From the May 2012 issue of Investment Advisor • Subscribe!

Marketing Nets Need Holes

To deliver the most right-fit prospects, marketing tactics need to allow certain prospects to get away

Illustration by Enrico Varrasso. Illustration by Enrico Varrasso.

When it comes to marketing financial services, it’s a numbers game. Getting the message to more people means more contacts, more prospecting meetings, more clients—or so the conventional wisdom goes. There’s a hidden number in that equation, however, that many advisors don’t consider—the number of hours spent following up and meeting with prospects who, for whatever reason, aren’t a right fit for the advisor’s practice.

Many advisors view marketing as casting a net. The bigger and more finely woven the net, the better, because fewer prospects escape. The problem with a big, tightly knit net is that it will indeed catch everything: those high-net-worth big fish, medium and smaller fish, as well as tires, tin cans and weeds. The best advisor marketing nets actually need big holes in them—holes that let all the undesirable junk fall through and hold on to just the big fish.

Traditional television and radio advertising, for example, is a big net. Even limited to the local broadcast area, the message reaches a relatively large portion of the available audience. Because the message needs to run frequently to penetrate (the average person has to hear a message seven times to remember it and even more times to act upon it), launching a broadcast campaign can be incredibly expensive. That’s a finely woven net.

Over time, a broadcast campaign will haul in prospective clients. Because broadcast messages reach a diverse demographic, many of those prospects will not be suitable for your practice for a variety of reasons, including age, income level, investable assets and willingness to save and invest. The problem is you don’t know they’re unsuitable until you or your staff takes the time to qualify them, either by phone or in person. You’ve now added the cost of that time to the already high cost of the campaign itself.

The cost of the marketing tactic isn’t the only factor for determining its effectiveness. You can have a small, low-cost tactic that fails to catch enough prospects. For example, a small advertisement in your college alumni magazine may be affordable, and it’s definitely more targeted than a general broadcast campaign, but the ad alone probably won’t bring you enough right-fit prospects to feed your prospecting pipeline. The fish see the net for what it is, and with nothing more to bait it, they’re not biting.

It helps to know something about the kind of fish you’re hoping to catch. Where do they live? What do they eat? Are they most active at morning or night, or during a particular season? How do they attract mates and raise their young? How do they interact with other species? What threats exist in their environment? You need to answer similar questions about your target market before you start fishing. If you don’t know what you’re fishing for and how it lives, how do you know where to fish, what equipment you need and what bait will work?

For the record, “retirees” is not a precise enough target market. You need to be more specific. Make a list of your ideal clients—the ones who need ongoing financial advice, provide the most right-fit referrals, are most profitable and who you actually enjoy working with. This is the species of fish you’re after, so start studying their traits and behaviors. When you find the common threads, you’ll have defined your target market.

Let’s say you’ve determined that your target market definition includes professionals age 40 and older, typically married with children in high school or older. A large portion, although not all, attended the same major university in your city, and most of them make sizable annual contributions to the university (as reported in the alumni magazine). In addition, they stay connected with other alumni and enjoy attending alumni functions, both formal events organized by the alumni association and informal events put together by other alumni. (How did you get all this information? You asked your ideal clients.)

Now you know what you’re fishing for. You know what motivates them and possible hot buttons: career, retirement, education funding for kids or grandkids and charitable donations. You know where and why they gather: time to choose a marketing tactic—maybe an informal event at a local bar or restaurant following a major university sporting event. You invite your ideal clients and ask them to please invite other alumni who might like to attend. By using a marketing tactic specific to your target market, you have increased the percentage of possible right-fit prospects and reduced the time spent sorting the keepers from the junk. (You may want to add in that alumni magazine ad, as seeing your name frequently helps the fish become accustomed to seeing you and makes them more willing to swim into the net.)

This particular tactic—an informal get-together after a sporting event—may not be for every advisor. Maybe you dislike sports, or the informal rubbing-elbows format makes you a little uncomfortable. Always play to your strengths. If you try to like something—sports, ballet, wine, hunting—just because you’ve identified a big pool of potentially profitable fish, the effort may fall flat and you may alienate your prospects and possibly your clients as well. They may sense that you’re a fish out of water at your own event. Sincerity is especially important for marketing that involves a charitable event or non-profit sponsorship.

In essence, the question to ask when evaluating your marketing tactics (the nets) comes down not to how many fish you can catch with it, but how many big fish—or conversely, how much junk it will let fall through the holes.

Of course, any good fisherman will tell you there are always those times when despite having the right bait, the right net and deep knowledge of the type of fish you want to catch, they just aren’t biting. Sometimes you can catch what you want, even if you don’t know what you’re doing, and sometimes one will jump right in the boat without you doing a thing. Flukes will happen. And that’s fine if you fish as a hobby.

But the fisherman who relies on his catch for his income doesn’t rely on flukes; he makes his own luck. He does that by knowing what he’s fishing for, knowing its habits and using the right bait and equipment. He knows that he has to do something with everything that lands in his net—he has to touch it, trash it or toss it back—so avoiding catching stuff he doesn’t want means less work, less time and less money.      

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