Articles
Being Global, Acting Local
Bibby Financial Services grew at 30% year on year for much of the 90’s and into the New Millennia. This growth was delivered exclusively through UK based operating companies. Initially the product range was fairly narrow, mainly factoring with Full recourse. However in an effort to maintain growth and to provide more tailored solutions to an increasingly sophisticated market, other products and services were added, including Invoice Discounting, Trade Finance, Leasing, Payroll etc.
Despite the new products and services it became apparent that the UK Market was approaching maturity resulting in lower growth for both the Market and Bibby. In common with many financial services companies before it, Bibby decided it was too ambitious to accept reduced growth by choosing to continue to operate in the comfortable environment of its own backyard. As a result a commitment was made to take the Bibby culture and experience, overseas to new markets and “go Global”. Since that commitment was made over six years ago Bibby Financial Services has now established overseas businesses in the United States, Canada, Australia, Poland, Ireland and France with more countries planned to come on line later this year.
How have we taken our strategic intent and turned it into reality? We read daily about Globalisation and the importance of branding, and there is no denying its existence. But how does this apply to a non-commoditised product or service being provided to the small to medium sized business sector?
As you would expect our first step is always to get to understand the local market from the end users perspective. So we need to identify what are the motivating factors in how a choice is made for working capital finance and to whom do they go to for advice? All of our services are provided to small to medium enterprises (SME’s) and we have found a clear trend. Although price and product remain major considerations to SME’s evaluating their choices, more often that not, Market forces dictate that price and product offerings will not vary much among providers. We have found that whether it is for service provision or for advice from an intermediary SME’s prefer to deal locally, and this also applies to many professional intermediaries such as accountants and bankers.
What about the Internet? Well we have found that smaller business do like on line express applications, but in the main, in respect of our services the Internet is being used as a research tool to help the business identify or assess providers. Despite the onslaught of the Digital Online 24 hour access world, most people prefer to deal with people and local people at that. Until we opened our Dallas office we rarely saw a deal in Texas. Texans want to deal with Texans, and we are building our Global business on this belief that this holds true the world over.
In developing our business model for the United States we made a commitment to a regional infrastructure. For each region we have an autonomous business unit with its own management team, sales team, client service team, cash management and legal entity. At the moment we have businesses established in four regions of the United States; California (LA), Midwest (Chicago), Southeast (West Palm Beach) and the Southwest (Dallas) in addition to our Canadian business (Toronto). The drawback is obvious; we have made a significant commitment to people and infrastructure especially as we are in the growth mode of our business. We therefore have huge initial infrastructure costs and few economies of scale. The advantage is that we have a much better understanding and potential to build strong relationships in the local market place. We can better support our new business team ‘in the field’ and have, what can be rare in a place as large as the United States, face to face relationships with all our clients. We can also have more credible relationships with intermediaries, allowing them to develop strong ties with our Operations teams locally and to encourage them to visit our offices for meetings and open days.
That is the theory, so how have we found the reality? From a client perspective we originally started with just one office which had originated clients throughout the United States, mainly from finance brokers. Through further acquisitions we quickly expanded to 3 Regional Offices and noticed that within six months 90% of our clients were based within the marketing region of the servicing office. As we continue to add more companies this localization continues and now that number is 95%. We have also found that as our offices set up local presences within the region our penetration into that market has increased at least five fold.
We found the same results with intermediaries especially bankers and accountants. A substantive local / regional presence adds credibility and greatly enhances the chances of being recommended. Most companies will have outlying New Business staff, and Bibby Financial Services is no different. In the United States we currently have a Salesforce of 18 with plans to double that over the next two years. They are the key relationship holders with these intermediaries throughout the company and we have over 200 individual referring partners and increasing this number by 5% every month. This level and increase has happened because we have the regional presence in so far as our Senior Management is able to easily visit them and explain corporate philosophy and strategy, thereby giving them the comfort they have access to local decision makers.
Of course a global brand and presence helps give the professionals we work with the comfort that they are working with a stable and credible organization. But in the world of Globalisation we have learnt that in dealing with SME’s and financial services intermediaries it is local credibility that counts. The additional investment in the people and infrastructure is easily outweighed by the improvement in local market penetration and the ability to deliver high levels of service and more effective Risk Management. Being geographically close to your Clients has many benefits.
