For most of us, tax season has come and gone. But there’s no need to be sad. As the old adage goes, it’ll certainly be back. Though the season has closed, we wanted to look back at the performance of the key players in online tax filing because here at Compete, we are supremely interested in measuring competitive firms’ online effectiveness and digital marketing efforts. So though the season has closed, we still want to know: who performed best this year in this online space?
Earlier this season, we conducted a survey and found that TurboTax was the most popular online option this year with 23.2% of respondents using it, followed by TaxACT (8.4%) and H & R Block (6.8%). One thing we noticed when we compared our survey results with our clickstream data was that TaxACT, although generating the fewest unique visitors to their site, outpaced H & R Block in terms of completed or filed taxes. This brought up a few interesting marketing questions. How does TaxACT move its visitors through the filing funnel? And, how can online tax providers improve their conversion rates?
To help answer these questions, I took a look at a measure of engagement for each of the competitors over the course of the tax filing season. In this case, engagement is defined as the percentage of prospects who started to file their taxes on the site. This metric shows us how effectively a site moves individuals from prospects to tax filers.
Below are the engagement rates for TaxACT, TurboTax, H & R Block, and eFile from December 2010 to April 2011. We see that TaxACT is getting the largest share of its prospects to start tax filing online. Thus, TaxACT leads the competitive set in engagement.
So, what’s working about TaxACT’s site? For one, it has a streamlined homepage with a simple three tier pricing structure, and the marketing messaging emphasizes its “free” option and “maximum refund pledge,” which is also clear and appealing.
TurboTax, though it has a lower rate of engagement by 5 points still outperforms the competitive set in completed filings. TurboTax is the industry leader and attracts the largest share of prospects in the industry giving them a strong edge. However, given TaxACT’s high engagement, TurboTax still has an opportunity to increase engagement on their site and follow best in class performance. TurboTax’s marketing messaging is quite different than TaxACT’s, focusing on its Deluxe version priced at a steep $49.95. The high-priced messaging may not appeal to a large number of prospects who think they want a free version. In addition, TurboTax also has a total of 5 editions, which may complicate the decision for some prospects (paradox of choice, anyone?).
H & R Block appears to have a very low rate of engagement. At first, this may seem surprising, but a look at their home page and marketing messaging reveals a different approach and business model. H & R Block’s site is actually driving traffic to its branch offices, which helps explain their low online engagement rate of 38%.
And finally, there’s eFile, the IRS-endorsed electronic filing system. Our engagement analysis shows that about 5 in 6 people who visit the site decide against using the government-authorized choice. I’m not sure what this says about marketing or the government, so I’ll leave that one for now.
More on taxes next year. Until then, happy end of tax season!
Jennifer Johnston Canfield is a Senior Associate in Financial Services at Compete. Jennifer is responsible for providing competitive analysis to financial services clients. Before Jennifer joined the Compete team she was a social media marketing consultant. Connect with Jennifer on Twitter (@jbjcanfield) or LinkedIn (http://www.linkedin.com/in/jenniferjohnstoncanfield).