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Broadband to-do list

Financial providers, retailers and health care companies must exploit broadband to keep customers close. The trick is not to spend on multimedia content, but instead to think small.

Commentary: Broadband to-do list
By Forrester Research
Special to CNET
April 17, 2003, 1:00PM PT

By Jed Kolko, Senior Analyst

By the end of 2002, more than one-fourth of online U.S. households had broadband at home. Broadband adoption nearly doubled over the past year and is on track to surpass dial-up in 2004. What's the impact?

It's broadband's always-on connection, not the multimedia capabilities, that creates opportunities for financial companies, retailers and health care providers. For consumer sites, the broadband principle is this: Exploit broadband by improving the customer experience of simple, frequent and tedious tasks.

Forrester has long said that the always-on connection is as important as the higher bandwidth in changing consumers' online behavior. Here's why:

• Most consumers get broadband for the basics, not for multimedia purposes. Consumers say that they get broadband in order to download information faster and to speed up e-mail and other communication. Those reasons, along with the benefit of the always-on connection, rank well above downloading music or video or gaming--and that's true both for early adopters and for mainstream consumers.

• Tiered services will give consumers always-on access without speed. Mainstream consumers are hesitant to pay today's $40 to $50 monthly fees for broadband. Providers are starting to offer slower, tiered broadband--which is half the speed at half the price. Adopters of slower-tier broadband won't get the high-bandwidth multimedia experience, but they will have the always-on connection.

• Home networking reinforces broadband's always-on connection. Today, half of households with broadband and multiple PCs get a home network to share that broadband connection. Networks bring the Internet to more corners of the home, making the Web not only continually on, but also just two steps away.

Broadband rewrites customer relationships
Broadband increases the frequency of all online behavior. But consumer-facing companies will notice a surge in two things: first, requests for basic information from consumers who no longer need to boot up and dial in; and second, demand for richer interactivity, because broadband makes iterative activities, such as updating shopping carts or using live chat, virtually effortless and instantaneous. Consumer sites must live up to these new expectations by:

• Building status displays for easy, accurate information. With an always-on connection, the PC becomes the ever-ready information resource.

Related story

Like America Online, Microsoft's MSN
Internet service is feeling the pinch
of competition from both high-speed
and budget dial-up ISPs.

This puts pressure on consumer companies to keep often-checked information, such as flight status, weather reports and stock quotes, up-to-date and easy to find.

• Creating applications that incorporate dialogue. Enriched interactivity lets business-to-consumer companies tailor products and services--from shirts to medical advice--to individual consumers. With broadband, consumers' screens refresh instantly after they input preference data, making them more willing to personalize their interactions.

• Knitting Web content into a multichannel experience. Broadband frees up the phone line, enabling customers to call service reps while looking at a site. Broadband's easy interactivity also means that applications like collaborative site-browsing can keep up with the speed of voice.

Although gratuitous multimedia applications won't help the bottom line, the business implications of automating mundane behaviors are profound. Capitalizing on broadband gives financial companies and retailers the chance to differentiate themselves from competitors, while health care providers get tools that will lower the cost of delivering services.

Financial providers: Build loyalty
Financial providers are already feeling the impact of broadband: Consumers with broadband are 33 percent more likely to check bank balances online than are dial-up consumers; they are also 46 percent more likely to receive or review bills online. Rather than view these increased activities as new burdens to manage, banks and brokerages should take advantage of broadband as First Tennessee and Wells Fargo have. Financial providers should:

• Monetize status-checking transactions. No, don't start charging consumers to check their balances. But consider site usage data as a marketing tool: Pitch overdraft protection to consumers who frequently look at their checking account balances, and sell investment analysis tools to customers who look at stock quotes every hour.

• Offer interactive online bills and statements. With broadband, pop-up information appears instantly when a consumer clicks on or drags a mouse over a link. Consumers will favor merchants like Citibank and Sprint PCS, which already enrich customer dialogue by embedding online bills with reverse lookup of merchants and numbers dialed--lowering the cost of service by deflecting calls from the call center.

Retailers: Concentrate on service
Broadband consumers spend more online, but they also shop in new ways. Categories in which visuals matter, such as apparel, get the biggest boost, as broadband lets consumers zoom, pan and rotate images more easily. But retailers in all categories can succeed--not just with visuals, but also by differentiating their customer experience.

• Post real-time inventory data. Dial-up consumers won't boot up their PC to check which Sears, Roebuck store has the vacuum cleaner that they seek, but those with broadband will expect Sears to make this sort of checking easy--and it does. Where competition is tight, and popular items are out of stock and "substitute" products won't do (think consumer electronics), the store that lets consumers check inventory status online will get the sale.

• Offer always-on customer service. Monday will cease being the heaviest online shopping day as broadband consumers shop anytime, not just during work hours. Retailers with just 9-to-5 online support will suffer as consumers shop at stores where multichannel customer service is available and adequately staffed 24 hours a day, 365 days a year.

Health care providers: Reduce costs
Broadband will enable the coming shift to greater self-care and home care. As baby boomers hit the chronic-disease years, health care providers will be able to shift routine data collection and care online and concentrate in-person resources on less routine diagnosis and care. Broadband will help control health care costs because:

• Automated patient forms streamline patient-provider dialogue. RelayHealth's structured e-mail system puts patient requests into a standardized form and eliminates irrelevant information, making it easier for a doctor, nurse or physician's assistant to respond quickly. Broadband makes filling out even multiple forms easy. The result: fewer time-consuming office visits and phone calls.

• Wireless home networks will boost health care information collection. From wristbands that monitor daily activities to smart pillboxes that dispense and record dosages, broadband will make connected bathroom and bedroom devices part of the patient record that doctors check.

Broadband service expectations
Broadband ratchets up consumer expectations--if the connection is there, consumers expect to use it. As a result:

• Makers of executable applications will join the ranks of broadband partners. When retailers, banks and travel companies need to build broadband applications, they'll look to vendors such as Curl and Yodlee. These companies are building the always-on top status displays--dashboards--that will display flight updates, stock quotes and traffic reports that broadband users will check as often as they look at their watches.

• Service will move offshore and into the moonlight. Broadband expands expectations for chat- and phone-based service response. Companies like Delta Air Lines that are already moving service operations offshore will be ready to help broadband customers calling and chatting in the wee hours, U.S. time. And daytime, U.S.-based customer service reps will moonlight from home after hours, providing chat support for other companies on their own time when broadband customers need their questions answered.

• Instant communities will form. With always-connected consumers, message boards will light up as soon as news happens. More online chat rooms will achieve critical mass, letting consumers sound off instantly on the latest antics of Tony Soprano or President Bush. TV networks will rely even more on online polls and feedback, and political movements that already rely on the Internet to organize activists--such as the anti-World Trade Organization protesters--will convene rallies more quickly.

© 2003, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.