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To start a digital transformation for increased revenue, biotech firm Qiagen turned to the SAP Hybris e-commerce platform to support a web shopping experience that could help consumers, as well as to support the apps that its sales force uses to generate new business.
Faced with an ambitious plan for growth, Qiagen embarked on a digital transformation project to shift a significant percentage of sales from traditional models to the internet. In the process, the company developed an analytics engine to help it learn more about its customers, which, in turn, can fuel sales growth.
Qiagen, headquartered in Venlo, Netherlands, provides instruments, consumables and detection technologies for research labs.
The company, which has a goal to reach $1 billion in revenue by 2020, decided that a significant percentage of that would come from e-commerce, according to Florian Wegener, Qiagen's former vice president and head of e-commerce (Wegener left the company in December 2016).
To develop an online presence that could scale to the levels that Qiagen needed, the company partnered with Tata Consultancy Services (TCS) to build a web store based on the SAP Hybris e-commerce platform. This made sense, in large part because Qiagen was already an SAP customer, according to Nilesh Patil, TCS' SAP digital and Europe practice head.
"They needed to have a solution that could scale enough to support their goal of $1 billion in revenue by 2020," Patil said. "So they decided on the SAP Hybris e-commerce platform, which was a good choice because Hybris is part of SAP now, and Qiagen already had SAP, so it had very tight integration with SAP."
Following an aggressive, Agile development plan, Qiagen and TCS began the project in 2015, and the online Web Shop was launched in May 2016.
SAP Hybris e-commerce provides the engine for the Web Shop, and SAP ERP Central Component (ECC) provides the back-end data, with the SAP Hybris Commerce DataHub as the data transfer mechanism (there are several other data sources, including Salesforce).
The Web Shop proved to be successful, and revenues from e-commerce went up immediately after launch, Wegener said.
On the path to better customer insights
However, the system is in a state of continuous improvement and development, and Wegener believed that Qiagen could do a better job of getting recommendations for purchases by tapping into and analyzing big data from the variety of sources that were feeding the Web Shop. To do this, they began developing an analytics tool they call the Customer Insights Engine (CIE).
The CIE links the Web Shop data to a PostgreSQL analytics database, which then integrates it with a variety of other sources, including Qiagen's Salesforce CRM, SAP ECC and other outside databases. The CIE then feeds data back to the Web Shop in the form of more personalized product recommendations. It also feeds into a number of internal sales apps, which provide Qiagen's sales force with more complete customer profiles.
"We already had a little something online in the Web Shop where we gave cross-recommendations to cross-sell based on customer behavior, but also [by using] knowledge from product managers based on workflows," Wegener said. "Within this industry, people use workflows, meaning that, very often, if they use product A, we can predict that they might want to use products B or C in the future."
One of the most important goals was to serve both the online customers who used the Web Shop and the offline sales force who could use the customer insights to generate new business and to serve existing customers better, according to Christian Schillinger, Qiagen's head of analytics for e-commerce.
"Qiagen was very happy to have the new Web Shop, but roughly 30% of revenues go through digital channels, and the rest are still offline channels, so you have to take this into account if you want a holistic customer view, and the Customer Insights Engine is what we built in the back end," Schillinger said. "The CIE is basically a collection of several algorithms that we developed independently from each other, and [which] combine different data sources to get a better view of our customers.
"We launched the online Web Shop product recommendation feature in the middle of 2016," he said. "And, this year, we just launched an app suite that provides insights about our customers to our sales force."
Getting a more complete customer picture
Schillinger explained that, for a customer who may have opened a new lab, the customer journey data gathered from the Web Shop is valuable, but not enough to present truly useful product recommendations.
However, the CIE can take information from the sales team, as well as from sources such as the National Institutes of Health (NIH), that shows who has received research funding, and can use this information to get a more complete customer picture.
"The NIH data, for example, is very important because we can integrate this knowledge and send it out to the sales rep. So the next time he goes to the account, [it] says 'Hey, you're going to open up a lab. Why don't you use products A, B and C,'" Schillinger said.
"If the same customer goes to the Web Shop, we can identify them and make specific suggestions. Because if you open up a lab, there's a high likelihood that you are more interested in instruments," he said. "However, if you have an already established lab, that probably means that you have already acquired all the instruments, so the focus shifts more toward the consumables side of our portfolio."
Qiagen's business model is akin to Nespresso Coffee, where they sell the machine at a relatively low cost, and then make money by providing the coffee capsules. Qiagen sells the instruments that labs need -- the coffee makers -- then provides the consumables and other products researchers need.
"Depending on what kind of coffee machine you have, it makes sense to recommend the capsules that fit best," Schillinger said. "For example, if you drink coffee for the first time, you might prefer a lighter taste, and then, over time, you graduate to a stronger taste.
"We have the same principle. A researcher might start with a certain kind of product, and then have to scale up to a product that is scalable for the demands of his business."
Insights lead to revenue growth
Qiagen's digital transformation with the Web Shop and CIE is positioning the company to achieve its goal of hitting $1 billion in revenue by 2020, Wegener said.
"Revenue grew $30 million last year, and are at projections of between $250 and $300 million total for this year. So we're still following the shift and growth strategy," he said. "We are shifting from traditional, offline models to the online world now [that] we have proven that we can grow fast in the online world."
The key to this growth is the analytics, which create a better customer experience and more personalized recommendations.
"First, the online shop is getting better and better in terms of customer experience. And second, we currently support all traditional sales reps in their customer sales conversations because they now have so much more insight about the person they are speaking to, and can give more personalized recommendations," Wegener said.
"Finally, these recommendations that are guiding the sales force basically tell them where to go or where they should not go, and this is something new in biotech."
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