Niche Marketing Will Become Mandatory For Clients To Find You

Back in March, Lisa Gray posted an article on Advisors4 Advisors entitled “The Big Referral Myth: How The Internet Has Changed The Way Advisors Get Business." In it, she suggests that referrals are no longer the most important way advisors get new clients, but that searching on the web has become the single most critical way to attract new clients.

At the time I thought she was wrong. The idea that web search replacing referrals in importance was over the top. While I still believe referrals are the most important way to attract new clients, I realize the point she makes is more important than I thought at the time. Four days after her post, Michael Kitces published an article called "In The Future, The Best Firms Won’t Find New Clients; The New Clients Will Find Them." In it, he refers to a Rydex/SGI advisor benchmarking survey of the different marketing methods employed by advisors in 2011 versus 2010. While the picture painted by the survey shows investment advisors struggling to understand how best to use the Internet and social media for marketing, it led Kitces to the conclusion that if advisory firms want to succeed in marketing they must be more "findable" on the web. And that requires that they have a more clearly defined niche and that they create content more specifically targeted to that niche. The importance of target marketing was another point made in Gray's post.

Then, on April 2, Registered Rep magazine published the article "Call In The Specialists." The article contains four case studies of financial practices that have found marketing success by specializing in the unique needs of a specific group. Interestingly, the article discusses niche marketing as a specialty within a more general advisory practice. It quotes Danny Sarch of Leitner Sarch Consultants Ltd discussing how you to pay to add that specific expertise to your advisory team. Advisors who pursue this strategy missed the point – the whole idea is that the specialized knowledge creates value and the biggest rewards will come to the advisors who orient their practice toward that specialty rather than maintaining a general practice and hiring a specialized team member. While there may be an issue of how to pay to acquire some of that expertise, the whole idea is to gradually develop the entire team to be specialists in that niche.

One of the things I find most surprising about this article is that it presents niche marketing almost like it was a new idea. The benefits of target marketing have been documented and discussed for years. What holds most advisors back, however, is their superficial understanding of the concepts. To be most effective, advisors must describe their niche in enough detail to identify specific issues that group faces that are different from the general population. And that is, in my experience, a lot more specialized that is commonly understood or discussed.

I still disagree with Gray on one fundamental idea – that web search will supplant referrals in importance. Advisory firms who can successfully describe their niche thoroughly enough will realize far more referrals as well as more prospects through web searches. Sophisticated target marketing will bring more clients from all channels.

I believe the future of financial advisor business development will be the realization that to really succeed requires a specialization. I can envision a time when the trade press no longer runs articles like the one discussed here about the benefits of target marketing because differentiation through unique expertise will be widely understood as a requirement for establishing a viable business.

Referral webinar replay now available

Today’s webinar on attracting referrals was a great success!  See the replay anytime by going here:  http://www.brighttalk.com/webcast/6867/45723

Lessons From the Dow Jones Man-on-the-Street Referral Survey

A recent video blog post demonstrates why target marketing is so important.

Veronica Dagher of Dow Jones recently posted a video in which she asks passersby on a Manhattan street what would cause them to make a referral to their financial advisor.  Some sample questions and answers include "What do you like best about your advisor?" "He gives me thoughtful ideas."

"What could your advisor do to improve his service?" "Focus on what I need and my objectives."

"What does it take to get a referral?” "The confidence that they will continue to do a good job for whoever I referred over." "They would have to do a good job throughout the market cycle."

Does it strike you that any of these people come off as particularly enthusiastic about making referrals to their financial advisor? It doesn't come across to me like that. Notice, for example, they answer the hypothetical question “What would it take for your advisor to get a referral” rather than responding “I give my advisor referrals, and this is why.”

My conviction is that the key to being referable is to provide a specific set of services tailored to the needs of a well defined target market. What is the trigger phrase that would get any of the subjects of this survey to tell someone about their advisor? Would one of their friends have to say "I wish I could find a financial advisor who will do a good job for me through the market cycle?" People don't talk like that!

If you have carefully and specifically defined your ideal client and tailored your services to the needs of that group, and that client was interviewed by Veronica, I can envision their response to the referral question to be something like "oh I do provide referrals to my advisor. He works with people exactly like me, and understands the particular things I need. So, when I hear a friend like me talk about their challenges with money, I always pass his name along."

If Veronica buttonholed your clients and asked about you, what would they say? Would it be "he listens to me and does a good job." Or, would it be "he knows me. He specializes in people like me." And which do you think would get you more referrals?

Steve Talks Referral Marketing on RegisteredRep TV!

I was at the Tiburon CEO Summit in New York week before last, and briefly visited with David Armstrong, Managing Editor of Registered Rep magazine. In this interview posted on the RegisteredRep website, we discuss a little about what is wrong with asking for referrals, and how to have a more productive approach to attracting clients through referral. I hope you enjoy this three minute segment!

Technology Won't Organize Us, it Creates a Greater Need to be Organized

Technology was supposed to make our lives simpler, and it has – provided you have discipline and realistic expectations.

One thing it will not do is organize our lives for us.

The inspiration for this post was an article on the Clientwise blog referring to an article in the New York Times recently by productivity guru David Allen. I am a huge fan of Allen's, and over the last few years I have worked hard to incorporate his principles into my daily routine.David Allen, founder & CEO of The David Allen Company

A common complaint I hear relates to information overload. There is just too much we have to process every day. Technology can put information overload on steroids. But it is not the information, it is how we handle it. As David Allen is fond of saying, if the sheer quantity of information were the problem then every time we walked into the library our heads would explode.

Technology is not the cause of our struggle to get the right things done but used poorly it can make the problem a lot worse. Allen's principles can help us do more than get organized (hugely valuable in itself), but can help us tame the technological beast and put it in our service. He suggests a series of five steps to optimize your focus and resources:

• Capture everything that has your attention, at work and at home, and writing. The first time you do this may take as much as six hours to "empty your head." A big project to be sure but a necessary one if the rest of the system is going to work.
• Clarify what each priority means to you. Decide what results you want, and what actions are required.
• Keep an inventory of all your projects someplace where you will see them often, and organize reminders for the to-do lists you create.
• Regularly review your inventory of commitments and projects.
• Deploy your attention and resources appropriately.

As I gradually learn how to utilize technology to apply Allen's principles, I find myself more consistently completing the important tasks I have committed to. I find that the more diligent I am about having discipline in following his ideas, the more productive I am and the more technology helps me accomplish things rather than burying me deeper in a tidal wave of tasks and information. If you struggle with overload of any kind, I strongly encourage you to take a look at some of the articles on Allen's website or to get his book Getting Things Done. His ideas have been a career changer for me.