The following should explain how and why an important IT investment decision has been made on a local level (AXA IM GmbH) triggering global changes within the AXA IM overall business model.
As stated before the German entity wanted to maintain autonomy not only in their sales/marketing process but also for the "production side" (= managing the assets for the German insurance group and third parties of approx 35 bn EUR in 2002). Most of the assets were managed in fixed income portfolios following strict client and legal guidelines. The equity portion was partly managed by AXA Rosenberg out of California and partly by 2 German team members for the European/German equity portion. Fixed Income was managed out of Frankfurt by a team of 4.
As Paris headquarter followed an integration strategy for all external asset management entities trying to bring some of the portfolio managers to a single location and if that was not possible transfer the assets to Paris, local management in Frankfurt had to justify the need for local production and defend the budget constraints.
Technically speaking when assets migrate to another location, the money physically remains at the local custodian bank. Only the investment decisions will be made and implemented by the new location but executed through the local custodian. The most popular argument for such a step was of course cost optimization but also harmonization of investment strategy and portfolio construction processes as well as exercising regular control mechanism.
Until that time local portfolio management decided on their own investment trades - based on a global macro view of the world - and traded locally with a pool of broker houses according to the best execution principles (selecting the broker with the best price offering for a given trade). Whenever Frankfurt decided on trades, Paris would not see it in their systems and therefore could not participate in these trades (which could have created economies of scales for broker fees). The only way of maintaining local portfolio managers would be to create greater transparency within the portfolio management and implementation decisions as well as execute combined trading within several entities.
Frankfurt senior management - to which I belonged at the time - decided to invest into an integrated financial portfolio management system (FPM developed by Computer Design) that increased efficiency and allowed trades to be visible to Paris portfolio management. The system covered the following areas: Order Management, Back Office, Compliance, Performance measurement & attribution. FPM was compatible with the previous system used by Paris portfolio management although their local clients continued being managed through the former system. It was important that headquarter could "see" the trades decided by Frankfurt portfolio management in real time before the custodian would send a consolidated report at the end of the day. Our Frankfurt senior management team defended the case to the global head of portfolio management and obtained the split of expenses for the system between Frankfurt and Paris. Implementation lasted approx 4-6 months and we managed to maintain a certain number of Portfolio manager colleagues in Frankfurt as well as their client portfolios (unfortunately not all of them).
The implementation of the new software lead to a strategy switch at AXA IM Paris finally introducing the "Multi-Expert-Business Model" in 2002 where some product management expertise stayed in different locations while following central guidelines. For most of the clients that business proposition was very valuable during those years as most of the global investment management firms centralized their "production entities" often leaving frustrated clients behind who then would take their money and left to the competition.
Is is hard to measure the success of FPM in terms of net new assets under management (which would be the correct measure to take). Some of those new assets could be gathered because of good performance or existing relationship and less because of changes in the front office tool. It is clear however that existing clients very much appreciated the new strategy (being serviced by their usual portfolio manager) and that new prospects liked the tailor made approach.
Source: AXA IM Asset Managers, Frankfurt
Saturday, July 31, 2010
Portfoliomanagement/trading tool at AXA Investment Managers, Frankfurt
Once again I have to go back in history in order to provide an example of IT investment undertaken in one of the companies I have worked for. The only IT investment done in my current organization has been the CRM system that I have described in my previous postings. I apologize for delivering an example that might be a bit "out of time" but that still gives interesting insights into the management of the foreign subsidiary of a global corporate company.
AXA Investment Managers, based in Frankfurt, started as a fully fledged asset management firm for the German speaking market with its headquarter in Frankfurt. Initially the company operated as a spin-off of AXA Insurance Group Germany in 1994 and serviced mainly the AXA Nordstern insurance group in managing their asset base. Over the years third party business was acquired and the entity became more and more independent from the insurance group. In 1997 AXA IM Paris and London took over the majority of the shares and started integrating portfolio management, sales & marketing and client service into the global AXA IM network.
Until 2002 client portfolios were almost entirely managed out of Frankfurt following guidelines from the Paris and London office. However it became clear that the number of portfolio managers based in Frankfurt was too high in order to manage the business in a profitable manner. Since specific client guidelines for the many separate mandates that AXA IM managed required a local portfolio management the Frankfurt management team decided to fight for keeping its independence. The question was how could Paris be convinced that a small team of portfolio managers would still follow overall guidelines, be linked to the Paris execution desk and still offer local tailor made service?
AXA Investment Managers, based in Frankfurt, started as a fully fledged asset management firm for the German speaking market with its headquarter in Frankfurt. Initially the company operated as a spin-off of AXA Insurance Group Germany in 1994 and serviced mainly the AXA Nordstern insurance group in managing their asset base. Over the years third party business was acquired and the entity became more and more independent from the insurance group. In 1997 AXA IM Paris and London took over the majority of the shares and started integrating portfolio management, sales & marketing and client service into the global AXA IM network.
Until 2002 client portfolios were almost entirely managed out of Frankfurt following guidelines from the Paris and London office. However it became clear that the number of portfolio managers based in Frankfurt was too high in order to manage the business in a profitable manner. Since specific client guidelines for the many separate mandates that AXA IM managed required a local portfolio management the Frankfurt management team decided to fight for keeping its independence. The question was how could Paris be convinced that a small team of portfolio managers would still follow overall guidelines, be linked to the Paris execution desk and still offer local tailor made service?
Friday, July 30, 2010
Business Intelligence initiatives at Bankhaus Warburg
Prior to coming to Miami I worked at a German private bank (100% owned by 3 private families) called Bankhaus Warburg & CO based in Hamburg, Northern Germany. It is fair to say that this bank was not exactly cutting edge in technology but tried to catch up with its Peers in the German private banking community.
My job consisted in managing a small team of sales people/relationship managers who were supposed to work on existing institutional clients as well as on new relationships (cold calling) and to offer the entire product range of Warburg & CO. At this time Warburg had several subsidiaries in Hamburg, Frankfurt, Zurich and Luxemburg each of them using separate sales entities to sell specific product ranges. Prior to my arrival there was no central entity overseeing all institutional clients that were defined as local corporate pension funds, intra-professional pension funds, foundations, insurance groups, churches etc.
Not only did I cover several client segments but the goal was to distribute a variety of investment solutions that were produced in separate entities - sometimes subsidiaries - who most of the time did not communicate with each other on a regular basis.
My first goal was to identify existing relationships within the group and to enter them into a basic CRM system that the firm had bought beforehand. In a second step those relationships needed to be classified according to the products they had invested in or for which they had contacted the bank in the past. The same applied for new prospects that the team needed to assess in terms of product interest and potential profitability on a short/medium term basis.
The existing database only offered a "one dimension approach" which was to store the contact information, notes about meetings and define the product area that was concerned. However the database could not communicate with the 2 other CRM systems used in the various subsidiaries that had already set up similar databases for their employed sales force. If the centralized approach was meant to be successful, a central, integrated IT solution was necessary. Otherwise most of the information gathered by the new team would be stored in a space that nobody could see and the follow up on product requests, interests etc was limited to a small number of people.
It took a while to convince the private partners of the bank to fund a new technology and to overcome the existing organizational behavior patterns and "old fashioned" client management processes that were implemented on a single product entity basis.
The decision was made by the senior management team consisting of 6 partners. IT was not involved at that stage and the partners only decided, that an integrated "IT tool" had to be found and implemented in order to enhance sales activities in the institutional department. Costs should not exceed 15.000 EUR. The decision making process was straight forward once the arguments were made as this is mostly the case in privately owned firms. The implementation took very long though and reflected the fact that existing sales people were very hesitant to give up their individual approach.
IT got involved and developed an in-house Access based application that was added to the existing CRM database and was meant to help establishing a link between a client visit (performed by the central sales department employee - i.e. myself) and the various entities among the Warburg Group that were involved with this new client. The new application was used for mainly optimizing the follow up of client meetings and thus speeding up the sales process. In a second time (that I did not participate in) there was a project for using hand-held devices that the sales person could use during a meeting and entering information for follow up / product requests etc on time. The information would be synchronized with the 3 existing databases once the sales person got back into the office and linked the device to the main computer. Wireless data transfer capability was not provided for that project (in 2006). Once the meeting was over all product areas that were involved in follow ups were informed in almost real time and could start working on that relationship. Which made the centralized client approach much easier to implement and also more efficient (again helping to establish a reputation within the organization).
Since I left the firm in 2006, I did not experience the implementation of the new devices and its impact on the profitability of the company. The goal initially was to harmonize and optimize sales processes and then to offer a "single face" approach to institutional clients. The expectation was that this approach would generate more revenues because of increased client satisfaction and less overlap in marketing activities by several product entities. According to some rumors I have heard in the meantime the system has technically been implemented but is not fully used by all sales people of the organization and therefore does not produce the cost reduction and revenue increase we had predicted in the planning process.
My job consisted in managing a small team of sales people/relationship managers who were supposed to work on existing institutional clients as well as on new relationships (cold calling) and to offer the entire product range of Warburg & CO. At this time Warburg had several subsidiaries in Hamburg, Frankfurt, Zurich and Luxemburg each of them using separate sales entities to sell specific product ranges. Prior to my arrival there was no central entity overseeing all institutional clients that were defined as local corporate pension funds, intra-professional pension funds, foundations, insurance groups, churches etc.
Not only did I cover several client segments but the goal was to distribute a variety of investment solutions that were produced in separate entities - sometimes subsidiaries - who most of the time did not communicate with each other on a regular basis.
My first goal was to identify existing relationships within the group and to enter them into a basic CRM system that the firm had bought beforehand. In a second step those relationships needed to be classified according to the products they had invested in or for which they had contacted the bank in the past. The same applied for new prospects that the team needed to assess in terms of product interest and potential profitability on a short/medium term basis.
The existing database only offered a "one dimension approach" which was to store the contact information, notes about meetings and define the product area that was concerned. However the database could not communicate with the 2 other CRM systems used in the various subsidiaries that had already set up similar databases for their employed sales force. If the centralized approach was meant to be successful, a central, integrated IT solution was necessary. Otherwise most of the information gathered by the new team would be stored in a space that nobody could see and the follow up on product requests, interests etc was limited to a small number of people.
It took a while to convince the private partners of the bank to fund a new technology and to overcome the existing organizational behavior patterns and "old fashioned" client management processes that were implemented on a single product entity basis.
The decision was made by the senior management team consisting of 6 partners. IT was not involved at that stage and the partners only decided, that an integrated "IT tool" had to be found and implemented in order to enhance sales activities in the institutional department. Costs should not exceed 15.000 EUR. The decision making process was straight forward once the arguments were made as this is mostly the case in privately owned firms. The implementation took very long though and reflected the fact that existing sales people were very hesitant to give up their individual approach.
IT got involved and developed an in-house Access based application that was added to the existing CRM database and was meant to help establishing a link between a client visit (performed by the central sales department employee - i.e. myself) and the various entities among the Warburg Group that were involved with this new client. The new application was used for mainly optimizing the follow up of client meetings and thus speeding up the sales process. In a second time (that I did not participate in) there was a project for using hand-held devices that the sales person could use during a meeting and entering information for follow up / product requests etc on time. The information would be synchronized with the 3 existing databases once the sales person got back into the office and linked the device to the main computer. Wireless data transfer capability was not provided for that project (in 2006). Once the meeting was over all product areas that were involved in follow ups were informed in almost real time and could start working on that relationship. Which made the centralized client approach much easier to implement and also more efficient (again helping to establish a reputation within the organization).
Since I left the firm in 2006, I did not experience the implementation of the new devices and its impact on the profitability of the company. The goal initially was to harmonize and optimize sales processes and then to offer a "single face" approach to institutional clients. The expectation was that this approach would generate more revenues because of increased client satisfaction and less overlap in marketing activities by several product entities. According to some rumors I have heard in the meantime the system has technically been implemented but is not fully used by all sales people of the organization and therefore does not produce the cost reduction and revenue increase we had predicted in the planning process.
Friday, July 9, 2010
Implementation of a CRM system for fund distribution
The business model of the fund distribution company I used to work until recently was to identify the best asset managers in the US - mainly from the equity arena - copy a succesful US product, "package" it within a Luxemburg based umbrella structure and distribute it outside the US with a strong focus on Europe. At some point in time a sales rep office in Brazil opened in order to serve on-shore Brazilian clients.
The founders of the firm came from a brokerage background and used to perform their task the "traditional" way by using business cards of their prospect and client contacts and hand-written notes for every single contact that was performed (phone or physical). Between 2002 and 2007 the firm hired more sales people in Miami as well as in other countries and ended up having 8 active sales people calling on potential investors all over the world. Administration of the funds was performed in Luxemburg, marketing and fund reporting was offered through an administrative team based in Miami. Therefore the main task of all country representatives was to make sure that the funds comply with local regulation and where necessary go through legal registration processes, position the funds on the major local administrative platforms and then sell to a targeted group of potential clients (on average each sales person had to follow approximately 150-200 client names).
Without IT support it became clear that not only was it impossible to follow up on every single contact and make sure that this contact receives the information he had requested during the last contact. But also there was no synergy happening between different country sales reps who did not share any of their market information or client visit notes. Although some global financial distribution organizations such as UBS, Credit Suisse or Morgan Stanley operate on a global basis they were covered by multiple sales people independently.
The business case for a Contact and Customer Relationship management system was not difficult to make (although some sales people still resisted) and one of the partners and myself were assigned to the project team in order to chose and implement the right and affordable software. Another important argument in favor of a CRM system was the important value that an extensive and updated client database represents for the company whose main focus is to distribute into different markets. There was the plan to sell the business in a certain number of years and that database would certainly play an important role in defining the price.
The overall goal of the future CRM system was to
- track every single contact to prospects and clients
- allow synergies between all sales employees and cross selling within global financial institutions
- ensure data security, specially for client data (such as amount of investments, gains/losses on portfolio investments, tax information etc)
- allow senior management to obtain regular sales activity reporting and track efficiency of single sales people.
The project team started to assess the needs of every user/sales person for their daily activity and to inform about the advantages of a CRM database. That process took approximately 3 months and some employees had to be convinced about the need and advantages of the system. It became obvious from the beginning that the majority of the people had no clear idea of what exactly they needed from an IT support and how they could formulate it. We established then a process chart going through every single step of a prospect approach starting with cold calling activity, follow up activities until the finalization of a deal and the servicing of a client.
Among the features to be included was the distinction between "prospects" and "clients".
Prospect information must include:
- general information about the entity (contact details, contact person etc)
- personal information about the main contact (birthday, family situation etc)
- detailed information about calling activity (phone and visits) as well as any follow-ups performed for this client
- a search application that allowed to group prospects by geography, order of importance, interest for a given product, profitability in the sense that after a certain number of contact attempts some business had to follow and if that was not happening the prospect would fall into a different category.
Client information completed the above mentioned information with the following data:
- selected products
- Transactions and volume of assets under management (regular update)
- fee structure applied and revenue per client
- gains and losses per product
Most of the large asset management companies I used to work for did not find an off-the shelve solution but customized existing databases (such as Siebel) and added company specific features to it. However this could only be done if there was sufficient funding for the project and a clear commitment to the CRM idea.
In the recent case one of the founding partners still did not believe in the benefits of a IT supported client information system and therefore was not willing to pay a lot for its implementation. He claimed that such a system would only be viable if everybody was disciplined enough to enter data and update the data on a regular basis. Starting with himself he would not commit himself to that task claiming a "lack of time".
At that point the project team decided to nominate one "data manager" who would be in charge of supervising the entry of all relevant client/prospect/product information into the database following a fixed format, enter that data for those sales people who did not have time to do it (mainly one partner) and who would also administer the access rights between single country data sets that to some people should remain confidential.
Based on our single interviews, the assessment of needs and requirements and within the reach of a limited budget (approx 5.000 USD) we decided to implement the ACT! client and contact database developed by SAGE. It was certainly not the perfect software but one that came close to our requirements. It does support the Microsoft Outlook environment which was one important factor for many sales people who wanted to be able to send client visit reports or other information out via email by using the text in the ACT template and avoiding to retype it again in a separate email. We had no budget for any customization and therefore suffer sometimes from a US bias of ACT! for certain screens. But overall acceptance was positive and in the meantime an upgrade to the 2010 version has been performed.
Outcome:
The project lasted for approx 5 months. As of today more than 4000 contacts globally are documented in ACT. There is a lot of information sharing between similar countries such as Italy and Germany in terms of comparing client visit notes and learning from situations that could arise in either country. Quick client grouping can be one in cases where a given product provider organizes a roadshow in a country and need to find those clients that show an interest in that particular product. Or the manager comes through a region/town and wants to know who would be available in that area.
And finally there is also growing recognition of the data value for potential buyers of the company who strongly rely on that existing book of business.
Sources: Selector Management, Miami
The founders of the firm came from a brokerage background and used to perform their task the "traditional" way by using business cards of their prospect and client contacts and hand-written notes for every single contact that was performed (phone or physical). Between 2002 and 2007 the firm hired more sales people in Miami as well as in other countries and ended up having 8 active sales people calling on potential investors all over the world. Administration of the funds was performed in Luxemburg, marketing and fund reporting was offered through an administrative team based in Miami. Therefore the main task of all country representatives was to make sure that the funds comply with local regulation and where necessary go through legal registration processes, position the funds on the major local administrative platforms and then sell to a targeted group of potential clients (on average each sales person had to follow approximately 150-200 client names).
Without IT support it became clear that not only was it impossible to follow up on every single contact and make sure that this contact receives the information he had requested during the last contact. But also there was no synergy happening between different country sales reps who did not share any of their market information or client visit notes. Although some global financial distribution organizations such as UBS, Credit Suisse or Morgan Stanley operate on a global basis they were covered by multiple sales people independently.
The business case for a Contact and Customer Relationship management system was not difficult to make (although some sales people still resisted) and one of the partners and myself were assigned to the project team in order to chose and implement the right and affordable software. Another important argument in favor of a CRM system was the important value that an extensive and updated client database represents for the company whose main focus is to distribute into different markets. There was the plan to sell the business in a certain number of years and that database would certainly play an important role in defining the price.
The overall goal of the future CRM system was to
- track every single contact to prospects and clients
- allow synergies between all sales employees and cross selling within global financial institutions
- ensure data security, specially for client data (such as amount of investments, gains/losses on portfolio investments, tax information etc)
- allow senior management to obtain regular sales activity reporting and track efficiency of single sales people.
The project team started to assess the needs of every user/sales person for their daily activity and to inform about the advantages of a CRM database. That process took approximately 3 months and some employees had to be convinced about the need and advantages of the system. It became obvious from the beginning that the majority of the people had no clear idea of what exactly they needed from an IT support and how they could formulate it. We established then a process chart going through every single step of a prospect approach starting with cold calling activity, follow up activities until the finalization of a deal and the servicing of a client.
Among the features to be included was the distinction between "prospects" and "clients".
Prospect information must include:
- general information about the entity (contact details, contact person etc)
- personal information about the main contact (birthday, family situation etc)
- detailed information about calling activity (phone and visits) as well as any follow-ups performed for this client
- a search application that allowed to group prospects by geography, order of importance, interest for a given product, profitability in the sense that after a certain number of contact attempts some business had to follow and if that was not happening the prospect would fall into a different category.
Client information completed the above mentioned information with the following data:
- selected products
- Transactions and volume of assets under management (regular update)
- fee structure applied and revenue per client
- gains and losses per product
Most of the large asset management companies I used to work for did not find an off-the shelve solution but customized existing databases (such as Siebel) and added company specific features to it. However this could only be done if there was sufficient funding for the project and a clear commitment to the CRM idea.
In the recent case one of the founding partners still did not believe in the benefits of a IT supported client information system and therefore was not willing to pay a lot for its implementation. He claimed that such a system would only be viable if everybody was disciplined enough to enter data and update the data on a regular basis. Starting with himself he would not commit himself to that task claiming a "lack of time".
At that point the project team decided to nominate one "data manager" who would be in charge of supervising the entry of all relevant client/prospect/product information into the database following a fixed format, enter that data for those sales people who did not have time to do it (mainly one partner) and who would also administer the access rights between single country data sets that to some people should remain confidential.
Based on our single interviews, the assessment of needs and requirements and within the reach of a limited budget (approx 5.000 USD) we decided to implement the ACT! client and contact database developed by SAGE. It was certainly not the perfect software but one that came close to our requirements. It does support the Microsoft Outlook environment which was one important factor for many sales people who wanted to be able to send client visit reports or other information out via email by using the text in the ACT template and avoiding to retype it again in a separate email. We had no budget for any customization and therefore suffer sometimes from a US bias of ACT! for certain screens. But overall acceptance was positive and in the meantime an upgrade to the 2010 version has been performed.
Outcome:
The project lasted for approx 5 months. As of today more than 4000 contacts globally are documented in ACT. There is a lot of information sharing between similar countries such as Italy and Germany in terms of comparing client visit notes and learning from situations that could arise in either country. Quick client grouping can be one in cases where a given product provider organizes a roadshow in a country and need to find those clients that show an interest in that particular product. Or the manager comes through a region/town and wants to know who would be available in that area.
And finally there is also growing recognition of the data value for potential buyers of the company who strongly rely on that existing book of business.
Sources: Selector Management, Miami
Friday, June 25, 2010
Social media in the automobile industry
Unlike the pharmaceutical industry the automobile industry has a clear definition of the customer and has the ability to approach him directly. Customers in turn can clearly influence the product design process by giving feedback during the initial product development stages.
2 years ago BMW Germany has started a Facebook initiative based on the roll out of the new Mini cooper (cabriolet version). Originally the "mini" was a very popular car built in the UK since 1959 by the Austin Motor Company which was later on taken over by BMW. (http://de.wikipedia.org/wiki/Mini_%28Auto%29). In 2002 - after the takeover of Rover by BMW - it was completely re-modeled and re-launched as a "hip" car for young urban professionals initially in Germany and then in other countries as well. A new version was about to be launched a few years later featuring additional factors such as an opening roof, more space in the trunk etc. In order to gather as much client feedback as possible, BMW launched a Mini Facebook page that tried to engage an active dialogue with their customers.
By the same time people at the headquarter Munich believed that customers would change buying behavior purchasing cars on the internet and introduced a new e-commerce feature. That prediction turned out to be wrong. While car purchases in Europe are still executed through face-to-face negotiation the Facebook site turned out to be quite powerful and popular. The main reasons for traditional buying behavior is
- the "touch and feel" of driving in a car
- rebate structure from wholesalers that are still not transparent
- the complexity of the product and the need for further education.
Customers however loved the Facebook initiative and actively started posting messages there or even blogging about their experiences with BMW cars, exchanging views among each other and giving useful advise to the user community. A very important feature was the feedback given to product design people about the needs customers expressed for the new Mini Cooper version. As an example the information that the car should have at least 2 cup holders (instead of one or even none which was until then the standard) was picked up by product design in Munich and led to a change in the interior layout of the car. Overall motivation for the campaign was not only feedback gathering but also spreading out the news about new features and positioning the product within a younger generation of customers that could be reached easier through social media and that represents a better target group for the Mini.
Based on that success a general Facebook page has been launched covering the entire product range of BMW cars extending the potential customer base beyond the traditional BMW driver to the usual Volkswagen customers. (source: http://www.facebook.com/home.php?#!/BMWDeutschland?ref=ts)
It is interesting to see though that BMW has launched country specific facebook pages (UK, US, Deutschland) whereas one would think that Facebook would get a global reach.
Unlike the Astrazeneca example this initiative did have a deadline (which was the product development schedule for the Mini) and did offer the opportunity to provide input which was used to modify some features of the product. Which would have been similar to the interactivity of the Sameer & Vinay case. However as we saw it for the drug companies there is no marketing empowerment given to potential new sales people who could spread out the news among their network and try to become sales entities themselves. I do believe however that this could be a possible feature to be introduced since cars are not as much regulated as drugs are and offer more room for manoeuvre.
In the Astrazeneca case the success was difficult to measure since revenues are generated through wholesalers and hospitals whereas for BMW there were clear revenue goals for the new Mini to be fulfilled and those goals could clearly be measured after the launch of the campaign. Despite the success of the Facebook initiative measured in terms of number of followers on that page the number of sold cars did decrease over the first 9 months in 2009. (http://www.bimmertoday.de/2009/11/03/verkaufszahlen-der-bmw-group-von-januar-bis-september/). But this was more due to the overall financial crisis rather than to a wrong marketing campaign since customer feedback on the use of social media was generally very positive. BMW now employs over 100 people in the area of social media marketing and that trend seems to continue in the futures.
2 years ago BMW Germany has started a Facebook initiative based on the roll out of the new Mini cooper (cabriolet version). Originally the "mini" was a very popular car built in the UK since 1959 by the Austin Motor Company which was later on taken over by BMW. (http://de.wikipedia.org/wiki/Mini_%28Auto%29). In 2002 - after the takeover of Rover by BMW - it was completely re-modeled and re-launched as a "hip" car for young urban professionals initially in Germany and then in other countries as well. A new version was about to be launched a few years later featuring additional factors such as an opening roof, more space in the trunk etc. In order to gather as much client feedback as possible, BMW launched a Mini Facebook page that tried to engage an active dialogue with their customers.
By the same time people at the headquarter Munich believed that customers would change buying behavior purchasing cars on the internet and introduced a new e-commerce feature. That prediction turned out to be wrong. While car purchases in Europe are still executed through face-to-face negotiation the Facebook site turned out to be quite powerful and popular. The main reasons for traditional buying behavior is
- the "touch and feel" of driving in a car
- rebate structure from wholesalers that are still not transparent
- the complexity of the product and the need for further education.
Customers however loved the Facebook initiative and actively started posting messages there or even blogging about their experiences with BMW cars, exchanging views among each other and giving useful advise to the user community. A very important feature was the feedback given to product design people about the needs customers expressed for the new Mini Cooper version. As an example the information that the car should have at least 2 cup holders (instead of one or even none which was until then the standard) was picked up by product design in Munich and led to a change in the interior layout of the car. Overall motivation for the campaign was not only feedback gathering but also spreading out the news about new features and positioning the product within a younger generation of customers that could be reached easier through social media and that represents a better target group for the Mini.
Based on that success a general Facebook page has been launched covering the entire product range of BMW cars extending the potential customer base beyond the traditional BMW driver to the usual Volkswagen customers. (source: http://www.facebook.com/home.php?#!/BMWDeutschland?ref=ts)
It is interesting to see though that BMW has launched country specific facebook pages (UK, US, Deutschland) whereas one would think that Facebook would get a global reach.
Unlike the Astrazeneca example this initiative did have a deadline (which was the product development schedule for the Mini) and did offer the opportunity to provide input which was used to modify some features of the product. Which would have been similar to the interactivity of the Sameer & Vinay case. However as we saw it for the drug companies there is no marketing empowerment given to potential new sales people who could spread out the news among their network and try to become sales entities themselves. I do believe however that this could be a possible feature to be introduced since cars are not as much regulated as drugs are and offer more room for manoeuvre.
In the Astrazeneca case the success was difficult to measure since revenues are generated through wholesalers and hospitals whereas for BMW there were clear revenue goals for the new Mini to be fulfilled and those goals could clearly be measured after the launch of the campaign. Despite the success of the Facebook initiative measured in terms of number of followers on that page the number of sold cars did decrease over the first 9 months in 2009. (http://www.bimmertoday.de/2009/11/03/verkaufszahlen-der-bmw-group-von-januar-bis-september/). But this was more due to the overall financial crisis rather than to a wrong marketing campaign since customer feedback on the use of social media was generally very positive. BMW now employs over 100 people in the area of social media marketing and that trend seems to continue in the futures.
Example of social media initiatives for the pharmaceutical industry
The unique feature of social media is that it allows a dialogue on the web versus a one way information stream given on websites. That feature allows companies to receive feedback from their clients and to react to that in a timely manner - improving client service or even changing new product designs before rolling them out.
It is difficult to define "the client" for the pharmaceutical industry (in order to keep it simple I limit my case to prescription drugs only and leave the OTC sector out). The patient purchases a drug prescribed by his doctor and gets it a the pharmacy that in turn receives it from the wholesaler. Within the hospital environment doctors do have drugs at their disposal that hospitals have purchased most of the time directly from the manufacturer (sometimes through wholesalers). Although the patient is the final user of that drug, his purchase decision for was influenced by the doctors recommendation who is the one pushing the sales. To the pharmaceutical industry only wholesalers and hospitals are considered "clients". Doctors are considered "opinion leaders" who need to be educated and convinced by the advantages of a given product. And the patient does not appear in traditional communication media in most of the countries. The use of social media for those companies is a relatively new feature and serves mainly an education purpose rather than a sales push initiative.
The company I am talking about does not use any e-commerce activities since their business is still negotiated on a "face-to-face" basis. Once contracts between wholesalers and the manufacturer have been signed, replenishment is done automatically but the sales process as such is still executed via key account manager.
An interactive website for medical professionals only was set up in order mainly to share the latest outcomes of clinical research on new products and further development for existing products.
Recently the company has launched a public Facebook Test campaign only in the US in order to reach the patient community and engage patients in an active dialogue with the company and among each other. The main focus here is on product information/education for existing products. Patients get the opportunity to interact with each other and share experiences with the laboratory that will give useful insights on product usage, side effects, benefits etc. The outcome so far has been positive but limited to the US market (astrazeneca pharmaceuticals on Facebook). Direct advertisement on drugs to patients is still forbidden in most of the countries which makes the use of social media difficult for those companies.
The main difference between that educational/information campaign on drugs and the social media effort for Sameer and Vinay is that in the latter case there was a clear deadline that had to be respected in order to save two lifes. The pharmaceutical industry does not have a deadline but tries to fulfill a clear goal by collecting patient feedback in order to target doctors better and develop the right products. The ultimate goal is not to push sales but to influence "opinion leaders" over time. There is no interactive marketing and no empowerment is given to the followers of that campaign who are simply expected to share their view and experiences on a limited number of drugs. It still makes it a powerful tool for communication beyond the traditional medical/research world towards the end-customer. And I hope that other companies will follow that path.
It is difficult to define "the client" for the pharmaceutical industry (in order to keep it simple I limit my case to prescription drugs only and leave the OTC sector out). The patient purchases a drug prescribed by his doctor and gets it a the pharmacy that in turn receives it from the wholesaler. Within the hospital environment doctors do have drugs at their disposal that hospitals have purchased most of the time directly from the manufacturer (sometimes through wholesalers). Although the patient is the final user of that drug, his purchase decision for was influenced by the doctors recommendation who is the one pushing the sales. To the pharmaceutical industry only wholesalers and hospitals are considered "clients". Doctors are considered "opinion leaders" who need to be educated and convinced by the advantages of a given product. And the patient does not appear in traditional communication media in most of the countries. The use of social media for those companies is a relatively new feature and serves mainly an education purpose rather than a sales push initiative.
The company I am talking about does not use any e-commerce activities since their business is still negotiated on a "face-to-face" basis. Once contracts between wholesalers and the manufacturer have been signed, replenishment is done automatically but the sales process as such is still executed via key account manager.
An interactive website for medical professionals only was set up in order mainly to share the latest outcomes of clinical research on new products and further development for existing products.
Recently the company has launched a public Facebook Test campaign only in the US in order to reach the patient community and engage patients in an active dialogue with the company and among each other. The main focus here is on product information/education for existing products. Patients get the opportunity to interact with each other and share experiences with the laboratory that will give useful insights on product usage, side effects, benefits etc. The outcome so far has been positive but limited to the US market (astrazeneca pharmaceuticals on Facebook). Direct advertisement on drugs to patients is still forbidden in most of the countries which makes the use of social media difficult for those companies.
The main difference between that educational/information campaign on drugs and the social media effort for Sameer and Vinay is that in the latter case there was a clear deadline that had to be respected in order to save two lifes. The pharmaceutical industry does not have a deadline but tries to fulfill a clear goal by collecting patient feedback in order to target doctors better and develop the right products. The ultimate goal is not to push sales but to influence "opinion leaders" over time. There is no interactive marketing and no empowerment is given to the followers of that campaign who are simply expected to share their view and experiences on a limited number of drugs. It still makes it a powerful tool for communication beyond the traditional medical/research world towards the end-customer. And I hope that other companies will follow that path.
Use of social media in business
Although the assignment reads "Describe an example of an e-business, mobile, or social networking activity in your organization within the last 2 years" I cannot deliver insight from the asset management industry - or at least from the company I have worked for - since they did not and still do not use social media or e-commerce in their business. This is in line with the overall trend in that segment of the finance industry mainly due to the fact that
- clients still need a face-to-face contact with their adviser in order to be convinced and do business
- most of the information is confidential and cannot be posted on the net
- the products can be complex and clients need more education than information
- fee structures in that area are not fully transparent and most of the companies do not want to disclose their fee offerings or rebate structures.
The UK is once again at the forefront of changing habits and people there seem to be a bit more curious for a new way of communication. But bear in mind that those initiatives are still in their infant shoes (Inspired Asset Management Launch Event (http://www.youtube.com/watch?v=1NpUkmSk8e8).
According to the Swiss website "Investmentber@ter" there seem to be a growing request among the German speaking private customer base to share product information and experiences about investment solutions and service provided by different asset management firms. This type of knowledge sharing would help potential customers scanning the competitive landscape much more efficiently and selecting the best product providers based on customer insight and not fancy marketing brochures sent out by the companies themselves. (http://investmentberater.ch/about/).
But as of today I have not witnessed social media initiative in my industry and therefore want to share some insights about the pharmaceutical industry (based on my husbands comments) and the automobile industry (based on one of my German friend's comments.
- clients still need a face-to-face contact with their adviser in order to be convinced and do business
- most of the information is confidential and cannot be posted on the net
- the products can be complex and clients need more education than information
- fee structures in that area are not fully transparent and most of the companies do not want to disclose their fee offerings or rebate structures.
The UK is once again at the forefront of changing habits and people there seem to be a bit more curious for a new way of communication. But bear in mind that those initiatives are still in their infant shoes (Inspired Asset Management Launch Event (http://www.youtube.com/watch?v=1NpUkmSk8e8).
According to the Swiss website "Investmentber@ter" there seem to be a growing request among the German speaking private customer base to share product information and experiences about investment solutions and service provided by different asset management firms. This type of knowledge sharing would help potential customers scanning the competitive landscape much more efficiently and selecting the best product providers based on customer insight and not fancy marketing brochures sent out by the companies themselves. (http://investmentberater.ch/about/).
But as of today I have not witnessed social media initiative in my industry and therefore want to share some insights about the pharmaceutical industry (based on my husbands comments) and the automobile industry (based on one of my German friend's comments.
Subscribe to:
Posts (Atom)