Highly regulated companies tiptoe into social media

Social networking is serious business within regulated industries. Posts pertaining to finance, insurance and healthcare, in particular, require adherence to strict government and industry regulations. However, even with the rule-a-palooza, some companies in these industries have not only found ways to keep regulators happy, but have also made social networking a productive and key part of doing business.

That said, the phenomenon is still in fairly early stages. Only around 10% of the companies in regulated industries have a "truly social" enterprise where multiple social media tools have been integrated into general content consumption, according to Toby Ward, founder of Toronto-based Prescient Digital Media, a consulting firm for Fortune 500 companies.

"It depends on the organization and their level of savviness," he says. Companies where executives start their own blogs, for example, are more likely to use social media effectively and adopt it widely, according to a recent study by Prescient. "Almost all major banks have been in social media for at least a few years," Ward says.

Show Me the Regulations

Banks are embracing social media despite the fact that the financial services industry may be subject to the strictest compliance requirements and regulatory mandates. In just one example, in January 2010, the Financial Industry Regulatory Authority (FINRA) published guidelines for blogs and social networking sites that, among other things, outline specific record-keeping responsibilities and supervision requirements.

That hasn't stopped MassMutual, a Springfield, Mass.-based financial services firm, from using social media. "We developed our social media strategy by forging a partnership with key contacts in our company's legal and compliance departments," says Marie Politis, MassMutual's vice president of online experience. "Regulatory requirements are even more stringent when it comes to communications by individual members of our salesforce."

MassMutual is working with Actiance, a Belmont, Calif.-based social media consultancy, to roll out a pilot program that meets FINRA's requirement to review and archive initial, or static, social media posts. ("Static" is a term used by FINRA to describe initial posts; once the audience engages with the content, the resulting conversation is considered "interactive.") Another MassMutual goal for its pilot program is to monitor interactive communications, which must be reviewed.

The benefits of connecting with existing and potential customers through social media make the effort worthwhile, practitioners say. "Money is a highly sensitive topic," says Michelle Peluso, global consumer chief marketing and Internet officer at New York-based Citigroup. "One of the things social media allows us to do is to listen in to hear what people say about our brand, our competitors, our industry, products and services, and our people." Even given all those advantages, though, "we have to think hard about the regulatory challenges," she admits.

When customers have a bad experience with Citi, they may complain about it in the Twitterverse or on a blog. "We don't let the fact that we're a regulated industry dehumanize us," says Peluso, who has a team of customer service reps who are trained to help people who criticize Citi on social media.

"We don't use the same scripted response every time, which you may find with other banks that use a standard answer approved by Legal," she says. "Our reps can use their real 'voices' and personalize a response."

In addition, Citi reps have been trained to move customers off of public feeds and into a private chat environment, where issues can be resolved confidentially and securely.

Social media can also be used for more traditional marketing efforts, such as making sure people are getting the information they need and that the information is accurate, says Peluso.

Rebuilding Trust in Banks

"One current challenge we face is that many people have a deep-seated anger with the banking industry," says Renee Brown, social media director at San Francisco-based Wells Fargo. "Consumers are not trusting us right now." That makes it especially important to engage customers constructively via social media, since many people hit social sites when they have complaints.

But the need to, for example, retain client records for seven years and make sure company reps comply with the rules and regulations can delay efforts to get involved with social media. Wells Fargo partners with consultancies that help make sure the bank meets regulatory requirements and is still "able to interact with customers, clients and potential clients," says Brown.

Wells Fargo's vendors include Hearsay, Socialware and Actiance. "These companies offer software to help with pre- and post-review options to ensure content is appropriately vetted, helping to streamline our internal processes," says Brown.

The two most regulated areas involve broker-dealers. They include investment banking and Wells Fargo's brokerage unit, as well as its home mortgage consultant network, says Brown.

One of the first steps in resolving customer issues is to separate actionable complaints from people who simply want to vent, says Brown. From there, helping customers resolve problems must exclude, by law, giving financial advice via social networks.

"While you may post a note to a friend about an investment, when you are licensed, you can't use certain terms such as mutual fund without it triggering the need for a disclosure," says Brown. "We make sure we go through the right compliance reviews before it's posted so nothing gets out there that shouldn't be posted."

This involves the bank's vendors "along with our legal and compliance partners to ensure we have the right oversight in place, but also the ability to be timely in posting and responding on social media channels," Brown says.

Best Practices

Tips for Going Social in a Regulated Industry

1. Work with the legal department, human resources and other groups to understand regulatory and legal requirements and create policies and procedures that work for all constituencies: regulators, employees and customers.

2. When in doubt about whether you're in compliance, take a public conversation into a more private venue, like email or the telephone.

3. Educate anyone in your company who's involved in social media about your policies. Explain why those policies exist, and discuss the best ways to use social media while remaining in compliance with regulations.

4. Like a company in a less regulated industry, develop a social media voice that's true to your brand, respond quickly to negative comments, and provide lots of relevant and updated content -- so people have a reason to come back.

5. Always disclose your connection to your company (including your title and the department you work in) when you comment or ask a question on social media.

- Linda Melone

Similar Rules

Insurance industry regulations also require due diligence regarding social media interactions. Generally speaking, these are "the same rules that apply to advertising," says Michele Wingate, social media manager at American Family Insurance in Madison, Wis.

Conversations or interactions posted by agents -- or anything on a social network -- must be archived in case they are needed for a response to any future legal challenge, Wingate says. To do that, American Family uses social media management software from Shoutlet, a provider of cloud-based social marketing tools.

Wingate admits it can be a challenge. "Our agents are eager to tap into other networks, but in order to comply with regulations, we can only use those for which we're able to archive content," she explains. Currently that list includes Facebook and Twitter, and it may be possible to archive LinkedIn content later this year.

Interestingly, the largest response to an American Family corporate Facebook stream had nothing to do with insurance. Instead, it was tied to the company's "Celebrating and Protecting" social media messaging effort, says Wingate. Conversations about National Chili Dog Day in July garnered more than 1,000 engagements (likes, shares and comments) -- a record number, says Wingate. "It was a happy thing, and those interactions kept us top-of-mind," she says.

The Need for Speed

Social media has changed not only the way people interact, but also the speed at which customers expect problems to be solved. "Prior to social media, people wrote snail-mail letters if they had a problem," says Leslie Youngdahl, social media analyst at Consumers Energy's digital care team in Lansing, Mich. "Now, through social media, they expect an immediate response."

Like other utilities, Consumers Energy is regulated by various state agencies, the Federal Energy Regulatory Commission and other entities. The company has a digital team made up of Youngdahl and two other employees who strive to acknowledge customers' remarks within an hour. They do this via a special email account that each team member can access.

The team members also post content on social networks, and when they discover a customer concern, they notify people in the company who can address the matter. "Even if it's two or three people talking about a subject, we always forward it to the appropriate people," says Youngdahl.

A recent social media conversation, for instance, alerted the digital team to a problem with the wording on the company's website that made it difficult for customers to log in. Youngdahl relayed the posts to the company's Web team and IT department and showed them a report on the trending topic and related keywords. The Web and IT teams then made the necessary changes.

"The conversation on that topic died down within a week after we made the change," says Youngdahl.

Consumers Energy primarily uses social media for customer service and to post updates about outages during storms. But as it reaches out to customers via social media, the company must ensure that it protects their privacy. For example, says Youngdahl, a customer might reveal his account number during an online conversation. When that happens, she says, "we delete it immediately and take the conversation offline."

Healthcare: Patient Privacy First

"As a healthcare service, our No. 1 concern is protecting our patients," says Susan Solomon, vice president of marketing and public relations at St. Joseph Health, a 14-hospital healthcare provider serving California, West Texas and Eastern New Mexico. "It's mainly about privacy issues, but there absolutely are ways to stay within the regulations and make social media work. You simply have to set boundaries up front."

St. Joseph's social media goals include reaching out to people to carry on conversations about their health long after they've left the hospital, Solomon says. For example, the subject of a recent St. Joseph Facebook post was, "How do you use superfoods?"

The organization also uses Facebook and Twitter to drive users to a landing page where they can sign up for a newsletter, make an appointment or otherwise securely interact with hospital staffers. For example, a recent breast health campaign included posts on the hospital's Facebook timeline that directed women to a landing page where they could schedule a mammogram.

Physicians also use social media to relay credible information to patients who may be searching the Internet for medical information only to find bad advice from unreliable sources.

That's why Boston Children's Hospital makes sure all of its 60,000 pages of online content goes through a peer-review process, says Margaret Coughlin, senior vice president and chief marketing and communications officer at Boston Children's.

With over 741,000 likes, Boston Children's has the second-highest number of Facebook followers of any children's hospital -- St. Jude Children's Research Hospital in Memphis is No. 1.

Coughlin says Boston Children's "got ahead of the curve" by studying the way people choose hospitals and doctors. This involved developing a proprietary model based on primary and secondary research of patients and nonpatients to see how many social media sources they and their families and friends turned to when researching illnesses and healthcare facilities.

The hospital also tracked how people interacted with these information sources. "We wanted to know where and how patients were getting their information and the likelihood of them going back to a certain social media site for information," says Coughlin.

It became clear that word-of-mouth and references from friends and relatives were most important to consumers. "Social networking gives word-of-mouth a whole new meaning, as those friends could include their online friends as well," Coughlin says.

The research also yielded a surprise. Whether a child had cancer or hip pain, the number of sources searched was not that different, says Coughlin. "This made us realize we needed to expand the information we provide to patients in as many social media platforms as possible."

Interestingly, some patients aren't concerned with their own privacy. "We have patients who want their lab test results via Twitter, which isn't appropriate," Coughlin says, "but it tells us that people are interested in fast information." In response, the hospital created a secure portal called MyChildren, where patients can get their lab results and other information.

As for employee social networking rules, no one outside of Coughlin's department is allowed to blog as a representative of Boston Children's Hospital. And no employees can dispense medical advice via social media, although general information and links to helpful sites is fine.

When social media first came on the scene, some executives at companies in regulated industries resisted, in what Prescient's Ward calls a knee-jerk reaction to new technology. But with a few precautions, these companies can engage, connect and converse with customers as effectively as organizations in any other sector.

Melone is a freelance writer based in Orange County, Calif. She specializes in consumer topics ranging from health to technology and business. Contact her at Linda@LindaMelone.com.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

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