Sharp Audience Focus

Consistency and Customization

Excess Returns

Monthly insights for investment marketing and sales professionals


	December 2012


	At every step along the path to asset growth – from introductory consultant meetings to client reviews – smart investment managers seek to communicate one set of consistent messages about their identity. But consistent communications fall under the heading of “easy to talk about, difficult to do.” This issue of Excess Returns considers how to avoid behavioral biases that compromise consistency. With best wishes, Liz Hecht Founder, Principal and Director of Research Print a PDF of this newsletter

Volume 2 | Number 7

In This Issue

Consistency and Customization

The Penalty Box

Custom Nation

Alpha Partners is an investment marketing firm specializing in research and presentation strategy. Our goal is to create alpha (excess returns) by helping investment firms win, keep and diversify assets under management.

Alpha Partners LLC
435.615.6862

www.alphainvestmentmarketing.com

Consistency and Customization

A few years ago I attended a presentation by a consulting firm during one of my client’s annual investor conferences. What immediately struck me about this presentation was that line for line, joke for joke, page for page, almost word for word, it was exactly the same presentation as the one that this same firm had given at this same client conference a year ago. I looked around the room and saw many of the same faces in the audience that I had seen the previous year – the same people, smiling and listening intently. Either this is really happening, I thought, or I am trapped in some awful déjà vu experience, a sort of Groundhog Day all my very own.

But it was really happening. I later checked the packet of conference materials from the prior year and the consulting firm was indeed giving the exact same presentation. And yet no one seemed to notice or, if they did notice, they didn’t seem to mind. I have thought about this experience for a long time and I still don’t know what to make of it. I do know, though, that it says something important about the delicate connection between repetition, sameness and consistency.

Behavioral Biases That Compromise Consistency

Everyone in the investment world agrees that consistency is a good thing. Consistent investment process implementation begets repeatable results and consistent communications beget loyal clients who understand the investment strategy. But there are inherent behavioral biases that make consistency difficult to achieve. Here are three that I constantly confront in working with investment firms as well as in communicating about my own company:

1.	The urge to start all over again. “There’s a big piece of business on the line! Let’s take a fresh look at our presentation and revise it … Let’s reconsider the key points we want to make about our competitive advantages.” The more important something is, the greater the human tendency to overcomplicate it. But the urge to work harder because the stakes are high often compromises consistency. In such cases, repetition is perceived as being stale and dull. But most often repetition is desirable, particularly when a firm already has defined a concise, truly differentiating set of marketing messages. Especially in a marketing context, repeating those messages in the same way, over and over again, is more beneficial than constantly trying out new messages or trying to communicate the old messages in a new way. Many people in the audience I describe above most likely had forgotten the main messages from that same presentation a year ago, just as you or I might likely forget the plot of a movie we loved and saw only, say, a few months ago. Instead of taking a fresh look at everything, a presentation team should rehearse customized delivery of the existing story.

2.	A misunderstanding of what it means to customize. When I say “customized delivery,” I mean that key parts of the same core presentation are customized to a specific audience, paying deference to their identity and their specific investment goals. It took me years to understand that by “customize” some investment firms meant customize the presentation to the personal preferences of different presenters within the same firm. I asked about this once: “You keep saying that you’ve ‘customized’ the presentation and yet there is not one page or even one bullet that addresses a specific audience?” “Oh, no,” I was told, “by ‘customize’ we mean create different versions of the presentation consistent with the preferences of individual presenters.” “Oh,” I said, too dumbfounded even to get on my soapbox and explain why this is such a bad idea.

3.	The inability to be concise. Verbosity makes it impossible for consistency to happen. Someone recently gave me a new business presentation for an investment firm that genuinely fills a niche. But the first page, rather than simply describing this firm’s singular competitive advantage, instead presented 6 bullets and 15 sub-bullets. Such visual and verbal clutter makes consistency impossible. To be consistent, one must first be able to answer the question, “Consistent about what?“

So is the consulting firm giving the exact same presentation practicing a desirable form of repetition, the kind of sameness that creates consistency? Or is it being lazy by repeating the same canned presentation? A bit of both, I suppose.

I do know that I tried giving the same Alpha Partners presentation to an existing client recently, reinforcing up front a set of key messages about our firm. It didn’t work. Or rather, it started off weak because we ultimately did get the business. But at first my client was bored. I salvaged the presentation by picking up on this quickly and shifting gears to focus on his specific project. But I should have customized a few more key pages of the presentation in advance so that it more directly addressed his needs, his experience and exactly what he was looking for … then and only then should I have briefly reiterated how Alpha Partners is different from our competitors.

Will I ever again give exactly the same presentation to the same audience? Tempting as it is, given a demanding schedule, the answer is no. I still believe it is critical to find just the right balance between consistency and customization.

The Penalty Box

The slightest sign of inconsistency – in investment process implementation, for example – and an investment firm might find itself in the penalty box with a given consultant for several years. In my experience, there are several areas where an investment firm may be vulnerable in this regard:

•	Inconsistent marketing literature. The RFP response, for example, might describe the investment process in terms that vary from the description provided by the presentation book.

•	Inconsistent responses during the Q&A. One member of the investment team might reveal a different intellectual slant relative to a teammate (e.g., a growth bias in a value firm or a different approach to portfolio construction). Such diverse perspectives may in reality be healthy for the investment process, but your firm still needs to present a consistent face to the world.

•	Misinterpretation. If not presented correctly, new information about the investment process (or even old information presented in a new way) might seem indicative of a major change to a consultant.

Consultants like investment managers who are relentlessly, even boringly the same. Building consistency with repetition and sameness is particularly critical given the importance placed on repeatable results. Investment marketers should weigh this carefully the next time they consider that fancy new process diagram.

Custom Nation

Of course I had to read this book: Custom Nation: Why Customization Is the Future of Business and How to Profit from It by Anthony Flynn and Emily Flynn Vencat. The book explores successful customization strategies employed by companies as diverse as Shutterfly, Chipotle and Procter & Gamble. It wasn’t only the penguins on the cover that drew me in; it was the following claim on the back flap: “What’s the secret of a successful 21st century business? Customization. For every industry and every product. Embrace it or get left behind.” Hmmm … Why can’t more investment firms successfully customize their communications with clients and potential clients – especially firms that already do a good job of customizing their portfolios to specific client investment objectives? As suggested earlier in this newsletter, maybe because “customization” sometimes still is confused with a lack of consistency.

Questions? Comments? Dissent? Click here.

Click here for other issues of Excess Returns.


© 2012 Alpha Partners LLC	Alpha Partners LLC Marketing for Excess Returns® 1062 Oakridge Road South \| Park City, UT \| 84098

You are receiving this newsletter as a member of the investment community. If you no longer wish to receive it, please respond to this email with “No More Penguins” in the subject line. To subscribe to this newsletter, send an email with your request to info@alphainvestmentmarketing.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.

April 2025

The Art of Uncertainty

Slashed spending by CEOs. Postponed or canceled construction projects. Jobs being cut and delays in hiring. “The unpredictability of President Trump’s stop-start trade offensive,” The Wall Street Journal noted on April 28, “is paralyzing companies on every front except one―taking an ax to costs.” Where will it all end? No one can know. And that’s why now is a very good time to read a book about the art of uncertainty. Professor David Spiegelhalter helps readers understand how humans have learned to measure, manage and survive the unknown. In addition to key insights about putting uncertainty into numbers, the author provides valuable lessons in successful strategies for communicating uncertainty.

January 2025

The Algebra of Wealth

Income. Compound interest. Investments. Debt. Taxes, Inflation … All play a role in building a profitable life. But so do character traits such as stoicism, focus and making the most of present time. In The Algebra of Wealth, Scott Galloway, a marketing professor at NYU Stern School of Business and a serial entrepreneur, provides expert advice on how to generate income and turn income into wealth. Based on personal experience and behavioral research, Professor Galloway offers vital insights that transcend the typical personal finance book, covering topics such as the futility of worry, treating expense management as a “rational obsession” and finding one’s true identity through hard work as opposed to pursuing a passion.

October 2024

The Money Trap

In this tale of Shakespearean proportions, Alok Sama describes his experiences working for one of the most prolific and audacious venture investment entities, SoftBank’s Vision Fund. Fund investments include ByteDance, Nvidia, Arm and Alibaba―along with legendary failures such as WeWork and Sam Bankman Fried’s FTX. At some point in his time as president and CFO of SoftBank, the author becomes aware of a plot to discredit him and a colleague―a plot involving surveillance of his family, a smear campaign in the press, bogus legal threats and even a honey trap. While hoping to learn who and why, the reader gets a fascinating crash course in early-stage tech investing.

August 2024

The Coming Wave

The Coming Wave describes how new technologies such as AI and synthetic biology are going to change the world. Not this year or next but over multiple decades. As a co-founder of two AI companies and the current head of AI at Microsoft, the author is well positioned to understand and communicate everything that can go right with the coming tsunami of new technologies―and everything that can go wrong. This book makes a compelling, heartfelt case for “claiming the benefits of the wave without being overwhelmed by its harms.”

February 2024

The Devil Never Sleeps

The devil is the potential for pandemics, climate change disasters, terrorist attacks and massive computer hacks. A leader in crisis management and homeland security, Juliette Kayyem documents in depth the perils of underreacting to the inevitable. By dismissing harbingers of doom as mere noise, countries and companies risk turning emergencies into calamities, local diseases into global pandemics and manageable negative events into existential crises. This book provides invaluable lessons on how to prepare for the devil, how to limit harm when the inevitable crises do occur and how to pivot in time for future disasters.

October 2023

Wealth, War & Wisdom

The reality of war never goes away. “Once every couple of generations,” writes Barton Biggs in Wealth, War & Wisdom, “an epic event occurs that destroys accumulated wealth.” The U.S., Australia and Sweden “have been lucky―so far―but in Europe, the apocalypse has happened in one form or another on a regular, generational basis.” In addition to tracking the fascinating history of the markets during WW II, this book explores two primary enemies of wealth during war: complacency (it couldn’t happen here, not to us) and failure to diversify by country and asset class.

August 2023

The Price of Time: The Real Story of Interest

Destined to become a classic of economic history, Edward Chancellor’s book provides an intensively researched compendium of all the economic woes that can result from excessively low interest rates. Starting with the ancient origins of interest, the book moves to the unintended consequences of zero-bound (and even negative) interest rates, and concludes with the impact of ultra-low rates on emerging markets.

Why Target Marketing Often Misses the Mark

Excess Returns

Monthly insights for investment marketing and sales professionals


	March 2011


	Institutional investment firms have intensified their target marketing efforts — developing white papers and website modules, for example, focused on public pension plans or endowments and foundations. These same firms, however, often fail to aim at the target when the target is sitting right in front of them. This issue of our newsletter examines the true meaning of “target marketing.” With best wishes, Liz Hecht Founder, Principal and Director of Research Print a PDF of this newsletter

Volume 1 | Number 3

In This Issue

Why Target Marketing Often Misses the Mark

Funding What?

Selling Snake Oil

Alpha Partners LLC
435.615.6862

www.alphainvestmentmarketing.com

Why Target Marketing Often Misses the Mark

I’m scrolling through my emails one fine morning, marveling as usual at the misguided nature of the solicitations that have made it through our company’s junk filters (Viagra! The Latest Nigerian Investment Opportunity! Cheap Canadian Drugs!), when I spot something unexpected: “Give Minnie a Balanced Diet” says the subject line. Hmmmm … The name “Minnie” rings a bell so I open the email to find the photo and message below.

It takes me a second, but then I get it! That’s our dog, I realize with pure delight. We adopted “Minnie,” now named Foster, from Friends of Animals. This is her intake mug shot snapped shortly after she arrived at the shelter. An online pet store, Petango, has embarked on a target marketing initiative and I am the very happy target. Over the next few weeks, looking at Foster’s photo, I begin to wonder why institutional investment firms aren’t better at this sort of thing. After all, if purveyors of pet supplies can customize their sales campaigns, why can’t institutional asset managers?

Investment companies, I have learned through a professional lifetime of hard experience, spend big bucks on target marketing and then, when it matters most (during a finals, for example), lose their aim. The typical in-person presentation is all philosophy-process-people — with very little, if any, deference paid to the identity, preferences and goals of the audience. In fact, some of these presentations are so relentlessly self-referential that they unwittingly defy the most basic rules of common courtesy.

Here’s what I mean by a professional lifetime of hard experience: the sales manager who refuses to put new business prospect logos on his firm’s presentation books; the portfolio manager who says, “Oh Liz, who has the time?” in response to my few humble suggestions for customizing his book to a specific audience; the insurance asset manager who rejects as being too difficult my suggestion to develop before-versus-after case studies. I have found this aversion to customization to be almost universal among institutional asset managers — even among firms selling to high-net-worth individuals, where target marketing is even more likely to get results.

Our world is filled with smart, competitive, hard-working people. Surely they don’t intend to screw up key business opportunities on a regular basis. There are several reasons why so many firms fail to take target marketing to its logical conclusion. Understand these reasons and you are on your way to becoming a successful exception to the rule.

Reason #1: Many salespeople do not include customized information in their presentations because they are afraid of getting it wrong. “The consultant won’t give us any information,” they often tell me. But there are other sources of information — the typical RFP, for example, yields nugget after nugget of target market intelligence for those who know how to pan for them.

Reason #2: Some are legitimately concerned about appearing to oversell. I recently participated in a phone call with someone interested in selling me something. He referred to my personal interests to the point where, skillful as his approach was in many respects, I felt, just the tiniest bit, as if I were being played. Given the serious nature of institutional investing, many firms wisely wish to avoid creating this impression. Selling too hard is never good. But how about selling just hard enough — with a few selective references, say, indicating that you understand audience goals and preferences?

Reason #3: There is no one-size-fits-all. Getting this right requires skill in reading your target. In some cases, for example, any form of customization would be inappropriate. During a finals, certain audiences only want the information they need, packaged in a precise way, so as to make a swift, informed decision. (Even these efficient souls, however, are likely to respond favorably to a presentation indicating some awareness of their identity.)

Reason #4: Investment companies produce sales materials in such high volumes that they lack the time and resources to customize. Many firms do not have the infrastructure to produce customized books. Still, skilled professionals should know how to customize their delivery to the audience without the benefit of a tailor-made sales document.

Reason #5: Increasingly, investment firms operate in a culture of specialization where investment management is divorced from marketing, sales and client service. The product specialist model — whereby marketing professionals become experts in specific products and serve as portfolio manager proxies — allows investment professionals to stay home and focus on their clients’ portfolios. This is a good thing that some firms take too far. At some investment companies, the people who generate the returns almost never interact directly with the real-life target of their efforts: the clients who need those returns to live better lives (see related article below, “Funding What?“).

On February 23, 2011, I received another email from Petango with the same adorable photo of Foster (née Minnie). “Hi Liz,” said the email, “Can you believe it’s been one full year since you adopted Minnie?” Once again, I was surprised and delighted. I had not realized that this was our one-year anniversary of doggie companionship. And so, filled with gratitude, I ordered some new dog toys.

I almost used to believe it when people told me, “No, we can’t.” But I persisted in suggesting customized sales approaches and many of our long-term clients have started taking this advice and getting results. And every once in a while, I get an email about a big win or a big winning streak — and that’s even better than getting a cute photo of my dog.

Funding What?

A new church. A groundbreaking exhibit for a museum. An early retirement. Special education for a disabled child. A regular monthly check for a pensioner after a lifetime of hard work. The ability to provide for more scholarship students in the class of 2015 … The list is endless. Yet the investment industry as a whole is mainly mute on the topic of how investment returns are used. Our industry talks about “funding ratios,” but everyone involved in the process of generating and selling investment returns should spend more time thinking about what we are funding — i.e., understanding how strong or weak returns can enrich or impoverish the lives of the people who pay our fees.

Selling Snake Oil

New business presentation books typically are called “pitch books.” Think about that for a minute. Do you really want to be making a pitch when you meet with a potential client? Do you really want to be a pitchman or pitchwoman? Like one of those loud people on television selling a new way to chop vegetables or one of those turn-of-the-century snake oil salesmen peddling false remedies from the back of a cart? True target marketing requires an acute ear, an earnest desire to understand and the ability to engage in an informed dialogue — it’s not about making a pitch!

Questions? Comments? Dissent? Click here.

Click here for other issues of Excess Returns.


© 2011 Alpha Partners LLC	Alpha Partners LLC Marketing for Excess Returns® 1062 Oakridge Road South \| Park City, UT \| 84098

You are receiving this newsletter as a member of the investment community. If you no longer wish to receive it, please respond to this email with “No More Penguins” in the subject line. To subscribe to this newsletter, send an email with your request to info@alphainvestmarketing.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.