In November 2007, ING Direct acquired personal investment site Sharebuilder. While the acquisition was said to be strategic in that ING Direct would now be able to offer investment options to its current customers, the question is whether this acquisition has achieved that goal. Specifically, did the acquisition increase demand amongst ING Direct’s current customers for Sharebuilder products?

Read the farthest point to the right as: ~7% of ING Directs customers who logged in that month also began a Sharebuilder application, and, of that 7%, 5% completed it

The chart above shows the percentage of ING Direct’s active account managers (customers) who began a Sharebuilder application in the same month (represented by the yellow line) compared to the percentage of ING Direct customers who began and completed a Sharebuilder application (represented by the orange diamond). So what we can note from the chart above is that the yellow line is not trending upward, but instead looks relatively stable from the month prior to ING Direct’s acquisition of Sharebuilder in November to 3 months post-acquisition. This indicates that demand for Sharebuilder accounts by ING Direct customers has not increased post-acquisition as we’d expect.

When looking at the orange diamonds, however, notice that they are actually trending upward post-acquisition, significantly. This shows us that after the acquisition, ING Direct customers who started to open an account at Sharebuilder were more likely to essentially finish an account at Sharebuilder*. In fact, in February 2008, ING Direct customers were 5x more likely to complete a Sharebuilder application once started than in October or November.

The finding here is that while the acquisition of Sharebuilder did not exactly increase more demand from ING Direct’s customers in the short term, it did increase the likelihood for an ING Direct customer to complete the application. So what are the implications of this finding? The story the data may tell us here is that demand for investment options do not necessarily change, that a certain percentage of a group of people will always be in market looking at different investment vehicles. However, while a certain percentage of people are in market, these people are more likely to complete an application with a company where they already have an existing trusting relationship, and in this case, five times more likely. So, by acquiring Sharebuilder, ING Direct is in fact increasing its penetration into existing accounts. This increased account penetration will ultimately create more loyal consumers and thus could be the first indication that this acquisition will prove successful in the long run.

*For this study, we considered a person to complete a Sharebuilder account when they completed an account and selected a pricing plan

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