2014 WEB.COM CONSUMER & SMALL BUSINESS PERCEPTION SURVEY

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1 2014 WEB.COM CONSUMER & SMALL BUSINESS PERCEPTION SURVEY

2 Executive Summary Once again, Web.com has conducted its annual comprehensive, dual-facing national survey of consumers and small business decision-makers (SBs). As with the 2013 survey, the goal and purpose was to understand consumers relationships with small businesses and assess the impact of web and digital capabilities on consumer attitudes and overall engagement with small businesses. Additionally, this Web.com survey explored SBs own awareness, appreciation and activation of their web presence and social media activities as a means to enhance their customer relationships. The online survey, fielded by Toluna Research from September 19-26, 2014, had 3,039 total respondents, out of whom 1,003 (33%) self-identified as SBs in organizations with 25 employees or less. This represents a +1.5% to 2.0% margin of error at 95% confidence at the 3,039 all respondent level and a +3.5% to 4.4% margin of error at 95% confidence for the 1,003 SBs. This is well within the standards required by most national media for statistically significant surveys. This 2014 SB sample exceeds that of last year s survey of 850 SBs. While this is only the second year that Web.com fielded the survey, some prominent themes emerged from the survey, which are explored in this brief report, including: Significant concerns about security and privacy that will likely impact consumer shopping behaviors this holiday season. Persistent security breaches at big box retailers and large banks are motivating consumers to look to small businesses as a more likely destination this year. Small businesses are learning from the challenges that big box retailers are facing and taking steps to meet consumer demand for tighter online security and privacy controls this holiday season. Consumers desire more wireless, mobile apps and services from small businesses, and SBs are taking substantial steps to address these demands and increasingly focusing their attention on mobile marketing opportunities. Small businesses that meet consumers expectations for online and mobile capabilities have a significant opportunity to drive consumers to their business, thereby improving their bottom line. SBs attitude and approach to doing business in digital channels is becoming more professionalized. Small businesses are beginning to invest in more sophisticated digital capabilities as well as in top notch security measures needed to deliver on what customers want and need today.

3 Who Was Surveyed The Web.com Consumer and Small Business Perception Survey tapped approximately 3,039 respondents. Of this sample, 1,003 self-identified as small business decision makers (SBs) after they met the following criteria: 1) Employed at a business with fewer than 25 employees; 2) Either the business owner, operator, proprietor, partner or a senior executive; 3) Serve as the primary, sole or final business decision-maker, or be a significant participant or influencer in the decision-making process. Below is a breakdown of the SB respondents only (1,003 respondents in total) based on age, gender, revenues, level of decision-making power and number of employees.

4 Top Line Results SECURITY CONCERNS DRIVING CONSUMERS TO SHOP AT SMALL BUSINESSES THIS HOLIDAY SEASON With the holidays just around the corner and reports of retail and banking industry security breaches continuing to make headlines, consumers are more worried than ever that their personal and/or financial data will be compromised when they shop online. In fact, 69% of respondents said they are concerned about security, privacy and fraud when shopping online this holiday season. Consequently, 25% of consumers are likely to change their online shopping behavior, 65% influenced to shop more online with small businesses this year. As persistent security attacks at big box retailers are motivating consumers to consider and shop at small businesses this year, there is a critical need for small business owners to reassure their customers they have taken measures in-store and online to keep their information safe and secure.

5 CONSUMERS PLAN TO SHOP BIG AND SMALL BUSINESS EQUALLY THIS HOLIDAY There is no question that consumers will still flock in-store to larger retailers or national chains, but the majority of consumers surveyed say they intend to give equal attention to both small and larger retail outlets when online shopping. ARE SMALL BUSINESSES LIVING UP TO CONSUMERS EXPECTATIONS? In terms of digital capabilities consumers have typically seen small businesses trailing behind their larger competitors when it comes to social media activities, engaging website functionality and mobile capabilities. However, those beliefs are changing. The perception gap between SBs and consumers on how well small businesses are meeting or exceeding expectations for being personal, intimate, human, face-to-face have narrowed in 2014 compared to While the personal touch remains important as a small business differentiator, consumers would like to see small businesses invest more in digital capabilities, particularly as more and more people are shopping via mobile devices.

6 There are gaps between SB and consumer perceptions when rating small business performance on a host of web-based capabilities, in particular. SB- and consumer-positive ratings of small businesses when it comes to Wireless, mobile apps and services are closer and better aligned in 2014 than in Yet, when it comes to small business performance with their web sites, the perception gap has increased this year in that SBs rate small businesses even more positively today compared to consumers than they did a year ago.

7 In order to deliver what consumers want and need in this brave new digital world, SBs have an opportunity to ramp up their social media efforts, giving their customers improved access and ability to navigate their websites and in turn, deliver an experience that mirrors the spirit and quality of an in-person experience. SMALL BUSINESSES EMBRACING MOBILE It is well understood that we have entered a strong mobile era. Each day, consumers are becoming more advanced in how they shop, bank, network, and access real-time information and entertainment on their smartphones and tablets -- leaving behind their laptops or desktops. People have become more reliant on their increasingly functional and affordable mobile devices and it helps that access to any content or any product is made possible with ubiquitous WiFi and mobile 4G LTE networks. SBs have a tremendous opportunity to reach and engage their customers from anytime, anywhere. We know that consumers value that SBs are nearby and local, so, if you combine the growing phenomena of accessibility via mobile, there is a tremendous opportunity for small businesses to further enhance their personal relationships through a more consumer-friendly approach with mobile and digital assets. Indicative of this, when we asked consumers to rate web-based capabilities that small businesses provide, with regard to wireless, mobile apps, services, 55% rated SBs as EXCELLENT or VERY GOOD, which is a 22% jump from 2013 (only 33%). For SBs in 2014, the survey noted an increase in SBs wireless capabilities as well with 60% of consumers giving a strong nod to small businesses for wireless capabilities, representing an 8% increase from 2013 (52%). PERSONAL BUSINESS HAS GONE PROFESSIONAL With the web now an integral part of daily life as we know it, consumers have come to expect an increased degree of sophistication and professionalism when shopping small businesses meaning consumers expect all small businesses to have a website. As such, small businesses are becoming increasingly focused on maximizing their online services experience. Small business owners are becoming more thoughtful, serious and committed to professionally managing their business online presence and to taking the proper security measures to keep their customers data safe. In this way, having a basic online presence is shifting from a nice to have or supplemental business component to a critical business asset.

8 SBs are seeing the tangible benefits of adopting more sophisticated website technologies and practices. Small businesses have an opportunity to think even more strategically about their online/ digital presence through the lens of what value they can bring their customers whether in the form of money, efficiency, security, etc.

9 WHAT THIS MEANS FOR SMALL BUSINESSES With the insights gathered from both consumers and small business owners with this survey, the Web.com team encourages small businesses regardless of where they might be in their web and digital evolution to think about these points as they asses their own online, social and mobile activities and security. 1. Amp up direct customer communications with messages to reassure them that the security of your website/digital assets is a top priority: it s well-maintained and monitored. 2. Find a way to leverage the business assets of the physical world and translate them to the digital world. 3. Take steps to become more accessible to your customers, as well as more professional and sophisticated with how your business offers products/services via the web and mobile. 4. Hone your focus on mobile opportunities - consumers see the greatest value in the local benefit combined with mobile accessibility and flexibility. 5. As your business evolves, seek counsel and help from proven resources that can propel your business down the path of growth and success. About Web.com Web.com Group, Inc. provides a full range of Internet services to small businesses to help them compete and succeed online. Web.com is a global domain registrar and further meets the needs of small businesses anywhere along their lifecycle with affordable, subscription-based solutions including website design and management, search engine optimization, online marketing campaigns, local sales leads, social media, mobile products, ecommerce solutions and call center services. Through a unique combination of proprietary Web publishing and management software, automated workflow processes and specialized workforce development and management techniques, we achieve production efficiencies that enable us to offer sophisticated Web services affordably and effectively to our customers. The breadth and flexibility of our Web offerings allow us to meet the needs of business anywhere along their lifecycle, from acquiring a domain name to establishing their websites to providing more sophisticated functionality or ecommerce. Headquartered in Jacksonville, Florida, Web.com has been serving the small business community since 1997 and became a public company in Through acquisition and organic means, we have grown from approximately 50,000 subscription customers in 2005 to more than three million customers at the end of We are proud to have been recognized on the 2012 Deloitte Fast 500 Technology list as one of the fastest growing technology companies in North America for the third year in a row.

WEB.COM CONSUMER & SMALL BUSINESS PERCEPTION SURVEY

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