Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

Fund Firms Search for Holistic Customer Management Programs

LAS VEGAS - Lately, fund marketing and technology executives feel as if they have been bombarded with a barrage of data from their customer relationship management (CRM) systems, but their biggest challenge is finding quick, easy and cheap ways to access that data and make it relevant.

"We've spent the better part of 10 years building data marts," said Frank Coates, CEO and president of Coates Analytics LP, speaking at the National Investment Company Service Association's 2008 Technology Summit at the J.W. Marriott Las Vegas Resort last month. "Our customers are trying to get their arms around their own data."

As more firms outsource this data collection to third parties, it becomes difficult to synchronize or marry the new data with the old in a way that's simple, cost effective and easy to use.

"It's all about making good decisions," Coates said. "Our industry has grown up using its intuition and its gut feelings. We haven't done enough to make fact-based decisions. We need to ask, 'how can we make smarter decisions about our resources?'"

Coates said every firm has a different idea about what constitutes essential information about a client and how to use it, and every firm seems to have its own idea about how to manage that data.

"We have been data starved for a long time," he said. "People don't know what to do with this data once they get it."

The data can be anything ranging from client profiles to transactional histories, and the more relevant the information is to the business, the better.

"You need to know who your customers are and who you're focused on," said Peter Travers, principal of Eagle Global Professional Services, a division of Eagle Investment Systems LLC. "Lately, we have been flooded with requests for help."

"Most companies really don't know what their customers' needs are," said Kirby Lunger, senior vice president of corporate development at Attivio. "More than 50% of companies don't even know what they need to know about their customers. The average company loses 10% of its customers per year. Acquiring new customers costs five times as much as retaining existing customers. This is extremely important in this terrible financial environment."

Some clients say "just give me everything" when it comes to data, but "you don't want everything; you want something meaningful," Travers said. "It won't do you any good to have a garbage can full of data that's unusable."

"How much data is really needed and how accurate does it need to be?" asked Coates.

"Customer relationship management at its most effective is an operational system at its heart," Michael Pessetti, vice president of sales and marketing for SalesPage Technologies, told MME. "It is a core data reconciliation and transaction management piece designed to solve bigger problems that firms face. The reality is that in the investment management space, the concept of CRM is different if implemented in a productive, holistic way."

Successful CRM techniques depend on the type of customer. For instance, financial advisers have different needs than investors. A firm's data mart can include information on which advisers are receptive to sales meetings and which aren't, Coates said.

"One of our biggest challenges is that financial advisers are constantly moving from firm to firm to firm," Coates said. "Every time they move to a new firm, it shows up in a different data file."

Data marts need to be able to track advisers who switch companies a lot to eliminate redundancies from their files, he said.

The two main types of data held in a firm's data mart are qualitative data about clients, and financial and transaction data, he said.

"Our goal is to marry that data," he said. "That hasn't been a reality yet."

Coates said the main obstacle to integrating all this data is cost. Accessing the data mart and digging through all the layers of technology is too difficult and time consuming for the average person to use, he said. The goal is to have a database that's fast, cheap, easy to use and able to be custom-tailored, but so far, no one has come up with that yet.

Products such as Oracle's Hyperion Financial Management and IBM's Cognos offer business intelligence tools, but many firms find them to be slow and hard to customize, and too much customization becomes expensive and unsustainable.

The success of these programs is dependent on information technology departments, and IT budgets have been cut back so much recently, it's all they can do to keep the lights on, Coates said.

"Firms tend to turn everything into three-year projects," he said, but many projects just can't wait three years. "They really need some rapid development. The new trend is to build small, incremental pieces of software that link together modularly."

"It's never fast enough," said Misty Ford, director of Americas business technology for Russell Investments. "You have to have quick wins along the way, and make sure you can identify milestones when you pass them."

"The holy grail is integrating data so you can create action on the part of the wholesaler before it's too late," Ford said. "We need to make the life of the road warrior easier. We also have to work with business stakeholders so they have the tools that can drive their businesses forward."

The less time salespeople have to spend digging through data files for information, the more time they will have to talk to clients, Pessetti said.

"Transparency is the only way we can get a measure of what you're doing," Coates said. "Don't let your data get locked up. This information has to be protected in silos, but when a business or marketing person needs to get access to information, it's nearly impossible."

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.