Engaging with a company’s users: Ducati tapped the power of its fans; In five years revenues quadrupled to €407.8m, market share doubled and the company became more widely known

May 13, 2013 4:21 pm

Engaging with a company’s users

By Paolo Aversa

The story. Widely seen as the acme of Italian style, tradition and performance in motorcycle design and manufacturing, Ducati has nevertheless often struggled to transform fame and fans into sales. By 1996 the company was on the verge of bankruptcy and had undergone several buyouts when a new chief executive, Federico Minoli, took over.

The challenge. Ducati faced fierce competition from traditional brands such as Harley-Davidson, BMW and Triumph, and from Japanese companies Honda, Yamaha, Kawasaki and Suzuki. Ducati’s annual production in the late 1990s was about 20,000 bikes, which generated modest revenues compared with, say, the annual 5.4m Hondas sold at the time. In less than five years Mr Minoli effected a turnround. This was achieved partly by a strict reduction in production costs, but also through a strategy of extending the traditional consumer base of extreme riders to the larger group of more laid-back enthusiasts. Still, Mr Minoli felt Ducati had not made full use of the potential of its fans’ extensive community. But how could it reach such a widespread group of users with few resources to invest in the endeavour?The strategy. Mr Minoli converted the marketing division into a web-based department called Ducati.com. He hired a group of very young but highly creative managers from various industries to develop an internet infrastructure that could engage with the virtual audience of customers and fans, who interacted with each other and with Ducati.

Some of the Ducati.com innovations were quite revolutionary for the time, when most companies still used the internet sparingly. Ducati was one of the first to participate in two-way discussions with its audience by using its own and others’ blogs, forums and chat rooms to collect ideas that would help it innovate and even develop new product concepts.

Today, Ducati still nurtures fans by putting them at the centre of its activities. Customers who contribute to Ducati innovations are publicly acknowledged and rewarded; fans can visit the company museum and historical plant in Italy.

Ducati Owner Clubs are involved in the organisation of events, bike tours and amateur races, and Ducatisti – as owners are known – are even chosen to feature in glamorous advertising campaigns such as “Ducati People” – initially featuring employees, but widened to owners.

Ducati also tested the power of its brand. For example, at midnight on January 1 2000 – when the world was celebrating the new millennium – Ducati.com launched the first motorbike to be sold only online. It was the futuristic MH900e, a limited-edition model inspired by the bike on which Mike Hailwood won the Isle of Man Tourist Trophy race in 1978. “Mike the Bike” had come out of retirement to ride the Ducati – the perfect metaphor for Ducati’s rise from the ashes. In just 31 minutes, Ducati sold all 500 units, and within 10 days 2,000 had been ordered. At €15,000, this was a signal of trust from customers, who had only seen it online.

The results. In five years revenues quadrupled to €407.8m, market share doubled and the company became more widely known. Today the community of 200,000 registered users, 1.5m Facebook fans, 68,000 Twitter followers and millions of YouTube views is still an important asset.

Ducati.com demonstrated to fans the benefits of being a Ducatist. Members of the club are given exclusive access to a series of experiences where they are able to interact with both the company and other fans.

The lessons. First, smaller companies such as Ducati can be creative.

Second, Ducati was a pioneer in using the internet to connect with fans, but being online was not an end in itself. The point is that companies must continuously differentiate themselves from rivals by exploring innovative ways to engage with their target audience, and to reward their most engaged and engaging users.

The writer is Marie Curie Fellow of Strategy at Cass Business School

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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