Certain Users Ripe for e-Picking

The Internet, a highly-touted channel, was supposed to increase efficiency, reduce costs and become the primary means of interaction between financial services providers and their growing wired customer base.

However, the large Internet-only customer base has never materialized. In fact, only certain segments—totaling approximately 15 million users—of the estimated 84.9 million "current" online users (users that log on at least once a month) are good targets for online financial services offerings, says a study from New York-based Cyber Dialogue, named "Profiting from CRM in Financial Services By Leveraging Online Value Metrics."

"There are three to four groups that stand out as good targets for online financial services products," says John Ferris, senior analyst, Cyber Dialogue. The characteristic of the most profitable segments are:

-- Alpha Online Bankers: 4.9 million users, 83 percent of which are online daily and 100 percent of which use the Internet for personal finance;

-- Alpha Online Investors: 3.7 million users with a high mean income, 94 percent of which manage investments online and are the biggest users of high-speed access at home;

-- Affluent Lifestyle Users: 3.2 million users with high mean income and investable assets, 100 percent purchase products and services online;

-- Young Chat & Sports Enthusiasts: 2.9 million users, 37 percent under age 30, 34 percent pay bills online.

"These four market segments will comprise around 90 percent of an insurance carrier's online business," Ferris says. "The idea of understanding the segmentation of Net users helps carriers understand the customer and understand that some are more valuable than others on the Internet. Mass marketing does not work on the Net. If you are trying to target retirees online for financial service products, good luck. If you want to target young adults, you'll have a better return."

Some of the features that the four most likely Internet user segments are interested in are comparison quoting, accessing and tracking claims information, updating policy data, e-mail for customer service and purchasing products online, Ferris says. "The most common response for shopping online, is 'saving money.' Comparison quoting, is key."

The report recommends that insurers attract Young Chat & Sports Enthusiast users by using ads on sports sites, citing that nearly three-fourths click on online ads. In fact, users in this segment report they commonly click on online ads eight times per month and 26 percent say online ads led to a change in their opinion of the advertised brand.

The Cyber Dialogue study surveyed 4,000 online consumers during 30 minute phone interviews on subjects, including attitudes, perceptions, experience and Internet uses.

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio