responseEinemann Analysis - Effekte von Webhosting-Nutzung

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PROF. DR. EDGAR EINEMANN

INTERNATIONAL COMPARISONOF THEECONOMICEFFECTS

RESULTINGFROM

THE IMPLEMENTATIONOF

PROFESSIONAL

WEBHOSTING

PRODUCTS

OUTCOMEOFAN INTERNATIONALCUSTOMERSURVEY

CONDUCTED BY1AND1 CORP.

INGERMANY, THEUKAND THEUS

June 2005

Economic Effects of Implementing Web-hosting Products

Contents

1.Survey questionnaire ...................................................................................3

2.Survey approach ..........................................................................................3

3.Significant web contributions to the sales revenue ....................................4

4. Improved customer communication and marketing .................................6

5.No cost reduction but increased efficiency ................................................7

6.No difference between industry sectors and regions .................................8

7.Conclusion:Extensive benefit effects of the web presence .......................9

APPENDIX ....................................................................................................10

Tables

Table 1:Base data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Table 2:Web contribution to the company development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Table 3:Web portion of the total business volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Table 4:Connection of sales and web activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Table 5:Communication advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Table 6:Cost aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Prof.Dr.Edgar Einemann 2

Economic Effects of Implementing Web-hosting Products

1.Survey questionnaire

The main focus of the survey was the question about the actual economic benefits resulting from individual Internet presences.Direct economic effects:How did the operation of the website effect the overall company development over the past year,what is the revenue portion generated by the Internet presence, to what extent did the website influence the sales revenue increases of the past year?Regarding the aspect of improved communication the survey asked about advantages in terms of canvassing and attracting new customers as well as increased marketing effectiveness.Finally the respondents were asked about a cost assessment:does the web presence constitute a cost-effective customer communication solutiontime,what were the expenses for the Internet presence in the past year?And the survey asked about industry affiliation and regional mapping.

2.Survey approach

In Germany, the UK and the US 1and1 Corp. asked a selected group of 54,886 customers to participate in the survey.A total of 5,027 responded to the invitation, i.e. a response rate of 9.2%. Included in the survey in the US and the UK were customers from small and medium sized companies, and in Germany private customers as well; their common characteristic is the implementation of higher priced, professional web-hosting products (packages marked as "business"or "professional"). 1,702 responses were received from Germany, (33.9%, response rate 9.1%),2108 responses from the UK(41.9%, response rate 9.6%) and 1,217 responses from the US(24,2%,response rate 8.4%).

Table 1:Base data

The objective of the survey was to obtain a first impression:Completing the questionnaire online did not take more than a few minutes and facilitated a quick evaluation.Participants were provided with a personalized link to access the questionnaire,which also ensured only one submission per customer.

Prof.Dr.Edgar Einemann 3

Economic Effects of Implementing Web-hosting Products

3.Significant web contributions to the sales revenue

Overall 94.7%of the respondents attribute a positive company development to their web presence.This impression is equally confirmed in Germany(96.1%), the UK(93.6%), and the US(94.8%).

Table 2:Web contribution to the company development

The differentiated evaluation of the responses regarding the specific question to what extent the website contributed to the sales development in the past 12 months confirms the overall positive result.Roughly a third of the respondents indicated to have produced over 20%of the total sales by means of their website.

Table 3:Web portion of the total business volume

The table demonstrates to what extent taking advantage of the available Internet possibilities benefits existing businesses.However: For more than half of the respondents the revenue generated via the website was less than 20%of the total business volume.A sales revenue portion between 21%and 60%was generally indicated by approx. 12%of the respondents.The relatively high sales portion of the web business in Germany (a quarter indicated to have generated more than 60%via their website) as well as in the USA represents a significantly high value. In the UK on average merely 3.7%of the respondents (higher results were indicated by the retail and media service sectors) indicated that their web presence generated a completely new business venue;however, for almost half of the respondents (49.2%) the web-based sales portion is below 10%.

Prof.Dr.Edgar Einemann 4

Economic Effects of Implementing Web-hosting Products

The result differs, however, if we look only at those respondents who experienced a sales revenue change within the past 12 months before the survey(in case of stagnant sales the web contributions prevented a revenue decrease).While on average 53.7%of the respondents reported a stagnant sales development, almost half of the respondents (44.7%) are enjoying increased sales; less than 2%complain about setbacks.

Of those who experienced a change in sales more than 80%contribute it to their Internet presence.The range varies from 87.7%in Germany to 81.6%in the UK to 78.4%in the US.

The 1,930 respondents noticing a connection between sales development and Internet activities consider the importance of their web presence as high. 38.1%assess the relevance as less than 20%,but half of the respondents (50.2%) estimate the web relevance to be more than 20%,and overall a quarter (26%) rates the weight of the web portion with regard to sales changes with over 60%.

Table 4:Connection of sales and web activities

Prof.Dr.Edgar Einemann 5

Economic Effects of Implementing Web-hosting Products

4. Improved customer communication and marketing

In all countries approx. three quarters of the respondents report a positive experience with

 well-aimed customer canvassing(71.4%)

 efficient marketing(77.1%),and

 improved customer communication(80.8%)

In general the results are more or less the same internationally,except that the positive effects of canvassing and attracting new customers are rated slightly lower in the US and the UK than in Germany.

Table 5:Communication advantages

A detailed analysis by industry sector and regions confirms the overall positive outcome as well.Thus in Germany all respondents from the lending and insurance sector emphasize the positive effects of their web presence for the company development–the lowest value of still 78%was reported from the construction industry.Based on the specific function principles of the various different sectors it is surprising that in Germany even the trades (51%) and the lending companies (44%) reported very positive effects regarding the question about improved customer communication. The regional analysis shows hardly noticeable differences, and existing conspicuous behavior cannot easily be interpreted (thus for the question about improved customer communication the positive view of 81% of the respondents in Mecklenburg-Western Pomerania leads the way as opposed to Saxony-Anhalt with 59%at the end of the scale; these results,however, stem from only 26 and 22 responses respectively). In the UK and the US differences between industry sectors and regions are of minor significance.

Prof.Dr.Edgar Einemann 6

Economic Effects of Implementing Web-hosting Products

5.No cost reduction but increased efficiency

Nearly 86%of all respondents assess their web presence as a cost-effective customer communication solution; the differences between Germany, the UK and the US are marginal.This rather positive overall assessment is the result of an analysis of the already mentioned significant sales and communication benefits–it is not equivalent to direct cost savings.The question whether the web presence is a concomitant of reduced workforce planning is clearly negated.Overall almost three quarters of the respondents did not experience any working time savings;however, in Germany and the US at least one third notices improvements in this area.The overall positive result is probably influenced by the fact that the specific overhead costs have been kept within reasonable limits.Even though the numbers cannot be compared precisely due to currency differences (the survey was conducted by country currency; for comparison purposes the amounts for the UK were converted to euros, for the US the values are indicated in dollars) the result clearly shows that: two thirds of the respondents paid less than€500 for their web presence in the past year,only 18.6%paid more than€1000.

Table 6:Cost aspects

Prof.Dr.Edgar Einemann 7

Economic Effects of Implementing Web-hosting Products

6.No difference between industry sectors and regions

The survey asked about the industry affiliation and the regional basis of the respondents.The detailed evaluation(6 selected tables in the appendix) confirms the impression gained so far, i. e.that in principle (except for details) there are no significant differences between Germany,the UK and the US,and within these countries there are hardly any differences between the individual industries and regions.This statement applies even where the comparability of the results is limited due to different industry affiliations in the individual countries.The rather low case figures necessitate the remark to not overrate the discovered differences.

Regional differences

Distinct but certainly not to be overrated regional variances are noticeable in North Rhine-Westphalia in Germany and in Northern Ireland in the UK–both regions which are not at the top of the“traditional"or the Internet economy.

In Northern Ireland the assessment values regarding the contribution of the web presence to the company development (85.0%,on average 93.6%), the assessment of the relevance of the web presence for the positive revenue development (71.4%,on average 81.6%) as well as the overall evaluation of the Internet activities as a cost-effective communication tool (75.5%,on average 87.0%) are almost 10 points below the British average. In North Rhine-Westphalia only 70.4%of the respondents notice a positive contribution of the web presence to the company development–that is 25.7%less than the German average.

Differentiation by industry sector

The differences between the industry sectors are very minor. Based on low case figures representatives of the health care industry overall (only surveyed in the USA) assess the advantages with clearly more skepticism than the average, the construction industry in the US sees above-average benefits for company development and sales relevance, and also in the US the total cost-benefit analysis in the finance/real estate/insurance sector is rated less o p timi s tic ally.

Prof.Dr.Edgar Einemann 8

Economic Effects of Implementing Web-hosting Products

7.Conclusion:Extensive benefit effects of the web presence As main result of the survey it can be said that the implementation of professional web-hosting products offers significant positive economic effects.With regard to the aspects of (1)company and sales development, (2) customer communication and effective marketing as well as (3) cost efficiency the result is really positive, even though direct cost savings were not reported.

The outcome is of particular significance because it is based on a relatively large number of respondents (5,027) and an international comparison.The surprising aspect of the findings is the uniformity of the results: in principle (except for details) the empiric results show no significant differences between Germany, the UK and the US, and within these countries hardly any differentiation between the individual industry sectors or regions.One can certainly say that the Internet has deeply penetrated the economy.

Central findings to be noted are:

(1)For almost all respondents (94.7%) the web presence provides a positive contribution to the company development

(2)For half of the respondents the sales portion generated via the web is below 20%,for roughly a third over 20%.

(3)More than 80%of the respondents who experienced sales changes in the past year notice a connection to the web presence.Half of this group estimates the relevance of the web presence for this development with more than 20%, a quarter even with more than 60%.

(4)More than three quarters of the respondents see major benefits in their web presence with regard to canvassing and attracting new customers, effective marketing and overall customer communication.

(5)Almost all respondents (85.9%) are convinced that they are implementing an overall cost-effective new communication tool – even though three quarters reported no working time savings.More than two thirds indicated expenses of less than€500 for their web presence in the past year, thus a very positive result.

Prof.Dr.Edgar Einemann 9

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