Excerpt from “BHA Market Positioning” White Paper
Following is an excerpt from “BHA Market Positioning,” a White Paper I recently wrote after returning from a trip to Asia. It details the time it takes to make commercially available contact databases useable and the cost to firms and organizations. The paper also highlights the difference between contact and mandate databases. BHA’s analysts have spent three years creating BHA’s product suite. They started with a plethora of alternative investor databases and then spent countless hours not only updating the data but also customizing it with investor mandate information. The data I present here is based on an analysis of their work. The amount of time and effort required to update investor profiles and the associated information, and the importance of this data being as fresh as possible, is quite astounding. Please read on…
BHA’s Core Value
BHA assumes the time-consuming, laborious task of compiling and maintaining an investor mandate database for fund managers. This is the primary value BHA provides to clients. Our 25 in-house research analysts have been updating records every day for three years and have gathered the following data on the process:
It takes 20 to 30 minutes to properly vet an investor’s Web site and find a starting contact.
It requires approximately 10 to 15 calls to reach the contact person to validate his or her contact information and then have him or her provide the names of the people who handle various alternative investment mandates. The person in an investment firm that owns the mandate is known as the primary contact.
It takes about another 7 to 10 calls to speak with the primary contact and interview that person to determine the firm’s or organization’s search criteria and mandate information.
A mandate is written up in the form of a profile and entered into the database that BHA sells as part of a service to its fund managers.
Follow-up calls must be made every 90 days to confirm or change investors’ contact and mandate information. This typically requires 3 to 5 calls to reach the contact and approximately 5 to 10 minutes to receive an update.
All in all, it takes an average of 90 minutes or so per year to maintain a single record in a database.
How to Determine ROI
Fund managers can determine the ROI of doing business with BHA by simply looking at the time it takes to update information on a particular alternative investor. After tracking 25 analysts’ time, BHA knows that it requires about an hour and a half of a staff person’s time per year to maintain a single database record. If you have 750 records in your in-house investor database, it will take 1,125 man-hours, or a little over 140 days, to keep that list of contacts up to date with current e-mail addresses, phone numbers, and strategy/mandate interests.
However, updating an investor database is not only a time-intensive process. Having highly paid staff gather and enter the data also makes it a very costly process.
Some fund managers try to increase their marketing ROI by subscribing to several commercial contact databases. Unfortunately, this does not save time or money. Commercial contact databases are typically 12 to 24 months old; in-house staff still must update inaccurate profiles, which are rampant in these databases.
Additionally, at best, contact databases have the first contact to call but have not established who the primary contact is for mandate data, what type of manager the firm is seeking, or what type of strategy they are interested in.
Many marketing budgets are being spent on commercial contact databases; this money would be better spent on an investor mandate database such as BHA’s. Investors in BHA’s mandate database have been identified, interviewed, and vetted. As a result, fund managers’ sales, marketing, and investor relations personnel can focus on setting up conference calls and meetings rather than scrubbing out-of-date data.