No tech support for online traders?
September 8, 1999
by Liane Gouthro
(IDG) -- If you're among the increasing number of people looking to the Web to manage your investments, try not to run into too many technical snags. Your chances of getting any customer service from an online brokerage aren't looking too good.
This news is unfortunate because the online brokerage market is expected to grow. This booming industry may reach assets up to $3 trillion by 2003, according to a new study by Jupiter Communications.
But online brokerages most likely still will lag far behind other retailers when it comes to customer service, says Robert Sterling, an analyst with Jupiter's digital commerce strategies group.
Jupiter's research finds online brokers have an "inadequate" response rate to customer inquiries. It's especially striking when you consider that this is a service-intensive business.
Only 39 percent of financial services sites respond to customer's inquiries within a day, compared with 64 percent of retail shopping sites, the researchers found. A similar first-quarter study found financial services sites had a 24 percent one-day response rate, and 26 percent of retail sites responded within that time.
The latest study shows some improvement, but not enough. And don't expect much more, Sterling says. Retail shopping sites, on the other hand, compete on the basis of services, he says.
"They don't want to compete on price any more than they have to, so they compete on other levels -- primarily through the services they offer," Sterling says.
The financial services market has never been the most user-friendly, Sterling notes.
"The level of service at a brokerage house is typically determined by the assets under management. It is unrealistic to expect the same service when you're investing $15,000 as opposed to $150,000," Sterling says.
But at least one online brokerage firm says it does not play favorites among investors. Datek Online has a dedicated e-mail group that tries to answer within two hours every customer service inquiry sent during normal market hours.
"We send out an automated response notifying the customer that we have received their inquiry and that they can expect a detailed response within 24 hours," says Michael Dunn, a Datek spokesperson.
Datek was lauded in a recent Yankee Group study that tested both the speed and the quality of responses to customer service inquiries at online retailers and brokerage firms.
"Datek scored 85 out of a possible 100, and they weren't the first brokerage to respond. The key to their score was the quality of their e-mail response," says Steve Robins, a senior analyst with Yankee Group's Internet computing strategies planning service. As more companies offer after-hours trading, they must improve their off-hours customer service.
Competition changes the field
But Jupiter's Sterling says preferential customer service is a simple fact of life.
"Any online retailer will take into account what kind of customer they are dealing with," Sterling says. "An online retailer knows what kind of customer you are. It's not like in a store, when you walk up to a manager and he has no idea .... An online retailer knows your buying habits, and he can treat you accordingly."
That's not to say there's no hope for improvement. As the full-service financial firms enter the online stage, we may see change, Sterling says.
"We already have a slew of online brokerages, but they will have to react in some way to the entry of the Merrill Lynches and the PaineWebbers. This could revolutionize the online [financial services] stage," Sterling says. "It's not clear what kind of effect they will have. But we can hold out hope that it might mean improved customer service."
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