Introduction

Merrill Lynch is one of the largest financial-services firms in the world. In 2003, they were
employing more financial advisors-employees that dealt one-on-one with clients-than any other
firm; nearly 2,000 more. Some FAs were consistent with contacting and updating their clients
on new financial products, or offering advice-but most were not. FAs sometimes had books
of up to 500 clients. Merrill, at the time, was encouraging their FAs to increase the size of
their books, paying incentive to open new accounts. Even offering incentives like trips to
Hawaii if enough accounts were opened. Service, customer retention, and profitability didn't
matter-it was all about new accounts. Robert Knapp, head of Merrill Lynchs district, wanted
to change this for the better. He created Supernova, a strategic framework that was designed to
segment a FAs book so clients, organize how they handle these clients, and help keep and
acquire new clients.

Environmental analysis
The main issue was that FAs needed help juggling the number of clients they had on their
books. They were acting less like consultant and analysers, and more like salesmen. They
lacked administrative support and as a result rarely were able to follow up with clients and
provide good service. They also did not have consistent, up-to-date information on that clients
to provide the most accurate and relevant information. As a result of this, clients would quit
(often), leaving the FA with the responsibility of acquisition. Supernova helped with all of this.

First, FAs books were reduced to only the 200 best clients they had in order to provide better
service. The others when either hand off to a different FA, or were sent to a Financial Advisory
Centre, which most clients did not object to. FAs were given the option of working with a
Client Associate who provided the administrative support they were looking for by filtering
phone calls and organising the FAs folders for the day (contained financial plan, information
on the client, the clients family, business, and other relevant data). A system called 12-4-2
was also administered. The system simply described the main minimum amount of times that
the FA would have contact with the client, by which means, and for what reason (12 monthly
contacts or 4 portfolio reviews, 2 face-to-face meetings). This resulted in less client turnover,
and more client referrals (client acquisition).

Supernova a great answer to the problems that FA were having. It segmented their books to the
clients that could have had the highest return, organised the FAs so they could provide the best
service possible and allowed for more time to seek new clients which most of the time was not
even necessary because client referrals were the best source of new business. Although some
partial adopters and those who had a hard time putting Supernova into practice posed risks
to the Supernova brand, the positives severely outweighed the negatives. Supernova provided
a business process- not a product, which is what Merrill needed. The proof is in the data.
Marketing strategy
Marketing involves satisfying customers needs and wants. A company can win only by fine
tuning the value delivery process and choosing, providing and communicating superior value.
As the Merrill Lynch is mainly about retail brokerage company so it should take more
necessary steps in order to attract clients. In addition to that the Financial Advisors would take
some business unit strategic planning and establishing a strategic business unit. The main
strategy should be customer focus with operational efficiency and customer intimacy. They
should develop relationship marketing strategy focusing on the following issues:
1. Frequency and equality of contact
2. Rapid response to problem
3. Attention to details
4. Improving Service Delivery

Marketing mix of Merrill Lynch: Supernova

Merrill Lynch is a financial service provider which serves governments, institutions and
investors throughout the world.

As it is a service based company, its marketing mix is to be extended beyond traditional 4Ps.
Its marketing mix is discussed below:

Products (service promised): Merrill Lynch provides financial advisory services for their
clients. They promised the following services to the clients:

Clients will have a multi-generation financial plan in a place.

They will be contacted by the FA at least 12 times a year.
They will receive rapid hearing response to any problem with within 1 hour and have
resolution within 24 hours.

Place (distribution): They had their business of offices in 32 districts in US.

Price: There was nothing mentioned about the price of service of Merrill Lynch
Promotion: They made public awareness through road-shows and demonstrations. And they
acquired new businesses via referrals from the old clients.

People: People comprise a fundamental component in the creation and delivery of service for
any service company. Merrill Lynch delivered their service through stockbrokers or financial
advisors (FA). They have both transactional and annuitized FAs. There was only FA for per
200 clients. These FAs were gifted salespeople who had college education and were required
to pass National Association of Securities Dealers series 7 examination.

Process: Merrill Lynch used 12-4-2 to describe their minimum annual contacts with the
clients. It includes 12 monthly contracts, 4 portfolio reviews and 2 face-to-face contacts. And
also uses segmentation, organisation and acquisition of the clients.

Physical evidence: Merrill Lynch had their own business offices such as a single physical
location or several very small locations to deliver that services. Also, they provided online
services. They maintained CRM through the organisation.

Review: What Are Learned?

The Supernova offers lots of benefits to Merrill Lynch, as soon as we can get a conclusion from
the case that supernova gave a new way to manage client relationships for Merrill Lynch which
focus on improve client satisfaction by using 12-4-2, segmentation, organisation and
acquisition to change the traditional working methods for financial Advisors to increase their
income and to select out the most valuable clients. According to the Merrill Lynch studies on
75 supernova FAs, as a consequence, Supernova FA production (revenue) increased 1% while
production from non-supernova FAs decreased by 6%. Market errors (mistakes in processing
transections due to FA or client Associates errors Merrill was responsible for) declined 54%.
The client satisfaction measures improved including satisfaction with client Associates
service, percentage of clients feeling the need more FA contact (declined), percentage of
clients feeling their FA exceeds in looking out for their best interests and satisfaction with
FA.

Recommendation
In my opinion, Merrill Lynch need Supernova to be successful or grow in the future because
historically, it was based on Merrill Lynch making money by selling products to clients for
FAs to make money. However, the retail-brokerage environment had changed with the
deregulation of stock broking, so many new firms entered the market to carve up the profits of
the industry by implementing kinds of effective strategy to compete. Thus, if Merrill Lynch
wanted to keep its state and reputation, it must need to find out a different way to support its
continuing profit growth, it seemed that supernova was well deserved in that situation.

The Merrill Lynch case is very important because its content transcends our discussion that
day into the parts of the course. My views of the Merrill Lynch case: they are trying to change
the interface with the customers in many ways and in many places simultaneously. The
Financial Advisors are very successful and they have low turnover among their FA population.
Still, the FAs had to worry about their mortgage, kids, etc; maybe they think the company
should do more to alleviate for us, the uncertainties and the risks surrounding the new
program. One opportunity for improvement is their current approach, where it is possibly
insufficient to show FAs some examples of success with the program and expect greater
participation in the supernova program. From the case analysis, it is clear that FAs are working
hard and are generally happy with their financial performance; with this new program, their
question is likely to be What has the company done to share the risk with them? They did not
invest anything in software, for sample, saying that the systems would come later. The
company was also not willing, for example, to the FAs their previous years salary.