Hey - Your 'Marketing' Light Is On

How many vehicles are on the road today with a “Schedule Service” message displayed on the instrument panel?

And how many drivers will ignore it for yet another day?

Why do we ignore those messages?

Lots of reasons.  For one, getting that oil change or not really won't affect how the car runs or performs right now.  It will of course impact the vehicle’s future performance and longevity, but that's not an immediate priority to many drivers.  Then there's the argument of not having enough time.  Even though we know that 30 minutes now can avoid hours of [expensive] labor later.  For others it's cost - just not in the budget right now.  Yet at some point they realize that it would probably save money in the long run.

Of course, looking at this situation objectively there's only one way to proceed.  It's a necessary expense to protect an asset that's important and which is costly to replace; you ignore that little light at your own peril.  You might win today - and think that you've saved money - but at some point you'll look back and realize that its message was a relative bargain.

Unfortunately there's no reminder light that says "Re-Think Your Marketing" but the situation is very similar.  Instead of measuring miles or months, measure the number of funds competing with yours.  No matter how special or unique or clever you think your strategy is, there are many others competing for every allocator's attention.

To get an idea of just how much noise you need to break through, consider that there are currently about 13,000 hedge funds.  Assume that only 10% run a strategy that's appropriate for a given allocator - or about 1,300 funds.  If that allocator devoted just 10 minutes looking at each fund, it would take over 200 hours to get through the list.  That's 5 weeks of time - assuming that the allocator did this and nothing else all week long.

Obviously that's not going to happen.  Allocators don't have that kind of time.  They're going to narrow down the field to less than 1%, and only that small subset even gets a first look.  Your fund needs to be in that less-than-one-percent group.

"But I have an outstanding track record"

Great; but that only keeps you in the running.  If you think an allocator will beat a path to your door just based on your performance, think again.  Consistently great performance is necessary to get noticed, but it's not sufficient:  there are plenty of funds out there with performance equal to or better than yours (and by the way they're not capturing 100% of the market either).

"My long/short global-macro-hedged-with-truffle-futures strategy is so innovative that people will be lining up to write checks."

Actually it's not, and they won't.  No matter how unique you might think your strategy is, allocators are going to bucket you into a category that they understand.  Don't rely on a perceived uniqueness to get noticed.

Well there's always pedigree - you earned your stripes at a top-tier firm; that's a point of distinction, right?  Actually, not as much as you want it to be.  Just like great performance it's important to have, but hardly unique.

What's left? Lower fees?  That's a slippery slope:  start competing on fees and you'll be limiting your profitability potential far into the future.  Unless you're prepared to claim and defend the position of low-cost provider, someone can always undercut you - leaving you with nothing else to differentiate your offering.

So how do you stand out from the pack?

You use the marketing tools that other industries have proven to be effective when faced with the same need to create distinction.  Create a unique brand, with a set of attributes that you can own, an identity that people can recognize, and a positioning that makes you distinctive.

Use contemporary language - not the same tired phrases that this industry has leaned on for years.  Electric starters and heaters were once huge selling points for cars – but they stopped being noteworthy about a century ago.   What would you think of a modern manufacturer whose ad featured "no more hand cranking!" ?  Is “skillful risk mitigation” any better?

Dose out information in layers that build your story:  a request for “a quick overview of your fund” doesn't mean “I want to read a 30 page deck.”  A 'lite' (digital) version of your marketing deck works far better in those cases.  And, you'll get to provide additional, as-yet-unseen information when your prospect wants to learn more.

Not all communication needs to be via decks and emails.  Webinars and videos are a much more dynamic and memorable way to communicate and to reinforce your brand attributes.

Finally, a modern marketing automation platform will let you manage these various communication channels more effectively, track behavior of visitors to your website, and can even identify the highest-opportunity prospects to make your follow-up process much more efficient.

Use these techniques to establish an identity and build awareness - and you won't have to worry about that “Re-Think Your Marketing” warning light anytime soon.