Monday, March 19, 2001

Women-Owned Businesses Spent $18.5 Billion Online

Aggregate business-to-business online spending for women-owned businesses reached $18.5 billion in 2000, according to a new study from Cyber Dialogue. Representing 46 percent of the total spending for all small businesses, women-owned businesses are rapidly increasing their use of online B-to-B channels and are becoming one of the small business industry's highest value and most loyal segments. Nearly 2 million online small businesses have women owners, a rise from just over one-quarter of businesses in 1999.

The new study, "Marketing to Women Owners of Small Businesses," provides an analysis of shopping behaviors, spending levels, use of online financial and business services, e-commerce initiatives and customer satisfaction. The study reveals that women-owned businesses demonstrate more aggressive use of the Internet and greater overall satisfaction with their online experiences. Women decision-makers are also more likely to order products online, use online financial or business services, operate Web sites and actively sell and advertise online.

"Women-owned firms are strongly concentrated in the two highest-value spending segments of retail and business services, which together account for 48 percent of all B-to-B online spending," commented Joi Anderson, a senior analyst with Cyber Dialogue. "Because women are actively leveraging the Internet for their own e-commerce initiatives, they are also a lucrative target for value-added online services such as e-commerce enabling and aggregated financial or business services."

Internet Not Displacing Offline Banking Transactions
Cyber Dialogue, a New York-based Analytical eCRM provider, today announced new analysis detailing how online banking and brokerage customers continue to rely on both online and offline channels to conduct transactions. These findings are in direct conflict with financial institutions' desire to use the Internet to save on customer service costs. However, the analysis also supports the key proposition that an institution's "most valuable customers" have adopted the online channel as a value-added service.

"To date, the Internet has not displaced offline activity and therefore has not reduced the cost of servicing customers. However, it does enable banks and brokerages to deepen their relationship with high-value customers," said John Farris, a Cyber Dialogue senior analyst.

The analysis found that those who take advantage of financial services' multiple channels tend to be the organizations' most valuable customers. Multichannel traders make fewer trades than online-only traders, but have a net worth that is 29 percent higher than online-only traders. In banking, online customers are more likely to use ATMs or automated phone systems than offline-only customers, but are also more likely to hold high margin products including IRAs, CDs and money market accounts.

"Multi-channel bankers and investors tend to be high-value customers who are seeking better service and greater convenience. To financial services organizations, the advantage of the Internet as a touch point is that the medium doubles as an effective marketing channel for targeting customers with additional products and services," continued Farris. "A successful strategy would be to start with a thorough analysis of churn rates among exisiting accounts, comparing those that do and do not utilize the online channel. This will underpin the proven ROI of your Internet initiative. Further analysis should help optimize your marketing by identifying the best cross-sell and acquisition opportunities.

The implication of this research for brokerages is profound: the option of online service is appealing to and utilized by customers with the greatest assets. By offering this additional channel, the most valuable customers are kept satisfied with their brokerage experience. Since competition for the high investable asset category will intensify through 2001, and it is likely that discount brokerages will consolidate, retention of these high-value investors will become an even more critical brokerage strategy.

"The Internet channel is critical for financial institutions because it's an extension of existing product-centric business units," said Director Tara McLaughlin of Cyber Dialogue. "With this in mind, it's imperative that this channel be 'shared' across business units to ensure that service levels recognize a customer's value across the organization and not just within the business unit. This implies that financial services institutions must organize cross-business unit teams to monitor and synchronize the Internet initiatives as opposed to having either separate e-Business units or 'siloed' Internet departments of business units."

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