The Internet is like Niagara Falls: an overwhelming torrent of information that threatens to bury anyone who ventures in.

Even the most powerful search engines cover only 15% of the Web's content, so the difficulties of attracting and retaining the online customer can appear insurmountable. But instead of just diving in, financial institutions should recognize that a powerful online brand can bring order to the torrent's chaos.

Brands help consumers make complex choices among products and services, offering assurance about quality and consistency. This is particularly important in a medium that prompts serious security concerns. Indeed, confronted with the Web's endless options, people depend on brands more than ever. The trick is to manage your brand to become part of the customer's core choice.

Earning such loyalty against intense competition requires delivering on your brand promise and doing it in an engaging way.


Becoming part of a customer's core choice is extraordinarily difficult. People react to the Internet's complexity by following a few familiar routes. The Boston Consulting Group, in a survey of 12,000 Internet users, found that 43% usually relied on bookmarks to find their Web destination. And 31% typed in the specific Internet address. Those who said they bookmark typically used fewer than 10 sites. In the Niagara of the Internet, the enduring challenge is to be one of the few sites earmarked by target customers.

The first big hurdle, of course, is attracting customers. For new sites, whether launched by established offline companies or dot-coms, building traffic often becomes the overwhelming objective. Millions of dollars are spent on advertising, leaving limited resources to ensure that the site delivers on promises to customers. For online brokerages, customer acquisition costs have risen to as much as $250 per account. The public, meanwhile, has quickly become immune to dot-com commercials.

By contrast, established offline businesses start with advantages in the online world. Customers are drawn to them because they already know their brands. These incumbents can reach out to their own customers to educate them about online offerings. For well-known offline brands, the online challenge is to learn how to exploit the public's superior awareness of them.


So how can financial services companies build sustainable online brands? The starting point is to recognize that the fundamentals driving people's needs, concerns, and behavior in the offline world do not change when they are sitting at a PC.

In financial services, where people often see products as commodities, the crucial difference among competitors is in delivery. The online brand (just as much as the offline one) has personal meaning for each customer and represents the person's cumulative experience of the provider's service. Financial institutions that offer customers an engaging and fulfilling online experience will create satisfaction and build loyalty. Satisfied, loyal customers then spread the word about a site and brand - a vital stimulus to new customers in the Niagara of the Internet.

Too many customers are dissatisfied with what they get online. As much as 28% of online purchase attempts end with the customer abandoning the effort. In some loan categories, customers abandon 80% of online applications. Thepsychological cost of leaving an online site empty-handed is low compared to heading out the door in the physical world, where the customer may have driven miles to get to a particular store or office. Online customers are always just a click away from the exit.


Executives talk a lot about the online customer experience. But too often their words are generalizations about the need for good content and for customer-friendly sites. It turns out that the best online brands have the following three crucial characteristics.

o First, the site is built to behave just as a great offline salesperson does.

The online salesperson - be it a character or just the site's operating environment - must replicate what a skillful, warm-blooded salesperson does. It should inspire trust, understand customer needs, and supply effective solutions to problems. It should help the customer in an unobtrusive way; close the deal; and keep promises concerning quality, delivery, and timeliness. Many sites, however, make brave promises about service but fail to live up to them - the death knell for an online brand.

o Second, the site should be entertaining. This is perhaps the hardest of the three characteristics to develop for financial services. But some companies, in particular the online brokers, have created sites that incorporate entertainment elements. E-Trade satisfies the emotions usually associated with entertainment - from pleasure and excitement to exhilaration and even obsession. It offers appealing information, stock trades for as little as $10, and free stock-price data. But perhaps more importantly, it recreates the exhilaration of the trading floor.

o Third, the site should create a community of interests. People like to congregate and communicate with others who share their interests. Relationships based on these interests are powerful, creating valuable communities of loyal online customers. E-Trade, eBay, and Amazon have all succeeded in turning these communities into armies of advocates. For example, eBay, the online auction site, encourages its buyers and sellers (who are usually complete strangers) to rate one another, thereby fostering trust and shared conventions.

PayPal, an online payment business based in Palo Alto, Calif., shows how rapidly such a community can be used to build business. By letting customers send money instantly and securely using e-mail, PayPal, a favorite service of online auction bidders, has acquired customers rapidly. This growth has come mostly from word of mouth, not from costly advertising. PayPal now has several million accounts.

Financial institutions have little choice about going online. To compete, they need to put their businesses and their brands on the Internet.

In doing so, though, they face a double challenge. First, they must attract customers to their sites. Second, their online "salesperson" must deliver the sort of compelling, satisfying, and even entertaining experience necessary to turn site visitors into brand advocates. If they fail at the first, they will have little chance to grow. If they fail at the second, they risk damaging their offline business.

Mr. Rhodes is a senior vice president in the Boston Consulting Group's London office. Mr. Becerra is a vice president in the firm's Buenos Aires office.

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