Last month we talked about marketing basics–in particular, about product, price, promotion, and place, the 4 P’s. In a nutshell, the 4 P theory you learned in your college marketing classes is that by offering the right products at the right prices to the right people using the right promotional vehicles, success is virtually guaranteed. In our June issue, we explored the first two of the 4Ps-product and price. This month, we’ll examine the remaining two Ps-promotion and place. For investment advisors, promotion and place translate to using the right marketing methods to reach the right target audiences.
Effective promotion strategies are the key elements of advisors’ success at any time, but it’s especially important when the economy is in flux. The challenge with promotion strategies for advisors is experience: 61% of advisors surveyed don’t have marketing plans, according to the latest AdvisorBenchmarking survey.
In 2009, there was a significant shift in how advisors gained new clients. The percentage of clients gained from actively seeking referrals nearly doubled to 21% in 2009 from just 12% in 2008 (see Chart 1 below). In contrast, the percentage of new clients coming from passive referrals, traditionally the most common source of new clients in the past, was 10% in 2009 versus 20% in 2008. This underscores the importance of seeking clients through active referrals. Also, advisors reported that their Web sites played a larger role in bringing in new clients in 2009-17% of advisor clients were attributed to leads from the Web.
When considering marketing tactics for 2010 (see Chart 2 below) , almost half (40%) of advisors surveyed said they would organize seminars or invitation-only events and 38% said they would host client appreciation events. Social networking sites are playing a bigger role in advisors’ marketing efforts, with 28% of survey participants planning to use social media Web sites such as LinkedIn (28%) and Facebook (23%).
Determining a Target Niche
Most successful businesses identify specific target markets and create messaging–as well as marketing strategies and tactics–to effectively reach these markets. Traditionally, advisors have not actively defined specific target markets, with the exception of identifying certain wealth ranges for their optimal clients. Concentrating on smaller groups of clients with similar needs and goals may enable advisors to build specialized knowledge and leverage that knowledge across the client base, rather than having to support disparate needs. The percentage of advisors who targeted clients with specialized investment needs and specific career descriptions did increase in 2009. Advisors increasingly relied on wealth range as a determining factor for focusing on potential clients-63% compared to 49% in 2008. We would caution that wealth range may not be enough of a criterion in creating a target market, as age, career, and lifestyle can have significant impacts on investors within the same wealth range.
Communicating with Clients