Monthly insights for investment marketing and sales professionals
April 2015
Can a simple shift in mindset greatly increase one’s effectiveness as a salesperson? You bet it can. This issue of Excess Returns explores strategies for selling through teaching.
With best wishes,
Liz Hecht
Founder, Principal and Director of Research
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.
Earlier this month, a regular reader of this newsletter wrote me the following note:
“I recently heard a compliment about a presenter that I thought encapsulated a best practices approach to prospect meetings. He said, ‘Erik was the first presenter who seemed to be trying to TEACH us something, rather than SELL us something.’ It occurred to me that you might have insight about the pros (and cons?) of that type of approach, or thoughts on why it works and how to do it, that you might want to explore in a newsletter.”
Bless you, dear reader. I was hunting for a topic for this month’s newsletter, and this happens to be a darn good one. First, let’s briefly tackle why selling by teaching works — and then address strategies for selling this way consistently.
Selling through teaching is effective in part because teachers are trying to give you something (knowledge) while salespeople are trying to get something from you (the sale). To their credit, the best investment companies figured out a long time ago that teaching sells. Hence the whole cottage industry of articles, white papers and thought leadership described in the February 2012 issue of this newsletter.
Strategies for Selling through Teaching
While investment firms understand the benefits of education, their sales presentations still tend to be less focused on teaching than selling. The following suggestions can put the power of teaching to work in your firm’s sales presentations.
Emulate the best. Think about great teachers you may have known. What attributes made them great, and how can you bring such attributes to your work as a salesperson? In my experience, the trait that best summarizes the most inspiring teachers is caring. Throughout my school years, I could always tell right away if a teacher really cared — about the topic and about his or her students, about helping people by sharing knowledge. In the investment world, an effective salesperson seems less interested in selling than in sharing knowledge about something important to the audience. This seems obvious, but I can assure you that it’s not. Some of the smartest people in the investment business still resist my simple advice that the best sales presentations are centered on the audience. Caring is what I remember about my best teachers, but you will remember other traits worthy of emulating. In addition to great teachers, another source of inspiration can be found in TED, an organization devoted to spreading ideas through short, powerful talks. (For a particularly inspiring TED talk, invaluable to teachers, salespeople and all of us who aspire to sell through teaching, I recommend Your Body Language Shapes Who You Are by social psychologist Amy Cuddy.)
Open a window. The best teachers have the ability to open a window into a new world, and investing consists of many fascinating worlds. There is venture capital, global fixed income, mortgage-backed securities and micro-cap stocks, to cite only a few examples. These are all very different worlds with different rules about what guides success or guarantees failure. Yet why do these different worlds so often sound exactly the same in investment sales presentations? Because the presenters are focused on fulfilling certain sales requirements (checking the philosophy-process-people-performance boxes) in a risk-free manner (no examples to bring the story to life). In the investment world today, it is indeed possible to sit through a 30-minute mortgage-backed securities or venture capital presentation without being given one example of a real, live mortgage-backed security or venture capital investment. The structure of the typical investment sales presentation and the cultural norms that guide its delivery conspire against what great teachers do best: help their audience learn something new. This represents a huge opportunity for investment companies with a genuine commitment to selling through teaching.
Teach to learn. There is an old Japanese proverb that reverberates with truth: to teach is to learn. One interpretation is that to demonstrate mastery of a subject, one must be able to teach the subject effectively to others. Another interpretation is that great teachers share information generously, which means that others are more likely to share information generously in return.
In 1996 I was invited to give a presentation to an audience of approximately 250 investment professionals on the daunting topic of How to Give a Winning Presentation. I was terrified. My business back then specialized in investment marketing but did not offer presentation coaching as now, and the last time I had given a presentation was in sixth grade (which did not go well). To prepare, I learned everything I could about the people in the audience, including an in-depth review of their new business presentations. I also read anything I could find on the art of presenting successfully. My presentation that day resulted in many long-term business relationships, and I can attribute that success to one simple piece of advice: always think of your audience not as a skeptical mob ready to take you down, but as a group of people who can benefit from what you are able to teach them.
The Downside?
The person who suggested this newsletter topic asked me to address the cons as well as the pros in a teaching-oriented approach to selling. Is there a downside? Sometimes investment firms worry about giving too much information away. The thinking is that transparency will allow outsiders — e.g., sovereign wealth funds or consultants expanding into investment management — to emulate their approach. Depending on the strategy, this may be a valid concern. But for most investment companies, success lies in the execution of the strategy as opposed to some secret formula. Many investors also have learned, often the hard way, that if they don’t understand something, they shouldn’t buy it. In the old days, there may have been some cachet associated with opaque investment strategies. But today, if a strategy is not clear, it’s buyer beware.
Another potential downside lies in talking down to an audience by trying to teach them something they already know in depth. The best way to avoid this is to (1) study audience credentials in advance and (2) ask if people already know something before you embark on explanatory detail. In my experience, there is a far greater risk of talking up to an audience than talking down — i.e., assuming they understand complex concepts when they do not.
Wealth Management Unwrapped
Nowhere is teaching a more powerful sales tool than in the private wealth management business. In this light, Charlotte B. Beyer’s book, Wealth Management Unwrapped: Unwrap What You Need to Know and Enjoy the Present, is a great addition to the library of anyone involved in buying or selling wealth management services. Beyer founded the Institute for Private Investors in 1991 to help improve the relationship between wealthy investors and their financial advisors, and in 1999 collaborated with The Wharton School of the University of Pennsylvania to create the first private wealth management curriculum for investors in the country. A pioneer in education about wealth management, Beyer shares stories that both advisors and their clients can learn from in chapters such as “How to Fix Jargon Overload” and “What’s in this Alphabet Soup?”
Monthly insights for investment marketing and sales professionals
April 2015
Can a simple shift in mindset greatly increase one’s effectiveness as a salesperson? You bet it can. This issue of Excess Returns explores strategies for selling through teaching.
With best wishes,
Liz Hecht
Founder, Principal and Director of Research
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.
Earlier this month, a regular reader of this newsletter wrote me the following note:
“I recently heard a compliment about a presenter that I thought encapsulated a best practices approach to prospect meetings. He said, ‘Erik was the first presenter who seemed to be trying to TEACH us something, rather than SELL us something.’ It occurred to me that you might have insight about the pros (and cons?) of that type of approach, or thoughts on why it works and how to do it, that you might want to explore in a newsletter.”
Bless you, dear reader. I was hunting for a topic for this month’s newsletter, and this happens to be a darn good one. First, let’s briefly tackle why selling by teaching works — and then address strategies for selling this way consistently.
Selling through teaching is effective in part because teachers are trying to give you something (knowledge) while salespeople are trying to get something from you (the sale). To their credit, the best investment companies figured out a long time ago that teaching sells. Hence the whole cottage industry of articles, white papers and thought leadership described in the February 2012 issue of this newsletter.
Strategies for Selling through Teaching
While investment firms understand the benefits of education, their sales presentations still tend to be less focused on teaching than selling. The following suggestions can put the power of teaching to work in your firm’s sales presentations.
Emulate the best. Think about great teachers you may have known. What attributes made them great, and how can you bring such attributes to your work as a salesperson? In my experience, the trait that best summarizes the most inspiring teachers is caring. Throughout my school years, I could always tell right away if a teacher really cared — about the topic and about his or her students, about helping people by sharing knowledge. In the investment world, an effective salesperson seems less interested in selling than in sharing knowledge about something important to the audience. This seems obvious, but I can assure you that it’s not. Some of the smartest people in the investment business still resist my simple advice that the best sales presentations are centered on the audience. Caring is what I remember about my best teachers, but you will remember other traits worthy of emulating. In addition to great teachers, another source of inspiration can be found in TED, an organization devoted to spreading ideas through short, powerful talks. (For a particularly inspiring TED talk, invaluable to teachers, salespeople and all of us who aspire to sell through teaching, I recommend Your Body Language Shapes Who You Are by social psychologist Amy Cuddy.)
Open a window. The best teachers have the ability to open a window into a new world, and investing consists of many fascinating worlds. There is venture capital, global fixed income, mortgage-backed securities and micro-cap stocks, to cite only a few examples. These are all very different worlds with different rules about what guides success or guarantees failure. Yet why do these different worlds so often sound exactly the same in investment sales presentations? Because the presenters are focused on fulfilling certain sales requirements (checking the philosophy-process-people-performance boxes) in a risk-free manner (no examples to bring the story to life). In the investment world today, it is indeed possible to sit through a 30-minute mortgage-backed securities or venture capital presentation without being given one example of a real, live mortgage-backed security or venture capital investment. The structure of the typical investment sales presentation and the cultural norms that guide its delivery conspire against what great teachers do best: help their audience learn something new. This represents a huge opportunity for investment companies with a genuine commitment to selling through teaching.
Teach to learn. There is an old Japanese proverb that reverberates with truth: to teach is to learn. One interpretation is that to demonstrate mastery of a subject, one must be able to teach the subject effectively to others. Another interpretation is that great teachers share information generously, which means that others are more likely to share information generously in return.
In 1996 I was invited to give a presentation to an audience of approximately 250 investment professionals on the daunting topic of How to Give a Winning Presentation. I was terrified. My business back then specialized in investment marketing but did not offer presentation coaching as now, and the last time I had given a presentation was in sixth grade (which did not go well). To prepare, I learned everything I could about the people in the audience, including an in-depth review of their new business presentations. I also read anything I could find on the art of presenting successfully. My presentation that day resulted in many long-term business relationships, and I can attribute that success to one simple piece of advice: always think of your audience not as a skeptical mob ready to take you down, but as a group of people who can benefit from what you are able to teach them.
The Downside?
The person who suggested this newsletter topic asked me to address the cons as well as the pros in a teaching-oriented approach to selling. Is there a downside? Sometimes investment firms worry about giving too much information away. The thinking is that transparency will allow outsiders — e.g., sovereign wealth funds or consultants expanding into investment management — to emulate their approach. Depending on the strategy, this may be a valid concern. But for most investment companies, success lies in the execution of the strategy as opposed to some secret formula. Many investors also have learned, often the hard way, that if they don’t understand something, they shouldn’t buy it. In the old days, there may have been some cachet associated with opaque investment strategies. But today, if a strategy is not clear, it’s buyer beware.
Another potential downside lies in talking down to an audience by trying to teach them something they already know in depth. The best way to avoid this is to (1) study audience credentials in advance and (2) ask if people already know something before you embark on explanatory detail. In my experience, there is a far greater risk of talking up to an audience than talking down — i.e., assuming they understand complex concepts when they do not.
Wealth Management Unwrapped
Nowhere is teaching a more powerful sales tool than in the private wealth management business. In this light, Charlotte B. Beyer’s book, Wealth Management Unwrapped: Unwrap What You Need to Know and Enjoy the Present, is a great addition to the library of anyone involved in buying or selling wealth management services. Beyer founded the Institute for Private Investors in 1991 to help improve the relationship between wealthy investors and their financial advisors, and in 1999 collaborated with The Wharton School of the University of Pennsylvania to create the first private wealth management curriculum for investors in the country. A pioneer in education about wealth management, Beyer shares stories that both advisors and their clients can learn from in chapters such as “How to Fix Jargon Overload” and “What’s in this Alphabet Soup?”
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@alphapartners.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.
Monthly insights for investment marketing and sales professionals
April 2014
Much has been published during the past few years about how human brain function affects investment decisions. But how do the workings of the human brain affect investment marketing? This month Excess Returns examines a few vital marketing rules based on how human beings process and retain information.
With best wishes,
Liz Hecht
Founder, Principal and Director of Research
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.
I am happiest in life when I am engaged in two good books simultaneously, listening to one in the car and reading one at home. So imagine my dismay recently when, after starting to listen to a book, I realized that I had heard this book before. I had borrowed this same audiobook from the library only about a year ago.
My personal memory shortfall got me thinking about the role of memory in marketing. My job involves presenting information about a complex, intangible product (investment management) in a distinctive, memorable way. If I could forget an entire book consumed over six hours, then how easy it must be for prospective clients to forget an entire investment presentation consumed in 30 to 60 minutes.
So I got to wondering, how does human memory work? And how can understanding human brain function be applied in developing more effective marketing strategies? It turns out that, yes, you guessed it, there is a growing body of work on this very topic.
Rules to Remember
Given the way the human brain operates, prospective clients, consultants and financial advisors are more likely to remember you and your approach to investing if you follow a few simple rules:
Break It Up. This also might be called the 10-minute rule. According to John Medina, author of Brain Rules, after 10 minutes, without a change in the kind of information being presented, the human brain checks out. If given more of precisely the same kind of information, attention dwindles, the potential for learning decreases and, in the context of investment marketing, so does the potential for getting another meeting or making a sale.
At 9 minutes and 59 seconds, writes Professor Medina, the brain needs something new to reactivate — something new with an emotional charge to release the neurotransmitter dopamine, which aids memory and information processing. In his book, Professor Medina describes how he breaks a 50-minute lecture into five 10-minute segments with dopamine-inducing transitions from one segment to the next.
Connect to the Audience. There are several ways to achieve such transitions: a synopsis of what the next segment is about (the brain craves meaning over detail), a specific example, a personal emotional connection or, perhaps most effective of all, an example linked to a personal emotional connection.
Academic studies show that the most persuasive messages are presented in a way that facilitates connection to the audience. One might wonder why scientific studies should be required to document obvious common sense. (People are more interested in information if they can relate it personally to their own lives. Duh.) In my own experience working with investment managers, however, I can see the need for such studies. Many investment companies have great difficulty presenting the story of their firm and their investment strategies in ways that trigger a dopamine-inducing emotional response. The typical investment pitch, in fact, prioritizes the information of least interest to prospective investors (the firm, the firm’s credentials) at the expense of information of greatest immediate interest (the investment strategy and how it fulfills a specific audience need).
Use Examples. We have always told our clients that examples are a key ingredient of strong storytelling, creating satisfaction as a plot unfolds. Because of what Professor Medina describes as “the brain’s natural predilection for pattern matching,” examples also make information “more elaborative, more complex, better encoded and therefore better learned.” Brain Rules describes the following experiment:
Groups of students read a 32-paragraph paper about a fictitious foreign country. The introductory paragraphs in the paper were highly structured. They contained either no examples, one example, or two or three examples of the main theme that followed. The results were clear: The greater the number of examples, the more likely the information was to be remembered.
For more on the power of examples in investment marketing, see the January 2013 issue of Excess Returns.
Use Pictures. Experts in communications, graphic design and human brain function all agree: pictures are much easier to remember than words. According to Brain Rules, “if information is presented orally, people remember about 10 percent, tested 72 hours after exposure. That figure goes up to 65 percent if you add a picture.” There are several reasons, some good and some bad, why investment marketing tends to be text heavy. A good reason is that many marketing documents are designed to be read as well as spoken (the presentation book that often is reviewed as a stand-alone document, for example). A bad reason is that investment professionals fear the subjectivity inherent in pictures; they are more comfortable with text and numbers. Another bad reason is that many in our business falsely perceive pictures as being somehow not sufficiently serious for institutional investors. (For more on this mindset and how to avoid it, see Oh, That Is So … Retail!)
These rules — break it up, connect to the audience, use examples and use pictures — scratch the surface of what brain research has to teach us about marketing. Such rules, in my view, merely ratify common sense. But I have to remember that in our world there are many who would defy common sense: the product expert comfortable only with numbers and facts who will not allow any pictures in a presentation book, the portfolio manager who refuses to use specific examples out of fear of being pinned down and the CEO who enumerates the merits of his or her company without explaining why the audience should care. Perhaps the science of brain research ultimately will convince these investment professionals what we marketers have known all along.
(Oh and by the way, circling back to the origin of this article, I think the reason I did not remember having listened to that audiobook was simply this: it was boring.)
The Rule of One
A friend recently sent me a research study about the optimum number of positive claims in messages designed to persuade an audience. When there is a persuasion motive, the study explained, more than three positive claims arouse skepticism. This adds another empirical rationale for the so-called Rule of Three.
The Rule of Three works just fine, but do you know what rule I like a whole lot better? The Rule of One. Think about it: What is the one distinctive thing you want clients and prospective clients to remember about your investment approach? If you can answer that question, you have the foundation for a strong marketing strategy. Why? Because one is easier to remember than three (or four or ten). Because focus on one thing concentrates and intensifies the message. And because many of your competitors will prove unable to identify, agree on and clearly articulate one truly distinctive element of their investment offering.
Brain Rules
John Medina’s fascinating book and related website offer support for commonsense marketing strategy, along with invaluable chapters on how exercise, sleep and stress affect brain function. The chapter on Rule #4 (“We don’t pay attention to boring things”) offers the best argument I have so far heard against multitasking: “Studies show that a person who is interrupted takes 50 percent longer to accomplish a task. Not only that, he or she makes up to 50 percent more errors.” All of the studies cited in Brain Rules (and in this issue of Excess Returns) can be found at www.brainrules.net/references.
John Medina’s book, Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School, provides many memorable lessons for investment marketers.
Monthly insights for investment marketing and sales professionals
April 2014
Much has been published during the past few years about how human brain function affects investment decisions. But how do the workings of the human brain affect investment marketing? This month Excess Returns examines a few vital marketing rules based on how human beings process and retain information.
With best wishes,
Liz Hecht
Founder, Principal and Director of Research
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.
I am happiest in life when I am engaged in two good books simultaneously, listening to one in the car and reading one at home. So imagine my dismay recently when, after starting to listen to a book, I realized that I had heard this book before. I had borrowed this same audiobook from the library only about a year ago.
My personal memory shortfall got me thinking about the role of memory in marketing. My job involves presenting information about a complex, intangible product (investment management) in a distinctive, memorable way. If I could forget an entire book consumed over six hours, then how easy it must be for prospective clients to forget an entire investment presentation consumed in 30 to 60 minutes.
So I got to wondering, how does human memory work? And how can understanding human brain function be applied in developing more effective marketing strategies? It turns out that, yes, you guessed it, there is a growing body of work on this very topic.
Rules to Remember
Given the way the human brain operates, prospective clients, consultants and financial advisors are more likely to remember you and your approach to investing if you follow a few simple rules:
Break It Up. This also might be called the 10-minute rule. According to John Medina, author of Brain Rules, after 10 minutes, without a change in the kind of information being presented, the human brain checks out. If given more of precisely the same kind of information, attention dwindles, the potential for learning decreases and, in the context of investment marketing, so does the potential for getting another meeting or making a sale.
At 9 minutes and 59 seconds, writes Professor Medina, the brain needs something new to reactivate — something new with an emotional charge to release the neurotransmitter dopamine, which aids memory and information processing. In his book, Professor Medina describes how he breaks a 50-minute lecture into five 10-minute segments with dopamine-inducing transitions from one segment to the next.
Connect to the Audience. There are several ways to achieve such transitions: a synopsis of what the next segment is about (the brain craves meaning over detail), a specific example, a personal emotional connection or, perhaps most effective of all, an example linked to a personal emotional connection.
Academic studies show that the most persuasive messages are presented in a way that facilitates connection to the audience. One might wonder why scientific studies should be required to document obvious common sense. (People are more interested in information if they can relate it personally to their own lives. Duh.) In my own experience working with investment managers, however, I can see the need for such studies. Many investment companies have great difficulty presenting the story of their firm and their investment strategies in ways that trigger a dopamine-inducing emotional response. The typical investment pitch, in fact, prioritizes the information of least interest to prospective investors (the firm, the firm’s credentials) at the expense of information of greatest immediate interest (the investment strategy and how it fulfills a specific audience need).
Use Examples. We have always told our clients that examples are a key ingredient of strong storytelling, creating satisfaction as a plot unfolds. Because of what Professor Medina describes as “the brain’s natural predilection for pattern matching,” examples also make information “more elaborative, more complex, better encoded and therefore better learned.” Brain Rules describes the following experiment:
Groups of students read a 32-paragraph paper about a fictitious foreign country. The introductory paragraphs in the paper were highly structured. They contained either no examples, one example, or two or three examples of the main theme that followed. The results were clear: The greater the number of examples, the more likely the information was to be remembered.
For more on the power of examples in investment marketing, see the January 2013 issue of Excess Returns.
Use Pictures. Experts in communications, graphic design and human brain function all agree: pictures are much easier to remember than words. According to Brain Rules, “if information is presented orally, people remember about 10 percent, tested 72 hours after exposure. That figure goes up to 65 percent if you add a picture.” There are several reasons, some good and some bad, why investment marketing tends to be text heavy. A good reason is that many marketing documents are designed to be read as well as spoken (the presentation book that often is reviewed as a stand-alone document, for example). A bad reason is that investment professionals fear the subjectivity inherent in pictures; they are more comfortable with text and numbers. Another bad reason is that many in our business falsely perceive pictures as being somehow not sufficiently serious for institutional investors. (For more on this mindset and how to avoid it, see Oh, That Is So … Retail!)
These rules — break it up, connect to the audience, use examples and use pictures — scratch the surface of what brain research has to teach us about marketing. Such rules, in my view, merely ratify common sense. But I have to remember that in our world there are many who would defy common sense: the product expert comfortable only with numbers and facts who will not allow any pictures in a presentation book, the portfolio manager who refuses to use specific examples out of fear of being pinned down and the CEO who enumerates the merits of his or her company without explaining why the audience should care. Perhaps the science of brain research ultimately will convince these investment professionals what we marketers have known all along.
(Oh and by the way, circling back to the origin of this article, I think the reason I did not remember having listened to that audiobook was simply this: it was boring.)
The Rule of One
A friend recently sent me a research study about the optimum number of positive claims in messages designed to persuade an audience. When there is a persuasion motive, the study explained, more than three positive claims arouse skepticism. This adds another empirical rationale for the so-called Rule of Three.
The Rule of Three works just fine, but do you know what rule I like a whole lot better? The Rule of One. Think about it: What is the one distinctive thing you want clients and prospective clients to remember about your investment approach? If you can answer that question, you have the foundation for a strong marketing strategy. Why? Because one is easier to remember than three (or four or ten). Because focus on one thing concentrates and intensifies the message. And because many of your competitors will prove unable to identify, agree on and clearly articulate one truly distinctive element of their investment offering.
Brain Rules
John Medina’s fascinating book and related website offer support for commonsense marketing strategy, along with invaluable chapters on how exercise, sleep and stress affect brain function. The chapter on Rule #4 (“We don’t pay attention to boring things”) offers the best argument I have so far heard against multitasking: “Studies show that a person who is interrupted takes 50 percent longer to accomplish a task. Not only that, he or she makes up to 50 percent more errors.” All of the studies cited in Brain Rules (and in this issue of Excess Returns) can be found at www.brainrules.net/references.
John Medina’s book, Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School, provides many memorable lessons for investment marketers.
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@alphapartners.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.