Average Performance + Good Marketing = Increase in AUM
Guess what, your performance is average.
What do you do now? You start being damn smart about marketing.
Apple had a downward sales trend in 2006; that is until it launched the “Get a Mac” campaign that featured comedian John Hodgman as a frumpy, unhelpful representative of a PC, and actor Justin Long as a cool confident Mac. Sales increased by 39% by the end of the fiscal year.
The sales of Old Spice Body Wash increased over 100% the month after the “The Man Your Man could Smell Like” campaign launched. Old Spice didn’t have the lock on good smelling stuff. It was simply a great marketing campaign.
The greatest fallacy that exists in private equity is that you can’t be smart about marketing. As a result everyone keeps talking about uninspiring performance, proprietary deal flow that really isn’t proprietary, and experience that is the same as everyone else.
There are three very quick fixes to account for lack luster performance and a common strategy:
1.) Establish yourself & your group as a thought leader.
How do you accomplish this? You focus on nothing but growing your digital footprint. To start, what is a digital footprint? Google your company, the number of pages that come up, that is your footprint. You expand your foot print by creating videos, writing stuff like this, posting things on social networks, forming partnerships, hiring a PR company, etc. No one is going to invest capital with you without checking you out online. If you are in 100 different places, and sound smart, an investor is much more likely to believe that your performance was the result of a rare solar eclipse.
2.) Come up with more creative ways to get people to listen to what you have to say.
Do you think you are the only one sending an investor a marketing deck? You need to be smarter than that. Camouflage your message in something that is more engaging than a marketing deck - find an original spokesperson, create a cool video that focuses on the charisma of your team and not the numbers, or get Warren Buffet to endorse you (what if it is possible?)
3.) Statistics and probability have as much to do with sourcing capital as relationships and performance. If you refuse to be smart, just be better. In this business there are great database companies like Preqin, Meridian – IQ, Capital Hedge, and Bloomberg. Grab one of these lists and attack it. And if you first thought is "that won’t work," I can assure you that you haven’t tried a Sonar Marketing campaign.
The competitive landscape is only getting tougher. Institutional Investors are aggressively consolidating the number of managers they invest with, HNW individuals are being attacked on all fronts, and technology is changing everything. I figure that now is a pretty good time to contemplate trying something different.
By Kyle Dunn