you working in a broker-dealer

environment that has enabled exploration through

use of a regulatory compliant social media solution,

or are you forced to sit on the sidelines?

Even with a compliant solution in place,

many advisors are searching for answers prior to

getting started with social media. Questions abound

regarding social media, ranging from assessing the

value of the medium to determining how to best

achieve results. And the current attention to social

media is reminiscent of the early days of websites

that trace back to the early digital media of the

mid-1990s.

In those early days of digital media, we grappled

with a very similar environment. The value of

websites was questioned and regulatory treatment

applied existing rules to the new media – much like

the experience we see today with social media. We

think we can take pointers from the past experience

with websites and develop a practical, compliant

approach to use of social media. We think a practical

approach is not only based on the classic ROI

(Return On Investment) but includes a view on

Return On Influence, or ROinf1.

The concept of influence as a governor of

business is as old as business itself. Before the advent

of “big brands” and marketing focused on engaging

people with the brand, people were generally

compelled to do business with the people they knew.

People were brands. Personal brands were built

on trust, value, and reciprocity and these personal

brands were based on the strength of relationships

and were highly referable. Sound familiar? Our

assertion here is that the traditional relationship

approach is the way you, the trusted advisor,

conduct business today and reflects the manner in

which you have become influential with your clients.

But we believe social media offers options to be

more efficient and effective in engaging directly with

your clients.

The concept of ROinf is not new either;

however, the application to social media in

connection with an advisor’s business and client

engagement is new. In order to properly consider

1 The notion of Return On Influence has been around for some time and numerous views are publicly available. The authors of this thought paper are also students on the topic and have formulated their own ideas regarding Return on Influence and its application to social media.

influence we must first define it. It is our contention that influence

is based on five factors:

• Trust

• Value

• Engagement

• Reciprocity

• Advocacy

Simply put, the more an advisor has of each of these five

factors, the greater the odds of achieving a positive ROinf. Let’s

consider each factor more fully as to what it means for you and your

business:

Trust – an advisor's personal brand is crucial to gaining

influence. If you are reading this whitepaper, chances are that

you have a strong personal brand based on trust established after

numerous personal interactions. These interactions and the trust

garnered from them have paved the path to influence. Today

advisors also have to engender trust online as a requirement

to build a viable social network. This trust stems from offline

influence and will need additional care to extend it to the creation

of online influence. Being genuine, establishing your credibility,

and respecting the attentiveness of your audience are just some of

the aspects of online trust you’ll need to consider. You also need

to recognize that regardless of how long you’ve had your practice

or how influential you may be, it will take time before you gain

a similar level of influence in social networking mediums. We

encourage you to accept social media as a “slow burn” at best.

Value – your trusted brand adds value to your relationships and

this is a concept that is not foreign to financial advisors. Your clients

stay with you because of the value you add – you bring them your

unique perspective and overall value proposition – your competitive

differentiators. And although “value” may be gained differently in

social media, you’ll find value goes hand in hand with trust in social

networking, and perhaps is expected to an even greater degree. It

is important to note the more value you are perceived to deliver

in social networking, the greater the odds of increasing your social

media network and expanding your competitive reach.

Engagement – this is a term often discussed in social

media circles. As you know, the more engaged your clients are, the

more inclined they are to deepen their relationship with you. This

is true in social mediums too, although in this case more care and

focus is required. Why?

Technology makes frequent and higher levels of engagement

possible which drives higher expectations from users of social

media. Social media users demand that you engage with your social

network in a relevant manner that delivers value – to them. It

is important this be perceived to come from an authentic voice

– your voice – not a canned or corporate voice. Done well, your

interactions will encourage dialogue and feedback with you from

your social network connection.

This level of engagement implies a meaningful time

commitment, but we believe the fruits of labor for online

engagement are worth the time.

Reciprocity – in social psychology this often means

responding to a positive action with another positive action, and

likewise, a negative action draws negative responses. In terms of

social media, once trust is forged then added value follows and

levels of engagement expand. Your social network connections will

then begin to reciprocate by making others aware of the value they

find in your interactions. They won’t just read the commentary you

posted on your website; they point others to it via their own social

media interactions. In turn, this interest will create new connections

for you and offer prospecting opportunities. Social media

dramatically increases the effectiveness of your efforts as it offers a

unique means for easily and quickly sharing your value proposition.

This element of reciprocity does present a challenge to those of

us engaged in a heavily regulated industry such as financial services.

While we believe solutions are coming, we urge caution in terms of

the typical application of reciprocity outside our industry – which

is sharing of content by your connections to others without your

engagement. Content must be considered in terms of applying

existing regulatory guidelines to this new social medium.

Reciprocity is also a double-edged sword. You must fully

recognize the power of reciprocity in social media because negative

views and bad feelings can spread like wildfire. Negative sentiment

often spreads more quickly in social media than positive views, so it

is critical to keep those interactions as positive as possible.

Speaking of positive, you’ve no doubt realized the higher the

level of engagement you have with your network, the more apt it

will be to serve as your advocate – which brings us to advocacy.

Advocacy - with an engaged audience and reciprocity in

play, your advocates will step forward. Think of these advocates

as your biggest fans. Some of them will be your clients, but

others may be part of your network through your clients and the

positive interactions they’ve had with you in social media. In other

words, prospects can also be social media advocates and help raise

awareness of your business and added value – increasing the number

of meaningful interactions within your social network.

Together, the five factors referenced above establish an advisor’s

influence. So how can you quantify ROinf and leverage it for

conversion in terms of your business?

In broad terms, the more meaningful your influence is on your

social networking connections, the greater the size of your social

network. This leads to positive ROinf but it is not the complete

end game. The more positive the ROinf becomes, the greater the

odds of achieving your goals for customer retention, advocacy, and

ultimately, new customer acquisition.

Let’s face it, just as it took several years to prove positive ROI

for websites back in the 1990s, it will take time to prove returns

regarding social media. There is no one size fits all ROI model for

business. We like to say that “ROI is in the eyes of the beholder” in

that the truest measure of ROI is that which makes sense for your

business and your circumstances. Could that be straight cost of

effort divided by the revenue derived from that effort? Absolutely,

but if you can’t necessarily track or measure that in your practice, we

believe it makes more sense to utilize metrics that you can track and

measure. With these thoughts in mind, let’s again consider ROinf.

The true beauty of ROinf is that it is flexible enough to consider

both hard (cost) and soft (engagement) attributes to paint a picture

of return. We think this will be equally relevant to the solo office

with few analytical tools, as well as the super-branch that has staff

dedicated to measurement. In essence, before an advisor considers

measuring ROinf, we recommend defining just how you would

define your influence. It may be in a detailed format relying on the

model proposed here, or it could simply be broad brush strokes that

compare retention and prospecting in a before and after sense with

respect to social media.

With all of this in mind, our suggested ROinf model follows:

Trust and Value

This could be tough to track, right? Since we’ve made the case that

trust and value are crucial to building a social network, it stands to

reason that this is where numbers of fans and followers come in.

We think you could translate this into meaning the more fans and

followers, then the greater levels of trust and value. So, we would

propose that a net gain in fans and followers is an indication of an

increase in trust and value.

Engagement

This may be even tougher to track than trust, particularly because

engagement based on social media may occur in other channels.

Regardless, we need to start somewhere, so in this case we’d propose

measurement of conversions and website traffic. A conversion is

an action we want our audience to take. The theory being that

the more engaged the audience is, the more apt they are to take a

desired action. In this case, it could be clicking a link in a post,

commenting on a post, or visiting your website.

Website traffic is more straightforward. You can measure

increases in website traffic and know that they are coming from

social media channels. Further, you can then measure the amount

of time these visitors spend on your website and compare that to

non-social media visitors. Additional measurements include similar

comparisons regarding website paths and actions taken on your

website – which may result in that person becoming a new business

lead or some other conversion event.

Reciprocity

As indicated earlier, we’ve defined reciprocity as the sharing of

content; however, this level of engagement appears to present

regulatory challenges, and we look forward to software solutions

that alleviate these concerns. Once this type of solution is in place

metrics will be fairly straightforward in that we would then want to

track the frequency of content sharing.

Advocacy

Advocacy is the next step from reciprocity in that advocates believe in

your influence and value proposition and are likely to share that belief

with their social network connections.

Advocacy may be the most valuable metric of all in measuring

effectiveness of your social media efforts, but it may be the hardest

to track. To keep things simple, we’d suggest analyzing your network

to determine who the most highly engaged individuals are and then

track the number of times they take some action on your behalf and

multiply that by the number of connections in their network.

Influence

The value and trust you build forms the basis for your influence

– which is likely the ultimate tool that enables you to grow your

network, deepen relationships, and generate new business. Through

social media you create capital in the form of meaningful interactions

and in turn, these interactions increase your ROinf.

About Mark H. Cohen

Assistant Vice President – Digital Media, Cambridge Investment

Research, Inc.

Mark H. Cohen offers over 20 years experience in digital

media. His career highlights begin with a decade in traditional

advertising, including a role as Executive Vice President for CCM,

Inc. In those early years he was active in the industry trade group,

the PMA, where he was a founding member of the New York

Chapter. He also taught promotion marketing, and later, the first

web marketing class at NYU’s School of Continuing Education.

In 1994, after co-producing the first concert broadcast on the web

– The Rolling Stones live from Dallas, Texas – he co-founded one

of the first interactive marketing agencies in New York, Premiere

Interactive Media – which he later sold to his partner when he was

recruited to become Janus Capital’s first Webmaster. Mark joined

Cambridge in January 2011 following a year of engagement with

the firm as a digital media consultant on behalf of the firm he

founded, Colloquy Digital.

About Victor Gaxiola

Social Media Strategist, Gaxiola Financial Group

In addition to Victor Gaxiola’s role as a Social Media Strategist

for the Gaxiola Financial Group, he is the owner/Social Media

Coach and spokesperson for Red 7 Marketing. He frequently

participates as a commentator on social media in the financial

services industry, and was recently selected to serve as an advisory

board member of linkedFA, a social network for financial and

insurance professionals. Victor has over 17 years of experience in

sales, marketing, and project management with various companies

such as Westin Hotels, United Airlines, and Wells Fargo Advisors.

He is a graduate from the University of California, Los Angeles

(UCLA) with a degree in interpersonal communication studies. As

a financial advisor, he co-founded Gaxiola Financial Group with

his wife, Kim, and increased engagement, retention, and dialogue

with clients through the successful use of social media tools.

Securities offered through Cambridge Investment Research, Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of AZ, CA, FL, IL, NJ, NV, OR, VA, WI. Investment Adviser Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Cambridge and the Gaxiola Financial Group are not affiliated.

Getting Started in Social Media

Cambridge offers advisors compliant access to social media

supported by in-house coaching and guidance for integrating

social media into marketing strategies. Cambridge’s broad scope

of solutions includes social media boot camps and one-on-one

consultation for getting started, content and resource strategy,

engagement tactics, and integrating social media into advisor

marketing plans. Following are highlights from Cambridge’s

24-page Companion Guide “Getting Started in Social Media”

which focuses on building presence, engaging others, and nurturing

relationships.

Audience, objectives, and resources – although more fully

detailed in the Cambridge Companion Guide, Cambridge’s primer

on evaluating social media platforms, begins by asking these

questions:

1. Who is your audience and what social media do they use?

It is important to understand which form of social media your

audience uses as different social mediums appeal to different

audiences based on generational preferences or other factors.

2. What are your business and marketing objectives?

Each form of social media has a sweet spot and understanding

that can give you insight as how you can best meet your goals.

3. What resources do you have to manage your social media efforts?

Engaging your audience will take time and effort. It’s critical

you fully understand the time commitment prior to making a

final determination on which social media platform you intend

to us.

We believe these questions form the basis for a social media

evaluation system that will enable you to objectively determine

whether LinkedIn®, Twitter, and/or Facebook are suited to your

business objectives.

Define Content Strategy

Another important step is to define your content strategy. Before

you set up a profile, you need to understand how you are going to

use the social medium, what you intend to “say” and how you are

going to interact – all of which result in a content strategy.

You can start to create a content strategy by addressing the following

questions:

• What message do I want to share?

• How does my message correspond to other forms of

communication (my website, marketing collateral, etc.)?

• Who is going to create the content for my social media

messages?

• How often is my social media content going to be updated?

• Does the content I intend to use require pre-approval on a

compliance basis?

• Has my content been approved according to regulatory

guidelines?

We encourage you to research the various social media

platforms, such as LinkedIn, Twitter, and Facebook, and develop

a foundation of knowledge so that you can best evaluate each by

recognizing their distinct attributes regarding audience, objectives,

and resources. We are pleased to add that Cambridge has done the

heavy lifting here for its advisors and offers relevant summaries in its

boot camp guide and personalized consultations.

Best Practice Tips for Social Media

We leave you with final thoughts on best practice tips for leveraging

social media:

• Develop a strategy based on:

◦Audience

◦Objectives

◦Resources

• Focus on one social network to start

• Tap into resources such as college interns

• Regarding LinkedIn

◦Create robust profile

◦Actively expand connections

◦“Mine” the network

• Regarding Twitter:

◦Listen, learn, and research

◦Connect to LinkedIn or Facebook

• Regarding Facebook:

◦Humanize your brand

◦Tap into resources

◦Frequent postings

◦Timely responses

◦Theme reinforces value

proposition

◦Consistently refresh content

About Cambridge

Cambridge Investment Research, Inc, member FINRA/SIPC, is

an independent, privately owned broker-dealer with about 2,000

independent registered representatives and nearly $45 billion assets

under management.

Cambridge offers advisors compliant access to social media

supported by in-house coaching and guidance for integrating social

media into marketing strategies.

Recognized in the industry as The Fee Experts®2, Cambridge

provides innovative fee programs and a full menu of commission

offerings to advisors across the nation. Cambridge has been ranked

the fee leader among independent broker-dealers for 10 consecutive

years3 and is a four-time winner in the Broker-Dealer of the Year

annual poll4. www.joincambridge.com.

2 THE FEE EXPERTS® is a registered mark of Cambridge Investment Research, Inc. for its investment advisory service for investment managers.

3 Financial Planning magazine, June “FP50”, Top 50 Independent Broker/Dealer Issue, 2001-2010.

4 Investment Advisor Magazine, 2010, 2009, 2007, 2003

CONNECT WITH CAMBRIDGE

Securities offered through Cambridge Investment Research, Inc., a

broker-dealer, member FINRA/SIPC, and investment advisory services

offered through Cambridge Investment Research Advisors, Inc., a

Registered Investment Adviser. Both are wholly-owned subsidiaries of

Cambridge Investment Group, Inc.

The information discussed herein is general in nature and provided for

informational purposes only. There is no guarantee as to its accuracy or

completeness. Reprinted by permission for use by Cambridge. All rights

reserved.

Selective advisors choose Cambridge. Contact us at (TheFeeExperts@cir2.com) at 877-688-BDOY (877-688-2369).

www.joincambridge.com 877-688-BDOY (877-688-2369)

Cambridge Investment Research, Inc.www.joincambridge.com1776 Pleasant Plain RoadFairfield, Iowa 52556