When Sergio Romo was converted from a lifelong relief pitcher to an "opener" in 2018, this forever changed the face of baseball, and this change was fueled by data. In Part 1 we covered why your Distribution Intelligence (DI) team needs a seat at the distribution strategy table and why getting buy-in from the implementors who will exercise new approaches in the field is as important as deriving the idea itself. As DI continues to evolve, we dive deeper into how DI can play a vital role in bending your cost curve, and how to effectively implement it across your organization.
DI Lesson 3: DI can play a role in bending the cost curve.
The Asset Management industry laments its profit margin declines from 40% to the low-to-mid-30%s, while forward-looking asset managers are strategizing on how to survive and thrive at sub-30% margins, even 25%. The current pandemic has amplified the importance of true Transformation as the end of the long bull market has exposed some unsustainable operating models. Done right, Distribution Intelligence holds the potential to increase the batting average (sorry, couldn’t help myself) of your sellers AND also lower the cost of sale. Self-funding the DI initiative can be explored too. Parallels can be drawn between a baseball team improving its cost structure through reduced reliance on higher-priced starting pitchers and, in our industry, the evolving expectations of the internal/hybrid/external wholesaler model, particularly given recent lessons learned in our new virtual meetings world.
Sergio Romo was returned to his role as closer in June. Not because he wasn’t effective as the opener, but because the data showed that he was more valuable in the closer role and they had other pitchers that could fill the opener role. They realized the end goal was not to win the first inning. Rather the goal was to win the game as a collective team through a combination of new data-inspired tactics and tried and true approaches.
DI Lesson 4: Think horizontally, avoid silo thinking.
Distribution wants to be communicating to the right people, with the right message, at the right time, and, now more than ever, in the right ways. This requires a team effort across sales, marketing, servicing, analytics, and product. We see the shiny object syndrome resulting in narrow investments that support a specific business unit’s goals, but not necessarily the broader more strategically important objective of the firm. The distribution architecture should not be about building a stack of leading tools like business intelligence, sales enablement, reporting, CRM, marketing automation, portals, and websites. It should be about looking across the sales, marketing, and servicing business architecture to determine how an asset manager is going to be great at lead generation, pipeline management, closing, cross-selling, and client management.
Lesson 4 is a topic that continues to resonate with our clients as they grapple with the ROI question. Look for further Olmstead perspectives regarding industry best practices on optimizing Distribution Architecture impact. Stay tuned.
Contact the author: