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.

How Selling Screws Up Your Marketing

Even advisors who "get" the marketing concept frequently sabotage it when they sell.

The key to niche marketing and, by extension, successfully attracting referrals, is identifying a target market and delivering a customized service mix to that audience. For many advisors, that whole idea (which involves deliberately ignoring a lot of promising prospects) is a difficult one to endorse and adopt. But even those who embrace that concept frequently undermine their own efforts when they get in front of the prospect one-on-one.

A wealth management practice I work with recently hired a new business development officer. The new vice president is a gifted salesperson. Put a qualified prospect in front of him, and there is a high probability they will become a client. He has introduced many high net worth clients to the firm, and attracted millions of dollars to manage. Long-term, however, we have an issue that may compromise the company's brand.

What makes him great is his natural, intuitive ability to connect with people, identify something of concern to them, and assure them that his company will provide a good experience. The issue is that the experience he sells could change with every person he meets. In a recent client advisory board I facilitated for the firm, I asked the group "how would you describe the ideal client for this firm?" He was quick to raise his hand and reply "Let me tell you how I answer that question when I am meeting with someone: You are."

So, if he is attracting millions of dollars to the firm, what could possibly be the problem with that?  Individual selling cannot be replicated across other people.  And it will not build your referral stream. In effect, you will have to rely on his selling for most of your new clients. You will not be able to magnify his efforts with a referral stream that builds on his spectacular selling ability.  You will be prevented from farming, and will have to revert to hunting for your food.

One of the critical components to successfully attracting referrals is to represent a particular kind of solution or experience to its target client. If everyone you meet is your ideal, then you are ideal for no one. And none of your clients will remember to refer you because they will not have a clear idea who your ideal client is.

When you craft your marketing plan and identify your ideal client and the particular mix of benefits you provide especially for them, make sure that you reflect that whenever you have an opportunity to describe your firm to someone new. Bring your selling efforts in line with your marketing efforts and they will be synergistic. And your ability to attract referrals will be magnified.

The Second Step In Your Communication Plan Is Training Your Staff

Creating a compelling brand image that will attract referrals requires everyone in your firm deliver a consistent description of who you can help and how.

Carrying out the marketing plans in many advisory firms is strictly the domain of the marketing people and principles. And that's a mistake.

Effectively attracting referrals involves consistently reinforcing the description of your target prospects and the solutions or experiences you can deliver to them. Every time someone in your firm talks to the public – whether it be clients, centers of influence, or just people they meet – is an opportunity to solidify that unique value proposition your firm represents. Your staff may interact with your clients more frequently than you do. Every one of those contacts contains the possibility of reinforcing your brand promise.

The first step, of course, is to describe your ideal client in detail in the solution or experience you can provide to them. Once you have that, first people you should teach it to are the people in your organization.

Sometimes, your staff can be even more effective at directly stimulating referrals then you. In an industry think tank I facilitated last year, one planner commented on how successful his paraplanners were at motivating clients to provide referrals. "There are times when I leave the room during a client meeting," he commented "and my paraplanner would say to the client ‘We just love working with clients like you. We wish we had 100 just like you.’" And frequently, the client would follow-up shortly after with a referral.

More generally however, there can be tremendous power in focusing the message across everyone in the firm. I remember working at a fee financial planning firm where the target client and value proposition was not that well defined. If you walk through the office and asked half a dozen people what the unique value and ideal client of the firm were, you'd probably get five different answers. They would be similar, but someone unfamiliar with the firm or the business might not be able to recognize that. The absence of a clear, unifying message meant that the firm would never reach a critical mass where the reputation could begin propagating itself through the community.

A consistent marketing communications strategy is critical for an effective referral marketing plan. And getting everyone on your team singing from the same page is the first priority once you know the message you want to broadcast.

Five Things You Can Do To Attract Referrals In 2012

As you put your 2012 business and marketing plans into action, what are your plans for attracting referrals this year? One of the biggest reasons we do not attracts more referrals than we do is because we do not have a formal, written plan on how we will attract them. Just like business plans and financial plans, achieving your goals with referral marketing begins with a plan.

To help you get started, here are five things you can include in your plan that will help you attract referrals.

Ask your clients how they describe you – Referrals happen when your clients mention you to their friends and business associates. (Not when you ask for them.) For that referral to turn into a client, what your clients tell their friends needs to be accurate and compelling. Is it? This can also be a great way to find out what your clients believe is most valuable about what you do for them.

Make sure your clients know your ideal prospect – When your clients send you referrals, are they the people you most want to attract as clients? If not, then your clients don't know who you are looking for. Helping them understand your ideal prospect is a great way to let them know you are trying to make your practice grow and to gently remind them that you would appreciate referrals without putting them on the spot by asking for names and numbers. And, of course, it helps them be aware of who the best referrals would be.

Change one thing in your practice based on client feedback – Sometimes it is what we do and sometimes it is how we do it, but there is always a way we can improve what we do that will make clients more excited. And the more we tailor what we do to what our clients want most, the more loyal they will be and the more enthusiastically they will refer us. Look through client survey data or ask your advisory board for clues about how you can improve.

Stop doing one thing that doesn't add value – We all do things that clients perceive makes us valuable and things that clients don't particularly care about. Dropping something that does not add value frees up time to do more of what clients really value.

Ask centers of influence who they are ideal clients would be – Asking COIs about their specialties, unique skills, and ideal prospects opens the opportunity to talk about your unique value and ideal clients. It also demonstrates that you can be an asset in helping them build their business. It will not guarantee that you will get referrals, but it is the most productive approach.

If you want to be successful in attracting referrals, start with a well thought out referral marketing plan. These ideas can help you get started.

How to Communicate About Your Advisory Board and Drive Referrals

John Gugle's experience is typical of advisors who effectively engage a client advisory board. In an interview last spring, he reported "the best referrals we have gotten have come from board members." We hear this a lot, and it is great - but limited. If you have a dozen clients on your advisory board, you will have strong referral sources among those 12 people. But that may be only about 10% of your client base.

Here is the challenge: how can you package the experience of the advisory board and get better referrals from the other 90% of your clients? The answer is an effective communication strategy.

There are four opportunities to communicate about your client advisory board. Each provides a fresh chance to initiate a conversation about your client orientation and your service, and to provide another reason to recommend you to new prospects.

Each of these opportunities can be expressed in multiple ways. They can be the basis of an article in your client newsletter or on your website, they can be the subject of a press release, or they can be added to the end of meetings with clients or centers of influence. The key idea is that you take what happens in the advisory board and translate it to more people than can participate in the board itself at any one particular time.

The first opportunity to communicate about the board is to broadcast its existence. We have heard from many advisors that the mere fact that they have created an advisory board attract positive attention.

The next chance is to publicize the feedback you received from your board. It is proof that you are listening to your clients and looking for ways to improve. You can offer a summary of the issues raised by the board and that you will consider what to do based on the feedback.

Third, you can announce plans for improvements you intend to make, following the suggestions of your board. You might describe generally what changes you plan to implement, and invite additional feedback.

Finally, unveil the actions you took based on the feedback you received. This is the most powerful of all of these communication opportunities. The commitment to steer your practice in the direction your clients have suggested is the strongest statement you can make about your dedication to providing your best clients an experience that is tailored to their wants and needs.

The client advisory board is the most powerful tool for soliciting actionable client feedback. Because of this, board members are usually the top referral orders for the firm. Communicating the outcomes of your advisory board can help each client and centers of influence get a little taste of the advisory board experience, and you can help them become better referral sources as well.