Financial Services eBusiness Execs Are Pulling The Wool Over Their Own Eyes

In a recent Forrester report, eBusiness execs from 57 financial services firms were asked what percentage of their firm’s customer service interactions take place online. Half of the execs said more than 25%, the average was 35%.

Unless many of the execs surveyed are from online-centric firms (e.g., ING Direct, E*TRADE), this number seems suspiciously high to me. Especially when you consider that just 23% of this same group of execs said that at least half of their firm’s customers are active online.

And since when do online channel execs in banks have a good handle on how many customer service interactions are taking place in the call centers and branches to be able to estimate the percentage of interactions the online channel accounts for?

In addition, when asked what provided the greatest value from the online channel, the number one response was “incremental sales,” cited by almost one-third of the respondents.

To me, incremental sales implies sales that would not have happened otherwise. How do these online channel execs know that the credit card, checking account, and savings account apps they’re taking online would not have come in through another channel if the online capability didn’t exist?

For firms offering online high-yield savings accounts, I can see my way to the incremental claim. But, by Forrester’s own numbers, direct mail still plays a huge role in driving credit card applicants online, and branch location is the biggest influence on where to open a checking account.

My conclusion: Apps that come in through the online channel seem are more the result of convenience, and not the result of the online channel making a sale that wouldn’t have occurred otherwise.

Don’t get me wrong — I’m not impugning the research. I think that what we’re seeing here is the combination of wishful thinking and undeserved chest thumping on the part of some online banking execs.

I understand their desire to show the success of the channel for which they’re responsible. But while they may be sharing these numbers externally, with firms like Forrester, I hope they’re more honest (make that “accurate”) when reporting and communicating internally.

The need for better tracking of customer activity by channel and for better response attribution is sorely needed to make smarter marketing decisions in the future.

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2 thoughts on “Financial Services eBusiness Execs Are Pulling The Wool Over Their Own Eyes

  1. Ron .. Of course you are right. We are seeing a natural rebound from 5/7 years ago when all sales were attributed to the branch, whether they arose there or not. As we vacillate between the two extremes, I agree we need a method of capturing customers behaviours in general across channels, because thats he way most customers interact with their Bank.

    Maybe your views on customer engagement and how that measure can help us would be a better test alongside overall revenue and market share.

  2. Attribution analysis is almost always missleading. I once did some work at a telco. If you added up the sales “attributed” to online, branch, telesales, advertising, promotions and 3rd party vendors, you got sales of 220% vs. the total. That’s why you need a common language and the agreement of all the channel teams as to how to attribute. All execs should be on the same team but the reality is that they are not.

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