Consumer investors are increasingly becoming dissatisfied with those Web sites whose purpose is to dole out financial facts and investment strategies, according to a survey by cPulse.
According to the report, customer loyalty to investing content-based sites has been on a steady decline since the summer of 2000. In the middle of the summer, about 16 percent of users could be qualified as loyal to a particular site. By the end of September, that number dropped to a 10 percent loyalty rate. In addition, by the third quarter of 2000, 40 percent of users said they were extremely satisfied with investment sites. By the end of that same quarter, slightly less than 32 percent were satisfied.
“It appears that swings in the market over the last three quarters have caused consumers to be even hungrier for up-to-date, fact-rich research that could help guide their financial decision making,” said Eric Rudich, analyst for cPulse. “We noticed that as the market worsened, consumers became increasingly critical of the sites they relied on for financial support.”
The cPulse survey cited “irrelevant information” as the leading defection driver and cause of customer dissatisfaction with investing content sites. The survey also said the relevance of the content was also an extremely important factor among loyal site visitors, noting that this attribute went from the ninth place in importance up to third place.
“As the bubble broke in the high-tech arena and in overvalued stocks in general, consumers flocked to certain financial sites in increasing numbers,” said Jody Dodson, cPulse executive vice president. “Apparently consumers were demanding more and more of their financial sites and they became more than just a place to check stock quotes or make purchases. Those sites not keeping up with consumer demands by providing rich research and up to the minute advice and content received poor scores from consumer investors.”
cPulse analysts have three suggestions for Web sites looking to do a better job: offer as much historical content online as is available offline; offer more analyst-level perspective including FAQs, comprehensive performance analysis, and news coverage; and offer tutorial resources that teach investors how to use the information that is provided.
The research from cPulse’s Satisfaction Solutions Group resulted from data collected from 4,706 interviews with site visitors between April 1 and Sept. 30, 2000. Web site visitors were interviewed while they were on a Web site.
A study by Gomez, Inc. found that the current downturn in the financial markets has left the online investment industry faced with many new challenges.
“The State of Online Investing III” found that many of the nearly 11 million online investors are reevaluating their online investment needs as they look to invest for the short and long term. As a result, online brokerage firms must now play catch-up in order to continue to attract and retain customers. The outperforming markets that drove investors online also provided them with a false sense of financial acumen. Now, firms must provide long-term planning tools and performance analysis to enable their customers to succeed in these less bullish times.
“The performance ‘honeymoon’ investors experienced in previous years has come to end,” said Dan Burke, Gomez senior analyst. “As a result, the online investment industry faces new challenges. Firms must retain existing investors who may be reeling from recent bear markets, attract new customers who view financial planning as integral to the investing experience, and secure a larger share of wallet once an investor establishes an online relationship.”
The study also details a shift in how people are investing since Gomez’ previous study in Spring 2000. At the time, more than 88 percent of investors surveyed considered themselves either Life Goal Planners (41.6 percent) or Serious Investors (46.1 percent). The current study finds that the total percentage in these two groups remains the same, but many more investors now fall into the Life Goal Planner category (56.3 percent) than the Serious Investor category (31.4 percent).
“With the markets experiencing such a broad sell off, many investors have little choice but to think and act as Life Goal Planners, as they are forced to wait out investments that severely depreciated during the recent market downturn,” Burke said. “Now is the time for online brokers to market their financial planning capabilities, advice components, decision support tools and investment performance reporting tools or run the risk of losing customers who can get these services elsewhere. There are 12.4 million investors who are poised to come online and they are disposed towards a planning approach to investing.”