Customer satisfaction with online buying could boost direct insurance in South Africa!!

Direct insurers will benefit from the increased consumer satisfaction experienced by those who go online for their purchases. As simple transactions are concluded conveniently and swiftly, more will trust the online mediums in making important financial decisions!

Access to the Internet has become easier and more cost effective, the overall online shopping experience is viewed positively and more people are gaining trust in online security.

I have come across an article on Moneyweb titled “South Africans highly satisfied with online shopping experience” and would like to share some of the findings on customer satisfaction online. This relates to a survey on online shopping habits by Mastercard Worldwide and reveals trends that the direct insurance industry should be aware of!

Survey Results on Online Shopping in South Africa

The Mastercard survey was conducted from 3 September 2010 to 1 October 2010 and reached 8,500 consumers. Findings include:

• 51% of South Africans who have access to the Internet are shopping online and 75% of those have done so in the past three months.
• The number of South Africans accessing the Internet to shop online is up 9% from the previous survey.

South Africans and access to the Internet

Any discussion on the expectations for growth in online purchases should also reflect on the access that South Africans have to the internet. It is best to reveal some findings from World Wide Worx

• In early 2010, South African research company World Wide Worx reported that the number of South Africans with access to the Internet grew by 15% between 2009 and the beginning of 2010 from 4.6m users to 5.3m users with similar growth predicted for the remainder of 2010.

It is also important to consider how people gain access to the internet. The Mastercard Worldwide survey revealed that more people are making use of broadband access technologies. ADSL usage has increased from 55% to 60% while 3G/HSDPA usage increased from 49% to 63%.

Conversely, the number of users who said that they utilise dial-up dropped substantially from 16% in 2009 to just 6% in 2010.

Interestingly, respondents who said they use their mobile phones to access the Internet has shown significant growth. More consumers are going online via their smart phones although there remains a low percentages of purchases made from cellular phones.

Online Consumer satisfaction in buying Online

Are the South African consumers happy with their online shopping experience?

• According to the latest survey by MasterCard, a majority (89%) of South African online shoppers are satisfied with their overall online shopping experience and 73% of active online shoppers intend to make an online purchase in the next six months.
• Both these figures have shown improvements over the previous year, where satisfaction was 83%, with the likelihood of continued online shopping at 72%.

Purchasing habits by Consumers Online

South Africans who shop online feel that making purchases on the Internet is more convenient, user-friendly and easier than walking into a store or ordering from a catalogue or via a call centre.

It is however important for online marketers to consider how the consumer gets to make the final buying decision.

• According to the latest MasterCard survey, South African online shoppers prefer to plan and research their online purchases in advance.
• Fewer people are making impulse purchases online. The number of online impulse shoppers dropped substantially from 22% to just 8%.
• The majority of those shopping online (84%) conduct research about their purchases on the Internet before buying, 69% use the merchant or company’s website for their research and 57% speak to family or friends beforehand.

What are the major constraints and factors limiting online purchase decisions?

• According to 55% of the respondents not shopping online, the number one reason was that they prefer to shop in-store in order to look at the physical product.
• There was a significant jump from 24% to 41% in the number of respondents who cited “additional administration and delivery charges” as their reasons for not shopping online.
• There was also an increase in people who said that they did not find anything online that interested them.

Potential for growth for Direct Insurance Industry

The research findings will be encouraging for the online insurance industry and might well motivate direct insurers to increase their marketing efforts. It is very positive to find that fears about online safety and security have decreased substantially.

These marketers are well advised to listen to the suggestions from online consumers on how to attract more purchases:

1. Continue to enhance payment security and improve users’ confidence in online transactions,

2. Don’t charge additional service charges on purchases and

3. Make websites easier to use.

Direct Insurers should keep in mind that consumers might visit other websites and discussion forums to gain more info about the insurer, insurance products and service delivery before making the final purchase decision and processing the transaction via the website of the direct insurer.

Marketing will have to include a focus on creating positive brand awareness via those websites that are perceived to be “independent”.