Banks won't have to worry about apples and oranges when comparing clicks and eyeballs thanks to a new research offering from Jupiter Media Metrix Inc. "There's a lot of subjective stuff out there," says Raj Dhinsa, a financial services analyst for the research firm. "We wanted to give banks and brokerage firms a way to benchmark their performance against their competitors in an objective, scientific way."
The result is the "Composite Online Rating of Effectiveness," or CORE, Index, which Jupiter Media Metrix introduced last month and will publish quarterly. The New York-based firm specializes in the analysis of Internet and new technologies; its Media Metrix arm measures Web traffic.
The CORE Index is composed of scores in the following areas: number of unique visitors to the financial institution's Web site, usage intensity (amount of time spent at the site), usage frequency (number of visits per month), customer loyalty (the only negative measure, based on whether a visitor to the site also visits a competitor's Web site) and transition (the ability to migrate off-line customers online).
Dhinsa says the index will be helpful to banks in a number of ways, especially since it generates "apples-to-apples" comparisons with competitors' online performance.
"I think it will also be particularly useful in setting priorities," he says. "Because it allows an institution to see where its strengths and weaknesses are, the index can help them make informed decisions about where they want to channel money, or other resources, to shore up a weakness that has been identified."
He cautioned that the banks named in the published index are the top performers nationally. "It's important to understand that if you're 23rd on this list, it doesn't mean you're the worst-performing bank; it means that you are 23rd out of roughly 11,000 banks in the United States. So, the people at the bottom of this list are probably doing a great job."
The Web-surfing habits of approximately 50,000 people contribute to Jupiter Media Metrix data, and the CORE Index includes only those institutions with sufficient traffic to produce "statistically significant" measurements, Dhinsa says.
Although Jupiter gave equal weight to each component of the index, the analyst thinks financial institutions can exploit the data most effectively by tweaking the weight of individual measures to fit their specific goals and strategies.
Banks and brokerage firms that are clients of Jupiter Media Metrix receive the data in the form of a Microsoft Excel file to facilitate this customization process.
For example, Dhinsa explains, a bank or brokerage firm with a smaller "footprint" in the market may choose to give less weight to the unique visitors component in order to generate a more accurate comparison of its online performance vs. peer institutions.
He noted, too, that using various weighting for the components enables a bank to test strategic options; that is, the index can be used as a tool in shaping strategy, not just in measuring the effectiveness of online initiatives that already have been implemented.
Although the CORE Index was introduced only a few weeks ago, Dhinsa says the reaction of financial services firms has been positive. "I think banks see this as a tool that is going to help them benchmark their online performance against competing institutions much more effectively than anything they've had available to them before," he said in a recent interview. "The inquiries we've received focus on their desire to obtain a better understanding of the methodology" rather than any dispute over the validity of the results.
Jupiter Media Metrix believes building and maintaining customer loyalty is becoming more important by the day in the financial services industry, as online offerings converge and differentiation among products and services continues to fade.
Dhinsa says the individual measures on the index are pretty straightforward, but the "loyalty" component requires some explanation. It gauges how often a "secure visitor" to a financial institution's Web site-meaning a visitor who can access the secure area of the site with a user name and password-also visits at least one other Web site in the same category in either secure or non- secure mode.
"The implication is that someone who went to another bank's site was unable to find all that they wanted, whether that was information or products and services, at the primary site," Dhinsa says. "That's why it's a negative indicator."
Site functionality can also affect loyalty ratings. For instance, a customer may go to a site other than his or her bank's in order to access bill presentment and payment functions.
The "transition" component, measuring financial institutions' success in migrating their customers to the online channel, required Jupiter Media Metrix to obtain comparative data on the total number of accounts at each bank from another source-in this case, SNL Financial, a research firm that collects such information from Securities and Exchange Commission filings as well as a number of other sources.
However, the SNL data generates only the number of deposit accounts at an institution while banks in the index may have a disproportionate number of customers in other categories, such as credit cards, brokerage or insurance. Consequently, a Jupiter Media Metrix white paper on CORE stresses that comparisons on this measure will be "most informative when comparing similar institutions."
Moreover, the transition measure obviously doesn't apply in the case of Net only institutions. In those cases, the firm assigns a rating that reflects the mean results of other banks in the index.
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