Social media has become the new frontier for financial services professionals when it comes to connecting and being top-of-mind—especially in tough times when in-person meetings may be unfeasible. Most active social media users know that sharing experiences and expertise through relevant, persuasive and compelling content goes a long way towards fostering engagement and providing real value to networks. 

However, engagement with published content doesn’t necessarily result in increased sales. Commenting or responding publicly to social media posts can generate ROI on content creation and publication, but it’s the authentic, 1:1 channels—such as private messages—that take these connections to the next level.

Private messaging is the new email

In the early 2000s, email overtook mail and cold calling as the most cost-effective channel for business outreach and responsiveness. But over time, its effectiveness rate diminished as the competition for “opens” in inboxes—already flooded with spam or similar vendor emails— created disinterest and inertia with consumers.

Before email, cold calling was the norm for financial services firms prospecting for new business. But today, more and more firms acknowledge that cold calling is no longer a viable, modern option and instead encourage digital prospecting techniques that focus on leads and referrals. To this point, Merrill Lynch's Wealth Management unit recently banned trainee brokers from making cold calls, guiding them to use internal referrals and LinkedIn messages to prospect for new clients. Another recent article noted that with financial advisors’ pervasive use of LinkedIn (48% used the platform in 2020), “cold outreach” has become the new “cold calling.” In fact, when a 1st or 2nd connection responds to a social post, a private message outreach can be considered “warm” rather than “cold.” Further contextualized, it often results in an accelerated path for lead conversion.

It’s no surprise that private messaging (PM) has overtaken outdated approaches like cold calling and email to become one of most valuable channels for 1:1 business communications. Why? 

On a personal level, PMs enable individuals and teams to instill a sense of trust, and authentically nurture prospect relationships towards an emotional inflection point that inspires the initiation—or expansion—of a business relationship. From a business standpoint, they accelerate sales opportunities and enhance customer lifetime value by offering a path to move social media interactions into real-world conversations with high-probability sales potential. PMs accomplish all of the above with less time and effort, significantly lowering customer acquisition, conversion and retention costs. 

From the aforementioned article, one wealth advisor estimated that 90% of his clients resulted from cold outreach via social media; another advisor estimated that 10% of people he reaches out to on LinkedIn eventually become clients. PMs can be considered the end-point in the social selling journey, where cumulative engagement has nurtured a lead that can be readily converted into a sale. 

Given its 1:1 nature, cost-effectiveness, and higher response rates (as compared to other communications channels), one would expect that its use would be widely adopted by businesses, yet this is currently not the case. One of the primary reasons why this is so is due to privacy concerns.

Aligning private messaging with privacy objectives

When it comes to the use and supervision of PMs, privacy remains a hot-button issue, with firms seeking to maintain boundaries between employees’ business and personal lives, as well as ongoing concerns about user reactions to the monitoring of those communications. The result is an increasing reluctance to permit PMs. As a result, to advance their use of social networks, these organizations are increasingly seeking a fragmentation of the networks’ features themselves to accommodate perceived privacy concerns. The result of this fragmentation can lead to complex supervision regimes that rely on manual approaches for each fragmentation, ultimately increasing compliance overhead.

Unfortunately, separating private messages from the rest of social media platform experience— or prohibiting them altogether—deprives financial advisors of a critical closing tool in their arsenal. To bridge the gap between what field teams want, need, or already use, and what corporations are looking to achieve, it is imperative to acknowledge that undoing privacy is not the focus. Critically, as it relates to private messages, the mechanisms designed to protect markets are not the same as those designed to assure privacy protections.

So, how can social selling align with privacy objectives? With mindful structural and functional frameworks, the impact to privacy can be mitigated:

Structural

• Limit the review team to a small, trusted group of reviewers with special privileges in the review software.
• Keep the review team insulated, and establish an escalation process that is sensitive to, and designed with privacy concerns in mind.
  

Functional

• The requirement is not to review all PMs, only the risky ones. Applying a well-defined lexicon to PMs will hone the supervision process to those messages that reference the organization’s business products or services, breach fair and balanced standards, or appear to be manipulative—not the PMs that users worry about: (un)solicited recruiters, career prospecting, or messages that are truly personal in nature.
• Transparent policies, in conjunction with adequate and tailored training on the do’s and don’ts of private messaging, as well as best practices, should make clear to users what the guardrails are to using PMs.
  

But don’t forget the regulatory perspective: Compliance teams must monitor for problematic business activities across any channel that’s being used to transmit those activities, especially as regulators move further towards principles-based supervision requirements. Increasingly, regulators are implementing channel-agnostic approaches to preventing harm to customers. 

Taken together, the principles-based approach combined with the business value of private messaging forms a two-pronged argument for why financial services firms should strongly consider enabling private messages across all social media platforms. Not only are firms that prevent PMs exposing their organizations to unnecessary risks that can be reasonably mitigated, but they’re also stopping their users from utilizing an immensely valuable aspect of social media.