The internet has become an essential marketing tool for intermediaries. However, a web presence and online strategy should complement the client-manager relationship, not replace it
Internet use has continued to rise at a phenomenal rate. The global online population rose from 45 million in 1996 to 242 million in January 2000 and to a massive 605 million in January 2002. NUA forecast that the number of users worldwide on the internet will reach 945 million by 2004 and one billion by 2005.
The internet hype in 1999/2000 was all about company growth and expansion but, as seen by the demise of the speculative dot.coms, this is not enough to sustain business. The two years between 2001 and 2003 was all about profit, while 2004 is going to be centred on customer focus and meeting client and intermediary online demands.
Convenience is the paramount advantage of the internet and in order to adapt successfully to internet-based business opportunities, investment companies need to open up back-office systems and offer around-the-clock online access to clients. Among the advantages for investment companies are the ability to look at accounts and carry out transactions at any time of the day, while having faster flows of personalised information delivered to their customers through a new communication channel. While these are hugely beneficial, they also change the demands on our existing business. Firms that create successful e-commerce facilities can reap other benefits including greater customer loyalty, lower operational costs, new client acquisition, new routes to market and new product development.
With the emergence of e-commerce, the market has become increasingly competitive and local proximity is no longer sufficient to maintain customer loyalty. Firms have recognised that to maintain and improve their position, they must gain a new competitive advantage and become more client-focused. Already price is becoming less of a differentiator. Customers now attach more value to intangibles such as reliability, quality and customer service.
The internet has created an online market for investors, making them more informed and demanding than ever. It is critical to manage your online customer relationships effectively in order to obtain their trust and loyalty. Investors are looking for reassurance and a safe online experience. Research your customers - find out their needs and adapt to them. You need to integrate both offline and online brands and services.
While the cost of customer acquisition over the internet is low, customer retention is more difficult. Investment companies need to manage the complete online customer experience, providing them with choices, product information, prompt answers to questions and up-to-date details. To succeed, the website interface with the customer should be truly personalised.
Most intermediaries want to spend their time identifying and generating new business rather than managing client demands for basic data and reports. In their dealings with investment management firms, intermediaries welcome having administrative demands taken off their hands, but only if doing so does not undermine their customer relationships. Best practices for investment management firms include providing content-rich educational and marketing materials to support the intermediaries on a daily basis, accommodating their workflow and customer-facing requirements and supporting an interactive feedback mechanism. In practical terms, this means the investment management firms should provide the intermediary with greater access to investment opportunities, sales tools, fund managers, and up-to-date analysts" reports as needed.
Every customer experience should be conducted within a strong brand that inspires recognition and respect. To deliver perceived value, investment management firms have to give customers exactly what they want, when they want it and in the form they want it. The enduring value and key to continued success is ultimately in the relationship - not the product alone.
Successful firms will know whether the customer prefers on-demand or event-driven provision of information and services. They will know not only the preferred communication device - PC, personal digital assistants, mobile phone or other internet appliances - but also the conditions for using each device. With service offerings such as price or news alerts, personal account aggregation and mobile services (on demand), the interaction with the customer can occur on many different levels.
Online customer satisfaction is another aspect that is often not fully developed or linked to overall strategies. When a client communicates with an investment management firm by telephone or in person, the personal interaction enables the executive or relationship manager to assess the investors" satisfaction to some extent. In a purely internet-based communication, you simply cannot hear the their tone of voice. Companies with successful online business models have built feedback mechanisms, surveys and other customer satisfaction measures into their websites and have installed programs that use this information in current or future product offerings.
Online access does not replace the relationship manager for the client or intermediary, it is designed to complement them. In fact, it frees up the time of the relationship manager to deal with more complicated issues. Just as any other website looks for impact and functionality, an online investment presence needs to be:
&149; Innovative - what is your unique selling point, how is your offering different from that of your competitors?
&149; Customer-focused - build online trust, be visionary, develop customer self-service
&149; Fast - clients require fast download of pages and files
&149; Secure - a secure site means a safe, trusted online service, ensuring client confidence
&149; Easily navigated - clients need to easily navigate and access targeted information
&149; Interactive - clients want access to real time data, responses to queries and reports online.
Information needs to be real time, up-to-date, reliable, accurate and accessible from anywhere at any time.
There are four levels for an online information strategy:
1) General website information on the investment company and products/services available to investors must be easily available. This includes daily prices, interactive fund fact sheets with fund performance details and a press centre for press releases, news items and articles. You should incorporate a document library with fund literature and application forms that can be downloaded in PDF format.
2) The registered online service which allows intermediaries and investors to receive investment managers" commentaries and investment strategies. An online booking facility for conferences and other events is also useful, especially if this is real-time and integrated with an automated email service.
3) Secure online reporting. The private investor"s log-in enables access to detailed account information and allows users to update their account details. Intermediaries can access their clients" accounts, receive commission statements and receive further benefits such as historic prices and charting tools.
4) Secure online investing and fund dealing is the final level in the online strategy. Controlled user access with personal user identity and passwords protects sensitive information by using the latest security devices and software while sensitive data is encrypted during transmission using 128-bit SSL encryption.
An online strategy is not just about having a website. It involves how we electronically communicate with clients and intermediaries - through both e-mail and instant messaging.
In the future, investment companies will provide more advanced, graphically rich e-mails which will, for example, alert clients when their portfolio and asset allocation are changed. This will be delivered to customers anytime, anywhere, using mobile phones, PDAs and other wireless devices.
M-commerce - the combination of the internet, third-generation (3G) mobile phones and smart card technology - is the next stage of evolution that will affect the online investment industry. Clients with mobile devices such as PDAs will access websites and, through a secure log on, enter your 'value added" online service. Interactive digital television will also serve as an additional personalised service channel.
Account aggregation continues to grow significantly with the intention being to cut the amount of time customers have to spend logging on to different websites to see their investments, savings, credit cards, mortgages and air-mile accounts. The most commonly used method for account aggregation is called screen scraping. This technology literally 'scrapes" data from the screens of the customer"s accounts at various institutions, accessed by using the customer"s user name and password for each account and gathers the results in one place.
Flexibility is the key to the successful online investment management business model. Technical and operational flexibility will enable the business to ride out ups and downs in demand patterns in the near future.
The challenge is how investment management firms adapt their business and embrace e-commerce, becoming customer-focused and managing the investors" online experiences through value added multi-channel services. We have no doubt that the next 18 months will provide such opportunities.
Companies that create successful e-commerce facilities can expect greater customer loyalty, lower operational costs, new client acquisition, new routes to market and new product development.
E-commerce should be used to improve customer service using a strong, recognisable brand.
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