Sails and marketing

After a series of acquisitions, ABN AMRO decided to emphasize the unity of the banking group by initiating a “one bank” strategy. Professor Henk Volberda (Rotterdam School of Management) looks at ABN AMRO’s use of sailing in that strategy via participation in the Volvo Ocean Race (VOR).

This case (see reference below) goes inside the biggest Dutch bank, ABN AMRO (henceforth AA). AA has adopted an acquisition strategy to rise to 13th place in world banks based on assets, with subsidiaries in over 60 countries.  With most of these new subsidiaries it used a laissez-faire approach, based on the idea that each subsidiary was best equipped to deal with local market characteristics. In particular, the international branches were allowed to keep their original names (e.g. La Salle in the US, Antonveneta in Italy)

But at the beginning of the 21st century low growth of earnings per share led to negative media coverage and management introspection. The overriding concern became the creation of a more cohesive entity and an increase in transparency to external stakeholders. The answer took the form of a “one bank strategy.”

Thinking of AA as one bank

As part of de-emphasizing local autonomy and building global unity, AA moved to endorsed branding. While the international subsidiaries kept their name, they featured the AA shield in front of their name, which was followed by the ABN AMRO name. In this way AA was able to preserve the local brand equity it had built up as it developed the global brand.

Other focuses of the one bank philosophy were the creation of a global tagline and of a global sponsorship. “Making more possible” became the tagline which was promoted via television advertisements in several of AA’s major market languages (Dutch, German, English, Portuguese and French).

A sponsorship with global impact

Furthermore, AA felt that a sports sponsorship could help build global brand equity. Locally, it was already a sponsor of Amsterdam’s football team (Ajax) and of a pro tennis tournament (the AA open). In its search for a sport with global reach it evaluated football, Formula One, golf and sailing as well as stand alone events such as the Olympics. In the end, AA opted for sailing and in November 2003 decided to enter the Volvo Ocean Race (VOR).

AA felt that sailing dovetailed with many of its operational characteristics. Ocean racing was a team sport, thus offering the opportunity to reemphasize the importance of teamwork. The linkage of performance in sailing to strategy and tactics also resonated well with performance parameters in the banking business. While not as popular as football or Formula 1, sailing did touch all continents and in particular the stopovers of the VOR occurred in important AA markets. The race also offered extended exposure since it took place over a nine-month period.

AA decided to give its sailing-marketing campaign particular weight and so opted to go beyond simple sponsorship by becoming owner of the team. This ownership went together with five ambitious goals for the VOR campaign.

Two fronts, nautical and marketing

To win the race and achieve the marketing goals, AA set up a wholly owned subsidiary ABN AMRO Brand and Sail Company (AABS) in early 2004. AA realized that it was going to need to rely on outside expertise to deal with the task of winning an ocean race. Of AABS’ 100+ employees, only 10 members came from within the bank. While this structure created success-oriented autonomy, the problem was whether it was properly equipped to communicate the one bank philosophy. The challenge was going to be achieving both the racing and the marketing goals.

During the process of building the first boat (ABN AMRO ONE), the idea of building a second one arose. While the team for the first boat had been hand-picked, the team for the second boat was selected using an Idols-like process in AA’s various markets. The advantage of this method was that it generated media interest in those countries and also offered a tie-in to AA’s programs devoted to attracting young professionals.

During 2004 the nautical side fared well, the marketing side less so. The boat construction deadlines were being met but the marketing campaign was lagging. Early in 2005 a skilled project manager, Pauline van Esterik, was called in to take over the marketing side. Van Esterik tackled three particular insufficiencies. First, while sailing success had been well defined, it was not sufficiently clear to the marketing side what it meant for the race to be a success and so she injected focus on the key events and projects. Second, while financial targets had been set, a detailed and layered operational agenda had not, a gap which Van Esterik filled. Third, responsibilities among employees were not clearly defined. She spelled them out and created three-month Key Performance Indicators (KPIs). A two page appendix (p.22-23) on the project tasks can spark discussion of the challenge faced by Van Esterik.

Key to achieving brand exposure was the organization of in-house media team. This team’s mission was to provide quality footage for the local media as well as the company. Client entertainment and hospitality activities were instrumental in achieving the customer satisfaction, business unit involvement and business tracking goals. In-port races at the stopovers helped create more brand exposure and interaction with customers. Lastly, as a way of increasing employee cohesion, AA used its intranet to keep employees abreast of race preparations (for example, the christening of ABN AMRO ONE was broadcast) and then of race activity.

The outcome

From a sailing standpoint the project was a success. ABN AMRO ONE won the race while ABN AMRO TWO finished fourth. The marketing effects of the venture were also subjected to scrutiny. Professor Volberda provides seven pages of detailed appendices to spark discussion of the external and internal benefits. First, a media exposure goal was set and slightly surpassed (p.24). Secondly, brand effects were analyzed in three markets (Netherlands, Brazil and Chicago) with results more positive in the first two markets than in land-locked Chicago (p.25-27). Third, seven waves of e-mail questionnaires were sent to AA employees to measure their interest, involvement and estimation of brand impact. Finally, surveys were performed at hospitality events in Spain (wholesale customers) and Holland (Private customers), the results of which are reported pp30-31.

The case ends on a drier note. Despite the nautical and marketing positives, AA chose not to take part in the 2008 VOR. Professor Volberda lists three possible explanations: the departure of a highly-involved board member; the traumatizing death of a young Dutch sailor during the 2006 race; resistance from the international subsidiaries. Were this last hypothesis credible, it would indicate that the race to create the one bank mindset is still on.

Reference:
ECCH 309-292-1
“ABN AMRO in the Volvo Ocean Race”
Henk Volberda
Rotterdam School of Management, Erasmus University

Published March 2010