Future of Online

Examination of online channels in Consumer, Healthcare, Technology and Financial Services markets.

• The insurance industry offers insight into the use of the Internet as a sales execution channel
• Companies targeting consumers can engage consumers in a relationship with your product online
• Consumer expectations pose challenges for online customer service
• Facilitating relationships online is one way to foster longer-term customer relationships

Over the years, organizations worldwide have spent significant portions of their budgets to build their online presence. Yet the quality and effectiveness of these initiatives varies widely across industries.

In today's environment in which organizations continually compete for a larger share of wallet building and sustaining a compelling online presence should be considered an iterative process, one through which organizations not only facilitate online transactions but also foster long-term customer loyalty.

Recognizing that online channels continue to evolve in their spheres of influence, this Datamonitor report illustrates how online channels are developing within a handful of key industries. Datamonitor believes that lessons learned from these examples can be applied across a variety of industry sectors.

• Gain insight into how online channels are developing across several industries.
• Envisage how your company can apply lessons learned from other industries to maximize the effectiveness of your online presence.
• Understand the critical success factors to establishing and sustaining a compelling online brand presence.

DATAMONITOR VIEW

CATALYST

SUMMARY

METHODOLOGY

OVERVIEW ANALYSIS

Increased access to and use of the Internet is driving the use of online channels

Understand the impact of online channels on your organization

Maximizing online sales execution channels

Promoting real world brands online

Meeting consumer expectations for personalized online customer service

Building customer relationships online

Success will depend upon a number of factors

Companies need to continue leveraging online channels as a key sales execution channel

Viral and word-of-mouth marketing will play an increasingly important role in reaching consumers

Superior online customer service can be a crucial differentiator

Online channels are evolving into interactive, personalized tools for consumers

ECOMMERCE LESSONS FROM THE INSURANCE INDUSTRY: WHAT IS THE FUTURE OF ONLINE AS A SALES EXECUTION CHANNEL?

Catalyst

Summary

Online sales of retail insurance products in the UK surged in 2005

Two new players have entered the market with a strong online focus

Brokers' market share of distribution is declining

Increased Internet access and usage will drive the e-sales channel

Successful e-tailers pay close attention to the most popular search terms

Certain insurer websites feature key search terms that drive traffic to their websites

Pay-per-click and pay-per-call strategies are key to driving Internet traffic

Companies are over-paying for sponsored advertising

Pay-per-call is set to grow

Aggregators offer consumers speed and convenience

Confused.com is the main aggregator in the UK

Revenue is largely generated via commissions

Aggregators may provide a way of growing an insurer's premium income

Online sales are forecast to grow rapidly over the next five years

Internet sales within motor insurance will be driven by the direct channel

Online household insurance sales will increase rapidly over the next couple of years

Actions

Datamonitor is seeing a surge in eCommerce activity

Companies need to stay on top of search engine optimisation

Insurers should partner with aggregators as part of their distribution strategy

PROMOTING REAL WORLD BRANDS ONLINE: HOW TO ENGAGE CONSUMERS IN A RELATIONSHIP WITH YOUR PRODUCT

Catalyst

Summary

The Internet creates new opportunities and challenges in communicating with consumers

Websites as billboards are a first step towards consumer interaction

It is tempting, but generally inappropriate, to follow a traditional media strategy

The best online strategies add interactivity to strengthen the core brand message

Online communities shape consumers' attitudes and purchasing behavior

Internet usage is increasing across the globe...

The frequency of using online forums and reviews is increasing

...but traditional interpersonal referrals remain the most relevant for now

Viral marketing efforts allow brands to reach consumers

Consumers can be divided into three groups to model the diffusion of viral messages

Opinion Formers define perceptions of cool

Adopters are the biggest influencers on Regulars

Online media channels are particularly important for Trend Connectors

Blogging and mobile communications are useful, but can be exaggerated

Blogs are the new mantra of viral marketing

Corporate blogs can be used as a PR tool, but are susceptible to bad press

The mobile communications channel has strong potential, but must be used with care

SMS marketing requires consumer trust

Interactivity and brand building are the long term way forward

Actions

Align online marketing strategies with overall branding efforts

Remember that ill-judged online marketing can harm a brand

A strong online campaign can have a major real-world pay-off

Use online channels to support word-of-mouth marketing efforts

Some viral campaigns can have a direct mainstream impact

Other virals work best at generating favorable WOM among Opinion Leaders

Monitor developing channels without rushing into inappropriate investments

Evaluate whether blogging is an essential tool for your business

Adopt mobile branding efforts that create real value

THE FUTURE OF ONLINE CUSTOMER SERVICE: CREATING VALUE AND LOYALTY THROUGH ONLINE CHANNELS

Catalyst

Consumers are demanding more than ever from their online experience: Will online customer services be able to meet or exceed these expectations?

Summary

Providing customer service online presents its own set of challenges

Customers expectations are always increasing

Online Customer Service (OCS) solutions necessitate investment in hardware, software and employees

Technological competency and access can limit the impact of OCS

Complexities exist between the on- and offline experience

Online customer service solutions present business opportunities irrespective of size

Packaged OCS solutions enable SMEs to compete with their larger competitors

The OCS technology facilitates cross-selling and customer information opportunities

Ultimately, online customer service needs to help build customer satisfaction and loyalty

Keeping influential customers content can build a strong online presence

Fast, reliable and customised levels of service are a key differentiator

Appropriate rewards, discounts and communication can build the relationship between consumer and supplier

Actions

BUILDING CUSTOMER RELATIONSHIPS ONLINE: VIEWING YOUR ONLINE PRESENCE AS A WAY TO FACILITATE RELATIONSHIPS

Catalyst

Summary

The healthcare industry demands innovative uses of online channels

Healthcare is mission-driven rather than profit-driven

Healthcare needs to cater to multiple stakeholder groups

Healthcare operates in a highly regulated environment

Accessing health information online is becoming increasingly mainstream

Consumers are taking a more active role in their healthcare

The Internet is a tool that consumers can leverage to take a more active role in managing their health

The Internet is evolving into an interactive tool for managing healthcare

Online communities facilitate peer-to-peer and consumer-to-healthcare professional interactions

Online channels can be used to facilitate consumers' interactions with their physicians

Consumers are interested to use online tools to manage and monitor health conditions

Actions

APPENDIX

Further reading

Ask the analyst

List of Tables

Table 1: Percentage of consumers arranging insurance online in the UK, split by motor and household, 2001-5

Table 2: Percentage of households in Great Britain with Internet access, 2000-4

Table 3: Sources for product recommendations in the US, 2005

Table 4: Typical OCS solutions available to SMEs

List of Figures

Figure 1: The percentage of people purchasing insurance online in the UK has dramatically increased since 2003

Figure 2: The number of households in Great Britain with Internet access is on the increase

Figure 3: Admiral was the top-ranking insurance provider appearing under the search term "car insurance" in November 2005

Figure 4: The top five pay-per-click results for the three most popular search terms for "motor insurance," November 2005

Figure 5: The 'virtual billboard' model persists in developing countries

Figure 6: The static 'billboard' model does have some benefits, especially for small niche businesses

Figure 7: A sizeable proportion of consumers use online forums for product and service information

Figure 8: There are four key reasons why viral and word-of-mouth marketing are becoming more important

Figure 9: Opinion Formers transmit trends via Adopters to mainstream consumers

Figure 10: NeoMedia allows shoppers to look up product information based on bar codes

Figure 11: The Tampax Compak website targets teen girls by providing an interactive ringtone generator

Figure 12: Consumers are more impatient when using technology: 37% of consumers would be unwilling to wait longer than 3 minutes on the telephone or online

Figure 13: The components of online customer satisfaction

Figure 14: Improvement and investment in complaint management and customer communications are necessary to increase loyalty and retention

Figure 15: Consumers increasingly turn to online sources for health-related information

Figure 16: Use of online forums and communities is beginning to pervade healthcare

Figure 17: Consumers would like to use technology to facilitate the interaction with their physicians

Figure 18: Online tools are exerting influence over consumers' interactions with their physicians

Figure 19: Consumers show interest in using disease management and compliance tools