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.
Friday, June 25, 2010
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.
Friday, June 18, 2010
Trends in the Asset Management Industry
The investment management industry is going through a big change in culture due to the increasing use of the internet. Internet Banking has been established many years ago and the trend now moves to the use of social media for client advisors in institutional asset management/private banking who try to better communicate with their clients about performance, changes in the strategy, new products etc. So far the so called "trust" and "confidentiality" factor have prevented many firms to extensively use the internet in order to win prospective clients or to service them through this media. However globalization, time constraints of investors and mobility forces most of the companies to track their clients and still be in regular contact with them.
That trend carries a high risk of data diffusion about strategies, investments, personal data that some companies have not fully covered. The example of Germany obtaining data through an ex-employee of a bank who sold the data shows that this information should have been protected much more than it obviously was. Also the awareness among client advisors, portfolio managers and also back office employees needs to be increased and regular training should be performed.
Only the big "household" names in the industry (such as JP Morgan, Fidelity, Waddell & Reed, Morgan Stanley, Goldman Sachs etc) have established internal policies about IT security. However there are more and more small asset management firms out there who either don't have the time or do not want to spend the money to focus more on data issues and can therefore be exposed to an information loss that might have severe consequences on their overall business.
That trend carries a high risk of data diffusion about strategies, investments, personal data that some companies have not fully covered. The example of Germany obtaining data through an ex-employee of a bank who sold the data shows that this information should have been protected much more than it obviously was. Also the awareness among client advisors, portfolio managers and also back office employees needs to be increased and regular training should be performed.
Only the big "household" names in the industry (such as JP Morgan, Fidelity, Waddell & Reed, Morgan Stanley, Goldman Sachs etc) have established internal policies about IT security. However there are more and more small asset management firms out there who either don't have the time or do not want to spend the money to focus more on data issues and can therefore be exposed to an information loss that might have severe consequences on their overall business.
Data protection in a small mutual fund distribution company
Once we have defined the two types of information sets I would like to highlight the data/IT security policy applied in the mutual fund distribution company I have been working for since 2007.
The company's mission is to select the best US asset managers for a given asset class within the equity arena, to create a mutual fund structure (Luxemburg umbrella funds) which is a sort of a "nutshell" for the given strategy and to distribute the product outside of the US (mainly Europe). Because of that focus on distribution only portfolio strategy information remains with the chosen asset manager in their company site and with the custodian in Luxemburg. It does not come through the Miami office and there is no need for specific security measures.
However all client data - existing and prospect - are stored in Miami and needs to be secured. In order to do that, the following features have been implemented:
Inside security:
All company employees have unique user names and passwords to access the email server. Most people have different editing rights for the software used to store the information (read only, modify, contribute etc)
Daily backups are performed on the company server (inside the building).
Information on existing clients is displayed in another software program than information about prospect clients (which is managed in a CRM software called ACT). Only one person has access to create new contacts or edit contacts in that database).
Outside security:
A strong firewall has been installed on the company server in order to prevent attacks from outside users.
An off-site backup server has been installed in case of any potential disruptions (hurricane etc)
Information on buy/sell transactions of fund certificates from clients are communicated by Fax only. The daily transaction report about subscriptions/redemptions or distribution of gains is sent electronically on a daily basis by the Luxemburg management company through a password protected file.
Among the company's employees one administrative assistant is responsible for managing the data. She is helped by a MIS (Management Information System) person who takes care of the security of the information
An external data hosting service has been hired in order to protect the data that is displayed on the Website. The overall responsibility for data and information security remains with one of the 3 founding partners of the firm.
Despite the above mentioned security measures, there are too many open "wholes" in my opinion that would allow outsiders to access the data. The ACT database that includes more than 600 names, phone numbers, contact details and also contact history of potential clients is simply password protected. But can be downloaded by any employee on their personal computer and eventually used for another firm that individual might be working for in the future.
So far no information leak has been observed and no client data was criminally used by outsiders to the firm. Also since 2001 no major disruption happened which would have forced the company to use the back up server. However I do believe that there should be more training offered to employees about the sensitive nature of the data and the danger in loosing it to competitors. Not only government agencies (such as the IRS) are interested in the detailed portfolio structures of potential clients but also any other asset management or distribution firm. Since I have been working with this company (3 years ago) no formal training session has been performed to create awareness.
Outside security:
The company's mission is to select the best US asset managers for a given asset class within the equity arena, to create a mutual fund structure (Luxemburg umbrella funds) which is a sort of a "nutshell" for the given strategy and to distribute the product outside of the US (mainly Europe). Because of that focus on distribution only portfolio strategy information remains with the chosen asset manager in their company site and with the custodian in Luxemburg. It does not come through the Miami office and there is no need for specific security measures.
However all client data - existing and prospect - are stored in Miami and needs to be secured. In order to do that, the following features have been implemented:
Inside security:
All company employees have unique user names and passwords to access the email server. Most people have different editing rights for the software used to store the information (read only, modify, contribute etc)
Daily backups are performed on the company server (inside the building).
Information on existing clients is displayed in another software program than information about prospect clients (which is managed in a CRM software called ACT). Only one person has access to create new contacts or edit contacts in that database).
Outside security:
A strong firewall has been installed on the company server in order to prevent attacks from outside users.
An off-site backup server has been installed in case of any potential disruptions (hurricane etc)
Information on buy/sell transactions of fund certificates from clients are communicated by Fax only. The daily transaction report about subscriptions/redemptions or distribution of gains is sent electronically on a daily basis by the Luxemburg management company through a password protected file.
Among the company's employees one administrative assistant is responsible for managing the data. She is helped by a MIS (Management Information System) person who takes care of the security of the information
An external data hosting service has been hired in order to protect the data that is displayed on the Website. The overall responsibility for data and information security remains with one of the 3 founding partners of the firm.
Despite the above mentioned security measures, there are too many open "wholes" in my opinion that would allow outsiders to access the data. The ACT database that includes more than 600 names, phone numbers, contact details and also contact history of potential clients is simply password protected. But can be downloaded by any employee on their personal computer and eventually used for another firm that individual might be working for in the future.
So far no information leak has been observed and no client data was criminally used by outsiders to the firm. Also since 2001 no major disruption happened which would have forced the company to use the back up server. However I do believe that there should be more training offered to employees about the sensitive nature of the data and the danger in loosing it to competitors. Not only government agencies (such as the IRS) are interested in the detailed portfolio structures of potential clients but also any other asset management or distribution firm. Since I have been working with this company (3 years ago) no formal training session has been performed to create awareness.
Outside security:
Thursday, June 17, 2010
Risks associated with asset management data
Asset Management companies act as trusted advisors on behalf of their clients (private or institutional) who entrust their wealth to firms they have selected carefully. In order to do that money is physically transferred from one custodian bank account to another custodian account from which the asset manager takes subsequently the amounts he needs in order to implement his strategy. At signature of the management agreement the client needs to disclose a certain number of personal data including fiscal data and data about potential money laundering issues. This data is the most sensitive information that needs to be protected by the custodian and the asset management company.
When the money has arrived on the custodian account, portfolio management starts implementing the asset allocation strategy. In order to do that specific trades will be executed through security or commodity markets. Information about those trades is the second category of sensitive data that firms want to protect at any time since the strategy represents the competitive advantage for a successful management performance and should not be copied by other portfolio managers.
When the money has arrived on the custodian account, portfolio management starts implementing the asset allocation strategy. In order to do that specific trades will be executed through security or commodity markets. Information about those trades is the second category of sensitive data that firms want to protect at any time since the strategy represents the competitive advantage for a successful management performance and should not be copied by other portfolio managers.
IT security within the asset management industry - First introduction
This is my first blogging experience - and I am really excited!
But instead of blogging about my upcoming move to London I will start talking about IT security in asset management companies. This is a big issue in Europe due to the fact that at several occasions data security and confidentiality have been breached and people get really nervous about it.
A few months ago the German government purchased stolen data from a Swiss and Luxemburg Bank which suddenly made people realize how easy it seems to be to download personal and private wealth data. And therefore how important appropriate security measures for banks and asset management companies are. The main purpose for the German government was to avoid further tax evasion and to force people to declare revenues in their home country. Lengthy debates and disputes followed since it went against the Swiss and Luxemburg Banking law that guarantees the so called "bank secret. And therefore was put forward to the political scene of various European countries. Germany finally obtained the data and can now pursue a high number of private individuals with security holdings in those banks that had not been declared so far.
Generally speaking data about private wealth, account information, personal contact details etc can also be used for criminal reasons and should therefore be strictly protected.
But instead of blogging about my upcoming move to London I will start talking about IT security in asset management companies. This is a big issue in Europe due to the fact that at several occasions data security and confidentiality have been breached and people get really nervous about it.
A few months ago the German government purchased stolen data from a Swiss and Luxemburg Bank which suddenly made people realize how easy it seems to be to download personal and private wealth data. And therefore how important appropriate security measures for banks and asset management companies are. The main purpose for the German government was to avoid further tax evasion and to force people to declare revenues in their home country. Lengthy debates and disputes followed since it went against the Swiss and Luxemburg Banking law that guarantees the so called "bank secret. And therefore was put forward to the political scene of various European countries. Germany finally obtained the data and can now pursue a high number of private individuals with security holdings in those banks that had not been declared so far.
Generally speaking data about private wealth, account information, personal contact details etc can also be used for criminal reasons and should therefore be strictly protected.
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