Forrester - Interactive Help in Financial Services

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May 30, 2007

The Business Case For Interactive Help In Financial Servicesby Brad Strothkamp T

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© 2007, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please email [email protected].

TRENDSIncludes data from Consumer Technographics®

EXECUTIVE SUMMARYInteractive help — which includes online chat and click-to-call — has come of age. That’s a good thing, considering tomorrow’s financial services shoppers will increasingly be found online. Financial firms contemplating their long-term eBusiness strategy need to consider the role of interactive help. Firms like E*TRADE Mortgage and Dell Financial Services have found such technologies to be an integral part of meeting their Web sales goals.

TABLE OF CONTENTSTomorrow’s Researchers Use The Online Channel — And Nothing Else

Reaching Out To Consumers Who Won’t Reach Out To You Online

Online Chat And Click-To-Call Is The Answer — With One Caveat

Four Factors Affect Success Using Interactive Help

WHAT IT MEANS

The Future Of Interactive Help For Financial Services Firms

NOTES & RESOURCESForrester studied industry developments and used Consumer Technographics® data to uncover trends in the use of interactive help technologies.

Related Research Documents“Trends 2007: eService Is Customer Service” January 18, 2007, Trends

“E*TRADE Mortgage: A Case Study In Chat”June 10, 2005, Trends

“How To Make Online Chat Pay Off”December 30, 2004, Trends

May 30, 2007

The Business Case For Interactive Help In Financial ServicesOnline Chat And Click-To-Call Should Be A Part Of Any eBusiness Strategyby Brad Strothkampwith Carrie A. Johnson and Brendan McGowan

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http://www.forrester.com/go?docid=41059&src=42472pdf



Trends | The Business Case For Interactive Help In Financial Services

© 2007, Forrester Research, Inc. Reproduction ProhibitedMay 30, 2007

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TARGET AUDIENCE

eBusiness, channel and product management professional

TOMORROW’S RESEARCHERS USE THE ONLINE CHANNEL — AND NOTHING ELSE

With all the talk about social networking, you’d think these new ways of using the Internet defined the online experience. You’d be wrong. Internet usage today is dominated by general research and purchase activity. Looking across all Web activities, researching and purchasing products are the number two and three activities behind email (see Figure 1).

Figure 1 Shopping Is The Second-Highest Web Activity Behind Email

And this purchase activity is having a profound effect on the sales of financial products. Consider this:

· Researchers increasingly go solely to the Net — especially younger generations. In 2006, 25% of US online households that purchased a product researched the purchase exclusively online. Online research is increasingly common among younger generations. Thirty-three percent of Gen Yers and 29% of Gen Xers researched their last financial product exclusively online (see Figure 2). This means financial firms can no longer afford to have poor Web sites. Sales may happen in a branch or over the phone, but that doesn’t mean consumers don’t visit, evaluate, and decide on your firm based on information on your Web site.

Source: Forrester Research, Inc.42472

95%

62%

62%

60%

38%

Use email

Purchase products

Research products for purchase

Send or receive photos via email

Send electronic greeting cards

“Percentage of online consumers who do the following activities online”

Base: North American online consumers

Source: Forrester’s NACTAS 2006 Benchmark Survey


© 2007, Forrester Research, Inc. Reproduction Prohibited May 30, 2007

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· Convenience of the online channel drives usage. Consumers prefer the online channel above all others because it is the most convenient. Eighty-five percent of US consumers who researched a product online did so because they could conduct research anytime they wanted. The Internet also facilitates comparison. Eighty-one percent said the Internet allows for easier comparison of products and providers (see Figure 3).

· Consumers still prefer to apply for products offline. Consumers still do not flock to the Web when applying for products. Across a range of products, consumers still prefer to apply for products in person or by mail (see Figure 4). The majority of consumers still want human assistance to validate their purchase decisions.

Figure 2 A Large Percentage Of Younger Consumers Research Exclusively Online


0%

20%

40%

60%

80%

100%

Seniors(63+)

OlderBoomers(52-62)

YoungerBoomers(42-51)

Gen Xers(28-41)

Gen Yers(18-27)

US

Online only

Online and offline only

Offline only

“For any financial products you purchased during the past 12 months, please indicate where you conducted your research.”

Base: US consumers who conducted research online or offline for anyfinancial product they purchased during the past 12 months

Source: Forrester’s North American Technographics® Benchmark Survey, 2007



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Figure 3 The Internet Is About Shopping Convenience

Figure 4 The Majority Of Consumers Purchase Financial Products Offline


“Percentage who agree with the following statements” (top five answers)

I am able to conduct researchonline whenever I want

The Internet allows me to more easilycompare products and providers

It is faster for me to conduct my research onlinerather than on the phone

There is more information availableon the Internet than other sources

The information available on the Internet is betterthan I can get from other sources

Base: US consumers who conducted research online for anyfinancial product they purchased during the past 12 months

85%

78%

77%

46%

Source: Forrester’s NACTAS Q4 2006 Finance Online Survey

81%


In person or at a branch55%

Through mail17%

On the Internet16%

Over the phone12%

“How did you apply for your most recent financial product?”

Base: US households that opened or applied for a financial product in the last 12 months

Source: Forrester’s NACTAS Q3 2006 Survey



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REACHING OUT TO CONSUMERS WHO WON’T REACH OUT TO YOU ONLINE

Tomorrow’s shopper will increasingly be found online. Some of these Web shoppers will walk into a branch, some will call in over the phone, and some will visit your Web site — never to be seen again. It is more important than ever for financial firms to have an interactive help strategy, in order to better reach out to these Web site visitors who do not reach out to you.

Online Chat And Click-To-Call Is The Answer — With One Caveat

Forrester has watched these two technologies mature over the last few years, and after conversations with dozens of clients, it is clear that their use can have a profound effect on online sales.1 There is one caveat — financial firms should only consider these technologies if they are already delivering a usable and useful Web site experience.2 Assuming that is the case, Forrester has found that these technologies:

· Have high customer satisfaction rates. Among different contact methods available, consumers find online chat and click-to-call helpful. In fact, the majority find those technologies more helpful than calling the firm directly or visiting a branch office. While 85% of researchers who contacted a firm during the research process used the phone, just 43% found that method helpful. By contrast, just 47% used click-to-call, but satisfaction rates were significantly higher at 61% (see Figure 5).

· Drive high satisfaction rates through convenience. Satisfaction rates are higher because these technologies get to the core reason why consumers are researching online in the first place: convenience.3 Thirty-two percent of US consumers who used online chat liked that they were able to speak with someone immediately (see Figure 6).

· Once they are tried by consumers, will be used again. High satisfaction rates among chat users lead to a desire to use the option again. Among US researchers who used online chat, they were 13% more likely than US online researchers overall to say that they would use online chat again (see Figure 7).

· Deliver incremental results. E*TRADE Mortgage is an early adopter of online chat and has experienced impressive results. Mortgage applicants who use online chat are much more likely than non-chatters to complete an application.4 On the click-to-call side, Dell Financial Services used eStara’s click-to-call solution to capture approved but unverified applicants and complete the sale over the phone — saving sales that would have been otherwise lost.5



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Figure 5 Among Shoppers, Interactive Help Is More Helpful Than Traditional Methods

Figure 6 Interactive Help Is All About Convenience


Calling the firm directly

Visiting a branch office

Using online chat(aka instant messaging)

Click-to-call (using the Web site torequest a representative to call you

while you’re online)

85%

43%

83%

41%

50%

63%

47%

61%

Used methodOf those, percent who found method helpful

Base: US online consumers and US consumers who conducted research onlinefor any financial product they purchased during the past 12 months


“When researching financial products online, how helpful werethe following methods of communication?”


I was able to speak withsomeone immediately

I had a simple question that wouldhave been a waste to call about

over the phone

It allowed me to completemy product research faster

By using this service, I was ableto get my questions answered after

normal business hours

32%

25%

23%

21%

“What did you like about using online chat?”

Base: US online consumers who used online chat andconducted research online during the past 12 months




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Figure 7 Once Shoppers Try Online Chat, They Like It

FOUR FACTORS AFFECT SUCCESS USING INTERACTIVE HELP

Both chat and click-to-callback offer financial services firms the opportunity to better connect with customers. In particular, the click-to-callback technology leverages existing call center infrastructure, and both technologies maintain the context of the user’s online experience. For firms that decide to implement these technologies, what’s the best path to successful implementation? There are generally subtle differences between the technologies from the firms that offer interactive help solutions, which will lead to consolidation in the space.6 The primary difference between a successful implementation of interactive help and one that is unsuccessful is the implementation itself — and not the technology. Financial firms successful with interactive help:

· Proactively target Web site visitors. Forty-two percent of US online consumers who have not used chat responded that they have not been in situations where they feel it would be helpful.7 Firms must understand that this is still a new technology, and customers may be hesitant to try it. Successful firms proactively reach out to Web site visitors, typically by presenting them with an “invite” to chat in the online space. The user is given the option to “accept” or “decline” this invitation. Not only does this promote usage, but it ensures that a firm controls whom the users speak with, not the other way around.


US onlinehouseholds

US onlineresearchers

US onlineresearchers who

used chat

19%

33%

46%

Base: US online consumers who researcheda product online during the past 12 months


“How likely are you to use online chat in the future?”



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· Focus efforts on “engaged” site visitors. Firms that successfully implement interactive help further refine their usage by targeting site visitors showing an active interest in their site. In a recent study Forrester conducted on mortgage shoppers, the mortgage shoppers who were most likely to apply could be found using tools such as a product selector.8 These “engaged” site visitors should be the primary target for interactive help.

· Move shoppers from the Web to the phone. The goal of interactive help is sales conversion — whether that conversion comes over the Web, over the phone, or in a branch. Firms that focus on interactive help use it to reach out to site visitors who might not otherwise contact the firm directly — remembering that a large portion of shoppers research exclusively online. These firms are quick to move that customer to the phone to close the sale. Firms have found that that type of cross-channel movement of sales prospects is not only the most effective way to maximize sales, but it also satisfies a customer’s desire to speak with a person before purchasing a product.

· Have a cross-functional organizational dedication. What separates a good implementation from a best practice often lies in the personnel supporting the solution. The best implementations depend upon a partnership between eBusiness and operations, an individual who champions the service, and a devoted team that has a deep understanding of the Web site. The implementation team also needs to have a strong sense of effective sales practices and a fervent desire to test and learn.

W H A T I T M E A N S

THE FUTURE OF INTERACTIVE HELP FOR FINANCIAL SERVICES FIRMS

There has been explosive growth of interactive help over the past two years. Mainstream firms like Bank of America, TD Canada Trust, and E*TRADE have made large commitments to interactive help. We believe that this is just the beginning for financial services. What does the future hold for interactive help technologies? Forrester believes:

· Interactive help will become a cornerstone of any eBusiness sales strategy. Financial firms are increasingly focused on sales of financial products online. With that shift from service to sales, conversion rates become the key metric by which firms measure success. To maximize conversion rates, financial firms will come to realize the importance of interactive help, coupled with a rock-solid lead management strategy and strong online application processes.

· Online and click-to-call will cease to exist as separate functions. The question is not whether online chat or click-to-call is more effective but how these two technologies should work together when moving customers through the sales process. Vendors that offer chat will add a phone option and vice versa. The ideal solution involves proactively targeting Web



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site visitors, engaging in a conversation, and then using the phone to close the sale. Click-to-call is a great value-add to this process, so the customers who want to move from chat to the phone don’t have to deal with contacting the firm themselves.

· Industry consolidation will continue. LivePerson bought Proficient; Art Technology Group (ATG) bought eStara. These vendors are not only the largest but also have the largest concentration of financial services clients. While there are dozens of smaller interactive help players out there — InQ, InstantService, and Velaro, to name a few — Forrester believes that consolidation will continue. Firms considering a vendor should keep in mind that the vendor they choose could very well be acquired over time.9

ENDNOTES1 E*TRADE Mortgage has figured out how to make online chat work for its business. Inviting site visitors

to chat online has resulted in more valuable chat sessions, higher customer satisfaction scores, and incremental sales from higher application and loan-booking rates. See the June 10, 2005, Trends “E*TRADE Mortgage: A Case Study In Chat.”

2 The most common question we get about sales is whether or not to offer proactive help options, like online chat or click-to-call. Our response: Forget about it, unless you have mastered the previous principles. Assuming that you have done so, chat and click-to-call are effective ways to reach out to Web site visitors and engage them in a conversation. See the November 7, 2006, Best Practices “Ten Ways To Build A Better Financial Services Sales Site.”

3 An overwhelming 82% of consumers expect the online process to be more convenient than walking into a branch or purchasing over the phone. See the November 7, 2006, Best Practices “Ten Ways To Build A Better Financial Services Sales Site.”

4 Although it’s still measuring the incremental success of invite-to-chat, E*TRADE is seeing improvement in the application-to-fund ratio. Chatters are more likely than non-chatters to fund a loan upon completion of an application. See the June 10, 2005, Trends “E*TRADE Mortgage: A Case Study In Chat.”

5 Dell Financial Services screens online credit applicants for both credit approval and identity verification. Some approved applicants fail online verification even though they are the true applicants. Prior to implementing eStara’s click-to-callback service, the lender lost about 90% of approved but unverified applicants — people who were ready to spend money but bailed out of the process after failing. After placing an eStara button on the form to provide a click-to-callback option, the lender now verifies — and converts — 55% of these applicants via phone. See the May 5, 2005, Best Practices “Click-To-Callback Bridges The Cross-Channel Gap.”

6 Look for more acquisitions similar to Oracle’s June purchase of telephony vendor Telephony@Work and Art Technology Group’s October acquisition of click-to-contact vendor eStara. Acquisition candidates that top our list include specialty vendors, such as LivePerson and Creative Virtual, and more generalized eService tools providers, such as KANA Software, eGain Communications, and Talisma. See the January 18, 2007, Trends “Trends 2007: eService Is Customer Service.”













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7 As with any new technology, customers need to be educated when and where to use chat. Among non-chatters, 42% said that they haven’t been in situations where they feel chat would have been useful, while 30% said they prefer to use the phone for questions. See the December 30, 2004, Trends “How To Make Online Chat Pay Off.”

8 Tools that help prospects select the right loan were the second-most heavily used tools by prospects. The gap between prospect usage (8.3%) and applicant usage (13.1%) was the largest difference for any tool or piece of content in our study. See the June 7, 2006, Best Practices “Online Mortgage Shoppers’ Paths To Purchase.”

9 Look for more acquisitions similar to Oracle’s June purchase of telephony vendor Telephony@Work and Art Technology Group’s October acquisition of click-to-contact vendor eStara. Acquisition candidates that top our list include specialty vendors, such as LivePerson and Creative Virtual, and more generalized eService tools providers, such as KANA Software, eGain Communications, and Talisma. See the January 18, 2007, Trends “Trends 2007: eService Is Customer Service.”






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