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.

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?

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.

To Get Your Clients Referring, Teach Them the Trigger Phrases

The new referral conversation is about interacting with our clients the way friends would interact with each other or enlist their help in problem-solving. Whatever approach we take, it should be a conversation that delivers benefits to the client.

One aspect of the new referral conversation is that it can naturally grow out of educating the client. You have worked hard to determine who your ideal client is, what problems they have, and what kinds of solutions or experiences they seek. Ideally, you would have reviewed your service mix and made some adjustments to more closely tailor it to that ideal client. So, the natural place for the new referral conversation to begin is in describing the problem you have decided to focus on solving or the need you have determined to fill. By extension, you will be drawing a picture for your clients of your ideal prospect. Our objective is to identify and reinforce expressions the client may hear that we hope will prompt him to mention you. We want to be teaching the client how to know who a great referral would be.

In The Referral Engine, John Jantsch says “I believe any salesperson worth their salt has developed a list of phrases, situations, and verbal clues that, if heard during a sales presentation, signal it’s time to take the order. The same idea is true of a qualified referral.”

What are your trigger phrases?

• ·         I was just awarded another allocation of stock options, and I'm not sure exactly what they can do for me.
• ·         Our company just moved to a cash balance retirement plan.
• ·         My best friends husband was just diagnosed with Alzheimer's.
• ·         We went to my son's high school last night to you the guidance counselor talk about financial aid.
• ·         My sister just had her first child.

Take some time and talk with your clients about who you have realized your ideal client is. And discuss those ideal clients in terms of needs they might express that you are particularly good at fulfilling. Teach your clients those trigger phrases so that when they hear them again you will pop back into their mind.

Separate Yourself From Other Advisors By “Productizing”

Face it – what most of us do for clients is indistinguishable from what other advisors do for clients, at least from the clients’ perspective. Claiming that we provide great customer service, financial planning, or adherence to the fiduciary standard won’t work. So, how can you differentiate yourself? One effective way is to “productize” your offering. Document your process, define what problem it solves and for whom, and package it as a single deliverable.

Here are a few examples:

• ·         RealLifeFinance^TM (GersteinFisher, New York, NY)
• ·         Parent Care 360 (Andrew L. Comins, CLU, ChFC, MSFS)
• ·         RetireSmart (Mass Mutual)
• ·         Divorce Survival Kit (Carol Ann Wilson, CFDS)
• ·         Rescue Your IRA (Brogan Financial, Knoxville, TN)

To productize your offering, first decide what issues it will address. Will it be oriented to risk management, college savings, retirement planning, a major life event like the loss of a loved one or a divorce, or some aspect of investment management? Identify what you will help clients work through and what the result will be at the end of the process.

Determine the outcomes and deliverables of your service. If it involves financial planning, decide what components of the plan will be fundamental. List what kinds of analysis you will perform. Decide what you will deliver and how it will look. Will it be a plan, ongoing reports, personalized page on a website, or a report? Will this be something that is delivered once during your relationship with the client, or is it an ongoing service? If it is ongoing, how frequently will you deliver it to the client?

Give everything a consistent look. The plan you deliver, any ongoing reports the client receives, the worksheets you use during the process, and the marketing material to promote the process should be named and design so that it is clear it all belongs to a cohesive system.

Once it is complete, give it a compelling name. If it is descriptive, a list can work well (our 10 point…, Our seven step…). If you can come up with something more like a brand name, consider trademarking. Whichever way you go, the point is to offer people something brief and memorable. If you have done it effectively, you can mention the name of your service to someone who is in your target market and they will ask you to tell them more about it. People will not remember everything about the description of your process or the steps involved in it, but they may remember the name. Once they have that in their memory, it gives them something quick and interesting to mention to other people.