Are You Planning To Grow?

If you're not, you won't.

It’s official: Summer is over.

The 4th quarter is staring us down, and planning for 2018 is about to begin. If you’re like most asset managers, a major part of your plan probably includes ‘grow AUM’.  While growing AUM is a key objective, an important goal, and a reason to get out of bed –it’s not a plan.  Despite your stellar track record, top-notch pedigree, and years of experience, allocators and other investors probably aren’t going to line up outside your office next year.

While most asset managers have received plenty of coaching and feedback related to “institutionalizing” their investment processes and other business functions, most were never instructed to plan out their marketing efforts in any more detail than a line in their operations plan. This is an industry of active investments – and attracting investors requires a certain level of active marketing.

Why You Need a Plan

Investors have more choices than ever before, and that means your fund must stand out from the pack and present your value proposition succinctly..  That requires a significant amount of effort and resources– which is exactly why you need to have a marketing plan.

This might seem like MBA 101, but the marketing plan must be built alongside your business plan because they’re two sides of the same coin. The business plan forecasts your revenue and expenses for the year, while the marketing plan lays out where those revenues will come from.  You can’t create a marketing plan without first understanding the objectives of the business; and a business plan is not likely to succeed without a realistic, actionable marketing plan to guide it.

Marketing Does Not Equate to “Sales”

A marketing plan serves as a roadmap for your marketing activities for the year.  But too often in the alternatives industry do executives equate ”marketing” with “sales” or “relationship management.”   These are very different functions

The purpose of the marketing plan is to clarify the value proposition and message that you will present to the marketplace. It identifies  the segment(s) of the market you want to reach, determines the strategies and tactics you will use to reach each of those segments, and estimates the costs and revenues associated with each of the planned initiatives.

Creating the Plan

Well-crafted marketing plans have three key components:  (1) goals, (2) strategies to achieve those goals, and (3) tactics to implement the strategies.  The goals need to be in lockstep with the overall business development goals (i.e., “obtain $XXMM from Y new investors”) and have a defined time components (i.e., “by end 1Q2018”).  Just as with a business plan, these goals must be realistic and achievable - or the marketing plan degrades into an exercise in wishing and hoping.

The strategies should include a mix of long-term and short-term drivers.  Long-term work involves brand building, refining your value proposition, and honing your message.  Short-term strategies guide activities that will have more immediate payback – typically focused on marketing channel mix, media choice and sales support.  Balance here is very important:  the more measurable ROI of short-term strategies is compelling, and can often sway managers into ‘transactional’ thinking.  But resources devoted to building your brand and owning a message will make those short-term activities even more effective in the future, and help to provide a bridge over inevitable periods of lackluster performance.

Tactics are the ‘how and when’ of the plan – very specific initiatives designed to execute on the agreed-upon strategies.  Beyond simply providing the instructions, this part of the planning process is designed to ensure that limited marketing dollars and staff resources are allocated to those projects that have the highest likelihood of success.

[Without a plan, many managers fall victim to ‘idea du jour’ decision-making:  spending money and time on initiatives that may not be optimally timed, or correctly targeted, or priced appropriately.  With advance planning, projects can be stack-ranked against each other so that only the strongest in each key metric gain a place on the marketing calendar.  Just as with strategies, it’s important to maintain a sense of balance with tactics:  while a sturdy plan is important, good marketers always keep an eye on their marketplace and learn to recognize when a new opportunity should appropriately replace a program that was planned earlier.]

Executing the Plan, Adapting Along the Way

Like any plan or blueprint, success depends on timely and precise execution.  Simply building the plan and placing it in a drawer won’t get you very far.  Think of the plan as a GPS device:  it will provide accurate guidance, but you’re still driving the car.  Measure your actual AUM growth against what the plan called for, and compare the plan costs to what you actually spent to obtain those additional assets.

As with any attribution process, the goal is to understand what drove the variance – both positive and negative – and use that learning to refine the plan for the remainder of the year and to further inform next year’s plan.  Just as a successful year on the investment side without losses  doesn’t mean your risk management work is complete, a year of AUM growth at or above plan doesn’t mean you should skip marketing for the coming year.  For example, staff at LP organizations turns over regularly, and prospects that passed on your strategy this year may have a need for it next year.  Building and strengthening a brand is a journey, not a destination.

Asset Managers should think about their marketing plan in the same way as they consider their business portfolio, and risk mitigation plans:  each one increases the probability of achieving your AUM goals, and ultimately, your profitability goals.