Monthly insights for investment marketing and sales professionals
March 2014
When I ask investment companies for a copy of their marketing plan, I am often told, “There really isn’t one” or “We don’t have anything on paper” or “Our plan is to manage money, and if we do that well, we will attract business.” This issue of our newsletter considers how investment companies can benefit from a thoughtful, flexible marketing plan.
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.
“In the long run, clarity about purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, the five forces, and other key business theories we teach at Harvard.“
— From How Will You Measure Your Life? by Clayton M. Christensen
I have had the good fortune throughout my career to work with a number of start-up investment companies, and I love working with start-ups. Why? Because in a start-up, marketing matters. In start-ups, there is almost always a detailed marketing plan as part of the larger business plan. At more established companies, I have learned, this is not always the case.
There are a number of reasons why no plan exists. Planning takes time, and at many investment firms time is the resource in shortest supply. The realities underlying any marketing plan are perceived to be too fluid, dooming virtually any plan to irrelevance before the ink is dry. And, perhaps most prevalent, many investment firms still, even in 2014, are completely dominated by those who invest, consigning all other unfortunate souls (in sales and marketing, for example) to a sad half-life of action without purpose.
Why Develop a Marketing Plan?
There are at least three good reasons why investment companies should create and maintain a concise marketing plan if they do not already have one.
1.
A plan saves time and money. A well-thought-out plan aligns available resources with longer-term goals. When it comes to marketing, some investment firms tend to flail about randomly. This month they want to do advertising and next month all their focus is on client events. None of these activities will have the desired long-term impact without a consistent, decisive, well-defined answer to the toughest question: “How is your firm different from competitors?” Especially when the answer to that question varies day to day depending on which professionals are being asked in different parts of the world.
2.
A plan facilitates swift response to change. The main reason firms don’t plan is fear of change — concern that reality inevitably will invalidate any plan. Yes, change is a fact of life in the investment world. Yet how can a company change course effectively if it never set a course in the first place? By checking a plan against reality, an investment company is more likely to course correct in a timely manner.
3.
A plan provides “clarity about purpose,” as noted in Professor Christensen’s book. I am working with a company now that has a clearly defined marketing plan. My client gave me the plan when I walked in the door for my first meeting with the team. The plan allows me to assess and measure my activities clearly in line with desired near-term realities and long-term goals. It gives me the courage to be a nuisance when I need to be a nuisance. It provides immediate guidance when, say, selecting callouts for the company’s latest white paper (this one as opposed to that one because this one is more clearly in line with your company’s desired long-term identity). A plan helps us all swiftly answer such life-defining questions as “Where should we focus our time today?” One never has the sense of “Why are we doing this again? Oh yeah, because our bosses have decided that this is the priority du jour.”
An investment marketing plan should not become a giant exercise in fixing a future reality that cannot be defined. It should be recorded on paper; it should be short (one page works) and refreshed annually; and it should change as circumstances require while allowing time for it to work. (The reason why many plans don’t work is that investment companies don’t stick to them. One exercise in thought leadership does not a thought leader make, and one or two client events alone do not generate the requisite asset-building buzz.)
While thinking about this article, I had the good fortune to read Apolo Ohno’s wonderful book, Zero Regrets: Be Greater Than Yesterday. In the opening, “Prologue: Toward a Euphoric Clarity,” he writes: “They say the more you think with particularity about things, the more you acknowledge the wanting of a specific thing, the more you articulate that out loud, then the more likely it is to come true. There is great truth in that. It takes a really clear understanding of how to reach a point and what it’s going to take to get there.” That’s precisely what many investment companies need: a clear understanding of how to reach a point and what it’s going to take to get there.
Planning for Financial Advisors
Grounded in a survey of more than 800 financial advisors participating in the Wharton School’s executive education programs, Marketing for Financial Advisors is a commonsense guide for financial advisors seeking to build a successful practice. The book focuses on the need to define a distinctive brand, build value with clients, develop an integrated marketing communications program and, most important, according to the authors, create a clear plan for action. The book’s final chapter, “Putting It All Together: Your Marketing Plan,” emphasizes how vital a plan is to long-term success: “Many studies have shown that without a written plan, even if it is just a sketch or outline … you are much less likely to achieve your goals.” And yet the authors, Eric T. Bradlow, Keith E. Niedermeier and Patti Williams of The Wharton School, note that only 58% of financial advisors surveyed have a plan, and of that 58%, only 65% have updated their plan within the last year.
While written for financial advisors, this book addresses marketing best practices applicable to all investment companies.
Sweaters for Penguins
A client and friend who shares our affinity for penguins sent us information about The Penguin Foundation‘s Knits for Nature program. These sweaters knit by volunteers protect our little friends caught in oil spills, preventing ingestion of toxins prior to cleanup. For more information, click here or email pfoundation@penguins.org.au.
Penguins caught in oil spills need these little sweaters to keep warm and to stop them from trying to clean toxic oil off with their beaks.
Monthly insights for investment marketing and sales professionals
March 2013
Time is money. Time also provides peace of mind, room for inspiration and the ability to be proactive rather than reactive. So how do investment company professionals get more of it? This issue of Excess Returns seeks to answer that question.
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 a time management fanatic. I worry about being late and if I am late I suffer personal torment. I want my tombstone to read, “She was on time.” I have read virtually every popular time management book ever written and continue to look for new ones. My husband has observed that if I spent less time reading time management books I might have more time (he is such a wit).
Through reading these books and through years of personal experience, I have sought and am still seeking to ingrain in my daily life certain practices for being more productive. These include being concise and judicious in responding to email, never picking up the phone unless I know who is calling, relentless prioritization, working with a timer (inspired by Francesco Cirillo’s Pomodoro Technique), breaking a project into its component parts before getting started and using a one-page checklist. (It has to be one page. For more on the joys of checklists, see the February 2013 issue of Excess Returns.)
How to Avoid Time Thieves
But all the time management wisdom in the world could not have protected Alpha Partners from the fix we found ourselves in during late 2001. We were kidnapped and held hostage by three clients that can only be described as time thieves. These companies could not make a decision, it seemed, about anything at all. (And we are not talking big strategic decisions here, but decisions such as what color their company logo should be.) All three projects started before the tech bubble burst in March of 2000 and were still lumbering on in late 2001. Time that we could have spent doing real work or developing new business was spent instead endlessly revising schedules, participating in project update calls and writing memos summarizing the latest list of next steps — memos that, we sadly learned, these clients would almost certainly ignore.
Working with these three clients very nearly killed Alpha Partners. But we survived and, thanks to heightened radar alerting me to time thieves, we have mainly avoided similar experiences. The clients we have now make decisions and get things done. There may be delays for various good reasons, but never does a project suffer death by procrastination.
What does our experience teach investment company professionals about how to avoid time thieves? Whether you are a sales professional with a grueling travel schedule, a marketer with a daunting list of responsibilities, or a portfolio manager who wants to stay focused on investing, you may find the following advice to be helpful:
Be selective. You know the famous 80/20 rule. There are clients who provide 20% of your revenues and take up 80% of your time. With some experience, you can spot these early in the search process. They don’t respect your time. They are late for meetings and not well prepared. Their attitude is all take with no give. By contrast, some of the most successful people, I have noticed, treat others with immense respect, in particular by respecting their time. These are the people you want to do business with. Particularly when you are managing an investment strategy with limited capacity, learn to stay away from clients on the wrong side of the 80/20 rule. Your firm’s success, maybe even your survival, depends on getting and keeping not just any clients but the right clients.
Keep educating your clients. No investment manager wants to be overwhelmed with client inquiries when the markets appear near a bottom or a top. By sedulously educating your clients in good times and bad, you will create space for your investment team to manage their portfolios in peace, focusing without interruption on new ideas when the market is rich with opportunities. High-caliber written communications can make all the difference between clients who constantly call and fret and clients who give your investment professionals the mental capacity they need to do their jobs.
Remain free of emotion. If you become angry — or, worse, allow your ego to rear its ugly, pointless head — you will waste precious time. The more effectively you manage your time, the more likely you are to be effective in managing money and educating clients, all of which translates into being too blissfully busy to indulge in anger or ego.
Epilogue: One of the companies that almost killed Alpha Partners in 2000-2001 is now out of business, one lost its star investment team when the team left to join another company and one still exists but with new ownership and new management. A few years ago, the latter contacted our firm with a request for a proposal. I considered declining based on our past negative experience. But there were new people at the helm and it was a large, complex, interesting project. So we went ahead and took a chance. The proposal took a lot of our time, but we got it done and sent it in, feeling excited and hopeful. And then … nothing. No one ever got back to us and our references have told me that no one ever contacted them. Maybe this company still could not make a decision. But do I hold a grudge against this firm? Nope, I most certainly do not. I’m too busy to hold grudges.
Being on Time
“If you’re early, you’re on time. If you’re on time, you’re late and if you’re late, you’re fired.”
— My husband’s first boss
There are two messages you send when you are late to a meeting with a prospective client: (1) my time is more important than yours and (2) I am too disorganized to show up when expected. Do potential clients take this into consideration in their hiring decisions? You bet they do. During research interviews, investors sometimes tell Alpha Partners that they decided not to work with an investment company because the firm’s representatives were late for an important meeting or because they did not adhere to the allotted time. Here are several strategies, psychological and practical, for being on time:
Build in fat. Always allow for extra time between meetings. It is your job to run the meeting on time, but if a client during meeting #1 wants to spend a bit more time than originally allocated, you obviously don’t want to curtail a productive dialogue. If you have the right amount of fat, you can spend more time during meeting #1 and still be on time for meeting #2.
Run reconnaissance. Whenever possible, check out the location prior to the meeting. Sometimes in big cities the physical location or entryway is not intuitive based on the address provided. You also may need to allocate extra time to clear security. It is important that small details such as these do not derail the outcome of an important meeting or presentation.
Be wary of people who are casual about time. I have attended meetings in the past with colleagues who had, shall we say, a more devil-may-care attitude toward time than I do. “Oh, don’t worry,” they would say, “I know how to get there.” Or, “We don’t need to leave an hour early. A half hour is plenty.” If you want to be on time consistently, do not let yourself be derailed by such people.
Get there early. Being early means you will be on time; it also will give you an opportunity to collect your thoughts, catch your breath and generally be ready to run a tight meeting sharply focused on the client.
The Pomodoro Technique
The Pomodoro Technique® is by far the most effective time management technique I have ever found. I have been using it since 2007. Here is how it works: Use a kitchen timer to work in uninterrupted intervals of 25 minutes each with a 5-minute break. Each such 30-minute interval is called a “pomodoro,” which means tomato in Italian and reflects the tomato-shaped kitchen timer that Francesco Cirillo started using when he created the technique. (You can experiment with longer intervals, but practitioners, myself included, have found that 30 minutes is best. Less than 30 minutes defeats the purpose, which is focused, uninterrupted work.)
If a distracting thought occurs during a pomodoro, you briefly note this on a tracking sheet for completion later (e.g., “schedule meeting with Greg to discuss new website”). After four pomodoros (two hours), take a 15- to 30-minute break. Each time segment is indivisible; there are no half or quarter pomodoros. If you start a pomodoro, you have to finish it when the timer rings. If a scheduled activity (e.g., “write Marketing Strategy Report”) takes more than seven pomodoros (three-and-a-half hours), break it down into different components for completion by stages (e.g., “finalize competitive analysis” and “write executive summary”). If a task takes less than one pomodoro, combine tasks and keep working until the timer rings, signaling the end of one complete pomodoro.
In this way, you divide your time into manageable increments. Endless stretches of time are categorized and defined, minimizing the procrastination that comes with feeling overwhelmed. The 5-minute breaks are critical to maintaining a healthy metabolism, giving you a chance to move around and mitigating fatigue throughout the day. When used systematically over time, the Pomodoro Technique also makes it easier to estimate how long certain tasks will take.
The Pomodoro Technique divides your time into discrete intervals, facilitating focused work without distractions.
Use of the Pomodoro Technique logo and trademark has been authorized by FC Garage by Francesco Cirillo.
For more on how time management affects the growth of your company’s business, see The Soul of Wit Revisited.
Monthly insights for investment marketing and sales professionals
March 2012
An organic food company recently helped me better understand certain important, commonsense truths about investment marketing. This month’s issue of Excess Returns shows how education — and not just any education but a very specific kind — builds client loyalty.
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.
As part of a concerted effort to eat healthy, my husband and I recently began learning more about sustainably farmed food options in our area. There is a well-managed volunteer food co-op and then there is Liberty Heights Fresh, a specialty foods store with a weekly share program; one pays approximately $30 a week for a bag of regionally grown organic produce. The reason I ultimately settled on the somewhat more expensive Liberty Heights option is simple: marketing. Or, to be more specific: marketing through education. Every Thursday morning, the day our family picks up our bag, we now receive an email from Liberty Heights entitled “What’s in the Bag?” Here’s a sample from March 22:
Meyer lemons are distinct from traditional Eureka or Lisbon lemons: their signature round shape, vibrant yellow peel, oily and especially fragrant skin, and low acid, extra sweet flesh. Use in baking, in vinaigrettes and marinades, or to add a special touch to lemonade and cocktails. Store in a bag in the refrigerator for up to two weeks.
For each item included in the bag — this week, along with the Meyer lemons, we find French breakfast radishes, dandelion greens, golden beets and rainbow carrots — Liberty Heights provides a brief description and history, a link to the farms where the food is grown, how it should be stored and related recipes.
Strategies for Providing Portfolio Education
Many investment companies commit significant resources to investor education. Yet most firms still could do a much better job of answering the following simple, straightforward question: “What’s in the portfolio?”
The portfolio isn’t just a list of characteristics or a summary of allocations. It consists of specific investments representing timeless philosophical beliefs, new ideas about what is going on in the world and diligent field research. By focusing on the much-neglected fourth “P,” the portfolio, investment companies very likely will win business in competition with firms that spend too much time selling all the other “P’s”: philosophy, process and people. (In an earlier issue of this newsletter, I explain why a fifth “P,” performance, also is often neglected.)
Here are a few suggestions for making the portfolio come alive:
First, describe what is in the portfolio. This seems simple enough, but certain investment portfolios contain so many different holdings and different kinds of positions that even providing a snapshot can be daunting. But through education about investment themes and the rationale behind related allocations, you can provide detail and color without overwhelming or oversimplifying.
Link the portfolio to philosophy and process. Explicitly answer the question, “How does what we are invested in right now reflect what we believe and the advantages we bring to execution?”
Show how the portfolio reflects your current outlook. Explain how current holdings exemplify your firm’s outlook on the economy and the markets. Sometimes I am told (still!), “We don’t have a top-down outlook; we are bottom-up investors.” Thankfully, the view that bottom-up fundamental research somehow precludes a focus on global macroeconomic factors seems to be changing, giving an edge to firms who can impart understanding of their portfolio from the perspective of the forest as well as the trees.
Teach investors something new. Find ways to bridge from mere data to education about something new — a profile of a new holding, a feature about an industry or country recently added to the portfolio or an explanation of a new performance measure. Raw portfolio data is available in abundance, but stories about macroeconomic themes, specific investments and other explanatory detail are still rare.
Tell stories and show pictures. I can count on one hand the number of investment firms that consistently apply the art of storytelling and photography/illustration to demonstrate what’s going on in their portfolios. Most firms see anything beyond lists of bullets, pie charts, bar charts and graphs as marketing fluff and, of course, therein lies the opportunity for the minority who get it and are willing to do the work.
There are a few good and many bad reasons why investment firms fail to provide portfolio education. Some fear portfolio transparency for legal or marketing reasons; others simply fear being wrong about what’s in the portfolio. There are many better reasons, however, for providing portfolio education, as investors — and that includes aunt Alice as well as sovereign wealth fund CIOs — are always grateful for a true understanding of what is in the portfolio.
This brings me back to what’s in my bag. I did not choose Liberty Heights Fresh because they have the best food (although the food is indeed wonderful). And I did not choose LHF because they had the best price. I chose them because they take the time to provide the most detailed, current, inspiring information about their products. And I likely will stick with them because they regularly teach me something new about what’s in the bag and the larger world where the produce in the bag originates. Meyer lemon pots de crème, anyone?
Here’s what’s in the bag for March 22 (with our cat, Bip). We chose Liberty Heights Fresh not only because of the quality of its products, but also because of the education LHF provides about its products.
Other?
I have been at war against the “other” category for years and I always review our company’s research reports to ensure that “other” is clearly defined with a parenthetical description or a footnote. So I was recently perplexed to receive the following snapshot of what is in my own portfolio:
Such vagueness about 6% of the portfolio, it seems to me, creates several unwanted perceptions about an investment company: (1) that is has an inadequate portfolio accounting system, (2) that it doesn’t mind being fuzzy in client communications about key portfolio details or (3) worst of all, that it does not really understand or care about what’s in the portfolio. In this case, “other” turned out to be a market neutral fund which could not be classified by an older, soon-to-be-replaced portfolio accounting system.
Steve Jobs, CMO
By now many of you have probably read Steve Jobs by Walter Isaacson. The book shows how Jobs, despite his success in playing many corporate roles, was above all a superb Chief Marketing Officer. And what made him hyper-effective as a marketer was his relentless focus on all of the small details that create an excellent customer experience. If you want to indulge in a reading marathon about Jobs, which I can attest is time well spent, you might also enjoy The Presentation Secrets of Steve Jobs, by Carmine Gallo, who in chapters such as “Develop a Messianic Sense of Purpose” and “Make It Look Effortless,” deconstructs the many ways in which Jobs excelled as a speaker. Mr. Gallo also recently published another Jobs-inspired book that may be of interest to investment marketers: The Apple Experience: Secrets to Building Insanely Great Customer Loyalty.
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
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’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.
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.
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!
Alpha Partners LLC Marketing for Excess Returns®
1062 Oakridge Road South | Park City, UT | 84098
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