Social media might seem like a minefield to many banks, with potential disaster waiting every step of the way. But Chase Card Services is finding otherwise.
By starting up its own social network for a select group of customers, the card issuer has not only gained insight into how they think, but is using that knowledge to improve the Priority Club Select Visa card it issues through a partnership with InterContinental Hotels Group.
Its online forum operates much like any other where people log on to chat about a mutual interest or hobby. The difference is that this one is only accessible to 300 or so Priority Club customers, and the discussions center around what they like or dislike about their credit card.
Douglas Williams, a Forrester Research analyst who wrote a case study on the crowdsourcing initiative, says that using social media to understand consumers better isn't new. But this effort stands out as one of the first he has seen with such a narrow focus—to improve the Priority Club Select Visa, which launched in 2005 and had been experiencing declines in new account openings.
Williams calls this process "social co-creation" and says it can be a powerful way for companies to identify potential improvements. It takes the guesswork out of product development by supplying concrete information on what consumers want.
The forum went live in June 2009. A group of customers were invited via email and offered incentives to participate.
Each member who makes four contributions in one month is given Priority Club bonus points. The way they contribute doesn't matter, whether it's completing a survey or participating in a discussion. Extra "member of the month" points are awarded to those who provide key insights.
The two biggest advantages of using the private online community are the depth of information it offers and the speed at which feedback can be obtained, says Andrew Light, director of the IHG partnership at Chase Card Services, which is part of J.P. Morgan Chase & Co.
By using the forum, Chase and IHG were able to identify in a matter of months what would become the key benefit of the Priority Club card—one free night's stay per year at IHG properties. They also determined that a fee of $49 per year wouldn't alienate customers.
Using traditional quantitative research and focus groups would've taken at least twice as long, if not longer, Light says. Even those adamant against paying an annual fee ended up getting on board after discussions on the forum helped expose the rationale and benefits.
Light says insight gained from the online group put the kibosh on another feature Chase had been considering after it showed promise in quantitative research and focus groups. "With our community we were able to dialogue about it a little bit and understood that what we would've been driving is a negative behavior," he says. "It was essentially a false positive." He would not identify the rejected feature.
Responses to the first email marketing campaign for the improved Priority Club Select Visa, which launched in June 2010, were double those of a previous campaign for the old card. Customers also are using their cards more frequently than before, which was a specific goal Chase and IHG had set out to achieve with the help of the online community.
Letting conversations take their course as much as possible is one of the most important elements to successfully mining online communities for usable information. "We've learned in talking to other clients who use these tools that as much as 50 percent of the insights they glean from the community have come from discussions and concepts that have been initiated by the community, not by the companies themselves," Forrester's Williams says.
But to be truly effective for product development, the community does need some structure. Chase works with IHG and the consulting firm Communispace to come up with two or three activities a week designed to engage members. A weekly email is sent to them, typically with topics to discuss, invitations to participate in open-ended brainstorming sessions, and surveys.
Making the experience lively and enjoyable is crucial, so some activities are just for fun, Light says. "It can be anything from asking members to put in a photo of their best vacation or something totally off topic, just to keep it fresh," he says.
Communispace culls responses to activities into reports, which get discussed weekly. In some cases, it might identify an area for Chase and IHG to potentially follow up with additional market research outside the community.
The intent is to complement traditional methods, not to replace them, Light says. He has found that quantitative research and focus groups often validate concepts that emerge on the forum. "We've been pleasantly surprised by that," he says.
Communispace moderators constantly comb the forum for actionable information. The personal relationships they form with members help strike the right balance between fostering freeform dialogue and guiding conversations back on topic when necessary, says Corey Schwartz, a vice president at Communispace.
Members who don't contribute enough are replaced. "The ideal member," Schwartz says, "is someone who wants to participate and be proactive in their contribution."
Restricting membership to between 300 and 600 people builds greater intimacy and honesty, which results in better dialogue among members, Schwartz says. "When it gets much larger, the intimacy is lost, and therefore the desire to participate and the feeling that their contribution matters dwindles."
The closed nature of the online group also helps. Light has found that members are more invested in the private community than in public ones because it's exclusive. In addition, the fact that the community is not open to just anyone helped allay initial concerns at Chase about the uncontrolled nature of social media.
After all, this was new territory for the company. But it has become an integral part of ongoing product development.
