My firm seems much more concerned with sales than marketing. How can I convince senior management that classic marketing is as important, if not more important, than just focusing on sales in gathering assets?
Don't shortchange marketing in quest for client growth
Classic marketing strategies an important component of any sales effort
The investment management industry has historically confused marketing with sales. Many investment managers believe that “getting out there” and calling — even cold — on as many people as possible and as frequently as possible is the best way to build the asset base. I would suggest to your senior management that the most effective and efficient way of building the asset base is to first determine the appropriate target market for the product or products that your firm offers. This requires research and analysis of the overall market, and requires the money manager to focus its money-raising effort on those investors, be they institutional or high-net-worth. It is imperative to have this focus because the market is extremely large and your sales and marketing resources might not be.
So let's assume that you believe the institutional arena is the best target market because institutional investors have historically participated in your asset class and they have historically invested in the vehicles that you offer such as separately managed accounts or fund of funds. Then you might look at the size of the investors in this large universe. If your minimum account size is, say, $20 million, you will want to focus on those funds that are comfortable with and have historically allocated at least $20 million initially to the various products of the investment firms in which they have invested.
The next step might be to further segment the market into defined benefit plans vs. other investors such as endowments, foundations and family offices. So let's assume you determine that defined benefit funds are the way to go. You might want to further refine this by plan sponsor type. Thus, you could call on just public funds or just corporate plans or on jointly trusteed (Taft-Hartley) funds.
Each group has specific idiosyncrasies that you need to be aware of, such as its actuarial determined target rate of return, risk tolerances and other managers used with products like yours. If you know who a fund's current managers are, you can determine the best way to differentiate your product if and when you are asked to come in for a presentation.
All of these activities are the basic building blocks of marketing, not sales. Identifying the target market, assessing the competition and determining your edge or differentiating characteristics are critical first steps before your sales executives begin their outgoing calls. Segmenting this large market and concentrating on prospects that have embraced your strategy, style and vehicle type in the past provide a target market already predisposed to what you have to sell.