3.5 Reasons to Skip Industry Awards

awardFor certain industries, such as financial services, that aggregate performance-related data – for example, in annual “league tables” ranking investment banks by the number or size of M&A transactions they’ve underwritten – there is some logic, as well as an objective basis, on which firms can claim to have outperformed their competitors.

But for most industries – lacking any quantitative basis or objective means on which to base relative performance of its individual companies – there are several reasons why participation in industry award competitions intended to recognize superiority or “excellence” can be a waste of resources, as well as a brand liability.

With the understanding that industry awards represent a substantial worldwide economic enterprise…here are 3.5 reasons why your ___________ (law, graphic design, accounting, management consulting, public relations, engineering, financial planning, advertising, technology, healthcare, beauty, payroll, etc.) firm should not participate in award competitions:

Reason #1: Your Awards Won’t Have Significant Influence on Prospective Clients

Fundamentally, awards are a form of extrinsic selling, and demonstrate your firm’s ability to do good work. But prospective clients are always more interested in what you can do for them, not in what you’ve done for others. Awards require prospects to make a leap a faith; to believe that your work for them will match or exceed your work for your other clients. And for some prospects, that’s a leap too large to take.

Most prospects also know that award competitions are not accurate barometers of the quality or consistency of the work you will provide. At best, awards may address the personal needs of some decision-makers who are more concerned with protecting their job (should your firm fail to deliver), rather than selecting the most qualified service provider.

Reason #2: Your Award Creates Another Content Beast that Must Be Fed

Because most award competitions are annual (and recurring sources of revenue for the sponsoring organizations), they have a very limited shelf life, in terms of your firm’s ability to promote the recognition. Most award winners proudly post the award icon on the home page of their website. But your “2016 Most Innovative IT Firm Award” begins to loose its luster around the month of July in 2017, as clients and prospects begin to wonder why your IT firm isn’t the winner of the 2017 award. If your firm has lost some of its magic, perhaps they should be looking at this year’s most innovative IT firm.

Like all other types of content designed to position your firm’s brand, industry awards are beasts that must be constantly fed. If your firm is unwilling or unable to make the commitment to pursue a particular award every year (and to risk losing, which is a strong possibility), then either pass on the competition altogether, or take down any award icons from your website that are more than a year old. Otherwise, your firm will be perceived as the 24 year-old who still wears his high school jacket with the varsity football patch. Living in the past.

Reason #3: Your Time is Better Spent Servicing Clients and Soliciting Prospects

Entering any industry award competition, if your firm is serious about winning, takes time and resources. For some firms with strong competitive instincts, this often becomes a lengthy, arduous process involving strategy sessions, dedicated teams, and even outside consultants who specialize in award submissions. (Yes, they do exist.) For large firms with deep pockets and low levels of marketing ROI accountability, award competitions can provide some level of validation for those executives looking to impress their CEO. But for small and medium-sized firms, where every marketing dollar is expected to yield tangible business results, award competitions make very little sense.

Rather than seeking brand credibility through what is a relatively weak 3rd party endorsement tactic (compared with earned media exposure, public platforms and direct client endorsements, for example) companies of all sizes are better served by re-directing award-related resources to strategies that foster referrals and increase the effectiveness of their direct solicitation process. Instead of hoping that your prospects will be impressed by your industry awards (if they happen to visit your website), build awareness and brand equity among target audiences with content that consistently showcases your firm’s intellectual capital in a non-self-serving manner.

Reason #3.5: The Award Selection System is Stacked Against You

Although the selection process for awards competitions varies greatly, all awards are subject to human bias and political / financial factors that are beyond your control, and that will always influence the outcomes. Even in “blind” competitions, if the basis of an award is subjective, relies on the opinion of a “blue ribbon panel,” or involves any type of voting / scoring system, most competitors will end up wondering why the designated winners were any more innovative, effective, attractive, or otherwise superior to them. Judging is always highly subjective, and never an accurate reflection of the best idea or solution.

For a host of reasons that are rarely discussed (such as the advantage of entrants who are advertisers in award competitions sponsored by industry publications), the award selection system is stacked against most competitors.

Their inherent weaknesses notwithstanding, and despite this particular rant, industry awards are not in any danger of losing momentum, and will remain as one component in the marketing tool kit. But the easiest tactics, like award recognitions, are not always the most effective or enduring ways to help your business grow. Think of industry awards as a car radio: they make noise, and can be nice to have…but it doesn’t help you reach your destination.

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Skip the Marketing Plan. Try this “Easy-Bake” Recipe Instead.

betty-crockerThe first question we ask prospective clients is, “Do you have a Marketing Plan?”

Most prospects sheepishly acknowledge that they don’t have a formal Marketing Plan. This group earns big points with us for honesty.

Some less forthright prospects will claim they do have a Marketing Plan, but when asked to show it to us, this group responds with, “Our plan isn’t written down,” or “It’s being updated,” which really means that they don’t have a plan.

There are several good and bad reasons why companies (of all sizes) don’t create a Marketing Plan. Those spoken and unspoken reasons include:

·     It’s too much work to create and maintain a Marketing Plan.

·     We had a Marketing Plan once, and it just sat in a 3-ring binder on the shelf.

·     Senior management doesn’t understand marketing. Why confuse them more?

·     It’s easier to just keep trying different marketing tactics, to see what works.

After decades of watching companies either earnestly struggle to create a Marketing Plan, or strenuously avoid creating one, we recently had an epiphany. We realized that most companies should SKIP the Marketing Plan altogether.

Here’s why: The ratio of companies without (versus with) a Marketing Plan will never change. So rather than badgering and shaming the “No Marketing Plan” companies, we should help them focus exclusively on the critical components of marketing that will help them succeed. We call this process the “Easy-Bake Marketing Cake Recipe.”

In Betty Crocker fashion, here are step-by-step directions for creating an Easy-Bake Marketing Cake for your company…completely devoid of all marketing jargon:

The Strategic Ingredients

Step 1: Determine why customers should buy your product / service. This seemingly simple goal – to understand what’s special about your company – is the most essential element of marketing strategy. Many companies either don’t have a clue, or have an unfounded / unrealistic viewpoint on why people should do business with them. You need to nail this step.

Step 2: Learn why customers are buying from your competitors. To gain a reliable answer to the Step 1 question, you need to possess a thorough understanding of the competitive landscape. The most successful marketers know everything about (and closely monitor) current competitors, to gain insight into why customers buy from them. They also work to anticipate new competitors, and explore potential customer solutions that could disrupt the entire category.

Step 3: Learn what your customers want and don’t want. If you’re not having a continuous, two-way conversation with current, prospective and former customers, then you are flying by the seat of your pants, marketing-wise. And you can’t rely exclusively on surveys to gain that market intelligence. Pick up the phone and talk to decision-makers at least once a quarter to really understand what they think and what they need.

The Practical Ingredients

Step 1: Define what your marketing resources are. Marketing requires money and people. Work backwards to build a marketing strategy. First decide what resources are available to invest, and then determine what strategies / tactics you can afford to apply properly and consistently. Having an “open budget” for marketing makes you a target for the latest gimmick, and is a sure way to waste a boatload of money.

Step 2: Put your sales process under the microscope. Marketing is not a religion. To justify its existence as a corporate function, marketing must help produce tangible business outcomes. Most marketing activity should be related to sales…and the sales function requires close scrutiny in advance of any marketing investment. If your sales process is broken (or non-existent), then your marketing will likely yield nothing of value.

           Step 3: Define exactly what you want your marketing to achieve. Your marketing goals should be directly or indirectly connected to activity that drives revenue. If that revenue connection is fuzzy, or based largely on wishful thinking, then either refine or eliminate the weak strategies and tactics. Be ruthless in your evaluation of all marketing activity at all times.

The Tactical Ingredients

Step 1: Select one effective direct marketing tactic. Most email solicitations go unread, with good reason: they are self-serving, poorly written and lack a compelling rationale for people to respond. But because the email marketing bar is so low, there is plenty of opportunity to stand out from the crowd. There’s also a big opportunity to leverage traditional snail mail, largely because marketers have abandoned that channel in lemming-like fashion.

Step 2: Select one smart content marketing tactic. The objective is to showcase your company’s intellectual capital (which is very different from a sales pitch), either through respected print / electronic media sources or social media, primarily to gain online visibility for that content. The 2016 marketing reality is this: If potential clients can’t find you by searching online, then you are not in the game. If you prefer to stick with the “We’re a relationship business, and don’t need an online brand presence.” marketing approach, then please let me know. I would like to short your stock.

Step 3: Select one consistent tactic to keep in touch with clients, prospects and referral sources. With so much media noise and competition, and because you can never know when people will be ready to engage, it’s important to remind decision-makers that your company is ready to help them. Quarterly communication is sufficient, and will avoid being viewed as a pest. Standard “all about us” newsletters are boring, so provide content that’s meaningful and of interest to your readers.

This overly simplistic, 9-step planning process is unlikely to gain the endorsement of the American Marketing Association. But for the vast majority of businesses who don’t have the time or interest to create a bona fide Marketing Plan, this “Easy-Bake Marketing Cake Recipe” should more than suffice.

Compared with some of the overly ambitious, non-productive Marketing Plans that we’ve seen over the years, it’s also likely to produce a much tastier outcome. Bon appetit.

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7 Signs that You’re NOT a Thought Leader

wise-man-guru-mountain-top-photo

Thought Leadership is perhaps the most widely used and consistently abused strategy in professional services marketing. There’s diverse opinion regarding what it is, and fuzzy expectations with respect to its benefits.

Our simple definition is that Thought Leadership is a content marketing strategy designed to leverage intellectual capital as a means to engage target audiences. The practical benefits of Thought Leadership are delivered through the power of “intrinsic selling.”

Without getting overly theoretical, here’s what we mean by that:

“Extrinsic selling” occurs when a seller’s credibility relies heavily on work they’ve performed for other customers. This requires the prospective customer to make a leap of faith; to believe the service provider can match or exceed what’s been done for others. It’s a “trust me” sales approach.

Conversely, intrinsic selling does not require a prospective client to base their selection on work done for others. Instead, it engages the prospective client based on ideas, opinions and advice that enables them to make their own objective decision regarding the seller’s potential to add value. Because no leap of faith is required, it’s a more powerful sales methodology.

The intellectual capital embodied within Thought Leadership is what provides you with credibility, and gives potential buyers the confidence to do business with you. It also serves as a sophisticated sales hook designed to grab their attention.

It’s easier to understand what Thought Leadership is by examining the behaviors that are contrary to its fundamental principles.

So here are 7 signs that you’re not cut out to be a Thought Leader:

  1. You call yourself a Thought Leader. Worse yet, you call yourself a “visionary.” Thought Leadership is not a mantle that can be claimed. It’s a market perception that’s earned over time, and an unofficial stature that’s assigned to you by others.
  2. Your editorial content is self-serving. If you’re unwilling to provide insights, information and recommendations without making yourself the hero, or without directly plugging your firm’s products / services, then you’re not really practicing Thought Leadership.
  3. You lack original or interesting ideas. Repurposing “archived” content (a/k/a other people’s thinking), or providing summaries or news reports of information that’s available elsewhere, will likely position you as an industry parrot, rather than a Thought Leader.
  4. You’re not a true student of your craft. Bona fide Thought Leaders are constantly focused on the current state and future direction of their professional discipline. They appreciate that a rising tide floats all boats, and unselfishly share what they know and think.
  5. You think Thought Leadership has a goal line. If you’re looking for instant gratification, and don’t completely believe, at the outset, in the long-term value of Thought Leadership as an ongoing marketing strategy, then simply scratch it off your to-do list.
  6. You refuse to share the spotlight. The most effective Thought Leaders seek to manage, rather than control, the conversation. Rather than pushing their own viewpoint, they define and promote topics and identify people worth paying attention to.
  7. You’re unwilling to work hard. Consistency is the most significant hurdle in the quest for Thought Leadership. To establish a level of top-of-mind awareness required for your target audiences to form and sustain a positive opinion, you need to generate relevant content on a quarterly basis. And that requires personal (or enterprise) discipline.

Just to be clear…the most effective Thought Leaders are not in the game for altruistic reasons. They expect a tangible return on their investment, in terms of market engagement.

Toward that end, a Thought Leadership strategy must ensure that your intellectual capital – whether it’s initially presented in a public platform (such as a seminar), through earned media (publicity), or owned media (social) channels – is also delivered directly to all relevant target audiences in a manner that’s not self-serving, and that fosters two-way conversations.

For example, rather than publicly touting that you’ve been quoted in the Wall Street Journal, you should leverage that media exposure in a more nuanced, sophisticated manner. You can expand on the underlying topic in a direct communication to clients, prospects and referral sources, soliciting their thoughts, and referencing the Wall Street Journal article (rather than your specific quote in it) as a catalyst for the discussion.

This long-winded perspective is not intended to dissuade you from seeking Thought Leadership status. To get started, you should identify a relevant, respected Thought Leader, study how they’ve earned that status, and then simply jump into the pool. Once you’re comfortable in the water, there will be ongoing opportunities to tailor an effective Thought Leadership strategy.

In true Thought Leadership fashion, please share your opinions, experiences and frustrations involving this battle-worn marketing strategy.

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Manage the Pedigree Factor in Professional Services Marketing

MissP1Institutional pedigree always matters, regardless of the type of professional service you’re selling. But to leverage pedigree as a marketing asset, you first need to understand why it’s important to your target audience, and decide what type(s) of pedigree will have the greatest influence on them. The professional credentials your firm possesses (or creates) are a major consideration in determining which doors to knock on, and which doors to ignore.

Pedigree means different things to decision-makers. In the classic sense, personal pedigree can take into account where you were raised, schools you attended, club memberships, employment history, who you know, and even your race and ancestry. For better or worse, there are many companies that hire employees based largely or exclusively on those external credentials, in order to create a consistent (albeit often elitist) institutional persona.

Whether they’re selecting a lawyer, management consultant or hedge fund manager, there are decision-makers who will always require the classic resume-based pedigree. Conversely, there are plenty of “meritocracy” buyers of professional services who will eschew external credentials and base their selections on the quality of ideas, past performance or future potential.

These suggestions might help you hack your way through the pedigree jungle:

Understand the fear factor in selection of an outside advisor. The old adage, “No one was ever fired for hiring I.B.M.” still rings true. Known brands are safe choices. When an individual selects an outside advisor, career risk plays a significant role in their decision-making. Their personal nightmare is twofold: first, that their selection will fail to meet expectations by a wide margin; secondly, that their own organization will not agree with their reasons for selecting the outside advisor…even if they supported the decision.

Unfortunately for professional services providers lacking strong external credentials, the reluctance to select them is far more prevalent at larger institutions. This is simply because the downside risk of making mistakes is much greater at larger firms. Selection errors may be tolerated at smaller firms, but as a company’s bureaucracy grows, so do the consequences related to selection errors. At big firms, taking a chance on an unproven or unknown outside provider is considered career suicide.

Reduce decision-making risk for prospective clients. If your firm doesn’t possess a strong traditional pedigree, there are several ways you can reduce decision-making risk for prospective clients. The most effective tactics involve generating either direct or indirect 3rd party endorsements that support your firm’s credibility. Here are three examples:

  • Earned Media: Positive exposure in respected, bona fide media sources (Wall Street Journal, Forbes, etc.) is still one of the most powerful ways to build credibility. Most small firms can’t afford a sustained PR effort delivered by an outside agency, but with a modest investment of time, creativity and determination, a DIY initiative can yield media placements that will bolster market confidence.
  • Industry Platforms: Most conferences, seminars and other types of industry platforms are now “pay-to-play” arrangements that extract significant sponsorship fees in exchange for a spot on the agenda. But the inherent 3rd party marketing value of these events is directly related to the credibility of the sponsoring organization. So rather than investing heavily in these events, seek opportunities to participate actively – as an officer or committee member – in professional associations that are respected by your targeted decision-makers.
  • Branded Interviews: This powerful but little known tactic involves alignment of your (lesser known) brand with a 3rd party (an individual or company) that’s well known and highly regarded in your market segment. One simple way to benefit from this “halo effect” is to create a quarterly publication that features non-self-serving interviews with these opinion leaders, covering topics of interest to your decision makers. In addition to driving top-of-mind awareness each quarter, when archived on your website, these interviews will serve to validate your pedigree.

Take advantage of non-performing, highly credentialed competitors. Some highly credentialed firms will coast on their reputations, and are not as hungry or diligent as their competitors that rely on performance rather than pedigree. This market opportunity often involves mid-sized firms that have engaged high pedigree providers, in hopes of receiving first-class service, only to be disappointed by treatment as second (or third) class citizens.

Thanks to internet transparency, these “abused client” opportunities can be easy to identify if you look for them. A straightforward “Are you receiving what you’re paying for?” solicitation can resonate in the prospect’s corner office, and often initiate conversations that lead to engagements where your firm is viewed as a hero simply for providing a level of service that the client deserves.

Conduct a pedigree “sniff-test” before you knock on doors. Marketing success relies heavily on hunting for high potential targets, and not wasting time elsewhere. A prospective client’s own pedigree is a strong indicator of their selection preferences for outside providers. Here’s the sniff test: if a potential client employs people with very similar academic and professional backgrounds, and your firm’s credentials are not a match, then don’t waste your time where you’re unlikely to be considered. Instead, look for pedigree landscapes that are compatible with your firm’s credentials, or seek opportunities where your firm’s credentials will be considered a cut above the prospective client’s pedigree.

Mark Twain once wrote, “In Boston they ask…How much does he know? In New York…How much is he worth? In Philadelphia…Who were his parents?”  The most effective professional services marketers define precisely what’s most important to their targeted prospects, and showcase their pedigree accordingly.

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B2B Marketing Needs One Giant Step…Backwards

Vest Pocket BrochuresIn the dark ages of B2B marketing communications, circa 1980, the goal was to get your snail-mailed communications past the office gatekeepers (a/k/a “executive assistants”), and onto the desks of your targeted decision-makers.

Most often, however, the sheer volume of first-class mail processed every morning by office gatekeepers made it more likely that your personalized pitch letter and costly sales brochure would end up, unopened, in the garbage can. Dead on arrival.

But starting in the mid-1990s, corporate adoption of email communication changed the dynamics of direct marketing.  First-class mail volume dropped from a peak of 59 billion pieces in 1996, to 23 billion pieces in 2013 — a 61 percent decline.

So in theory…this significant reduction in snail mail volume meant that the bar for getting materials past the office gatekeepers was lower; making it far easier to get your marketing materials into the hands of intended targets.

But that’s not what’s happened.

Instead, in lemming-like fashion, B2B marketers largely abandoned snail mail as a viable marketing communication channel, and adopted email as their “direct” medium of choice.

Now, 20 years later:

  • The sheer volume of email, even with clever Subject lines, makes it nearly impossible to gain the attention of targeted decision-makers; and
  • Misguided “eco friendly” practices (notably, failure to appreciate the paper industry’s stellar record of sustainable forest management) have fostered a generation of lifeless marketing collateral that’s either viewed onscreen, or downloaded and printed in PDF format on office printers.

As a result, today’s B2B marketers are failing to capture opportunities to connect with prospects through physical materials, in a business environment where the arrival of personalized, first-class mail is often a unique event; prompting most gatekeepers to ensure that it’s delivered to the intended target.

In addition to capturing this marcom window of opportunity, marketers would be well-served to take an additional giant step BACKWARDS…by developing “Ink on Paper” collateral materials that build brand stature.

What marketers will gain by recapturing the lost art of Ink on Paper includes:

Visceral Impact – Pixels on a screen have no weight, no dimension, no texture, no smell. Ink on Paper places something physical into a person’s hands. They open the cover and turn its pages. It’s a sensory experience that communicates on human terms, and that cannot be replicated by a flimsy PDF reprint created on a laser copier.

Personality – The range of creative expression using pixels is limited by the fixed dimensions of a flat glass screen. Ink on Paper lives on a canvas of unlimited graphic possibilities, in terms of size, shape, color and physical features. It provides an opportunity to stand out from the crowd, to express yourself more effectively, and to make an impression that’s likely to be remembered.

Permanence – People scroll through computer screens at hyper-speed. The volume of information is unlimited, and no intellectual commitment is required of viewers. Ink on Paper moves in slow motion, forcing readers to pay closer attention to its content.

Whether they sit on a desk or in a vest pocket, high quality printed materials suggest that the people and company who produced them actually exist, have nothing to hide and can be trusted.

Practitioners in most disciplines are often quick to embrace new tools and methods that enhance their results and professional satisfaction. But a much smaller number of those professionals understand the importance of sticking with, or adapting, existing tactics that work well. They do not fear appearing out-of-touch or old fashioned.

Seasoned marketers who have thrown the baby out with the bathwater in their wholesale adoption of digital communications, as well as more recent arrivals to the marketing profession who have always lived in a paperless world, would be well-served to reconsider Ink on Paper as a medium.

No marketing communications program is truly integrated without high quality print collateral.

Try using those materials as the basis for a snail mail campaign with clients or prospects, and see what happens. Ideally, do it before your competitors discover the opportunity.

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The Death of Rolodex Marketing

RolodexSurprisingly, a significant number of professional services firms continue to resist building online brand visibility as a business development strategy. The excuses we hear from them most often include:

“We’re in a relationship business.”

“New clients don’t find us by searching online.”

“Our business is driven exclusively by referrals.”

Although often it’s a waste of time to push back on their refusal to embrace online visibility, these are 3 reasons that we use to plant some seeds of doubt:

The Way People Make Decisions Has Changed Forever

In the pre-internet world, personal relationships, referrals and endorsements played a significant role in the decision-making process. Before making a decision about anything –buying a car, hiring a plumber, investing in a fund, and even sizing up a potential love interest – people communicated directly with friends, family and business associates, seeking their opinions and guidance. For generations, human interaction served as the primary validation process in decision-making.

Over the past 20 years, the internet has dramatically and permanently changed the way that people make decisions. Online research is rapidly replacing human interaction as the primary validation process in all decision-making. We check out Edmunds.com before we buy a car. We join Angie’s List to find a reliable plumber. We read Morningstar.com to gain insight into investment opportunities. We scan profiles on Match.com to evaluate candidates for a life-long relationship. Studies show that business buyers now complete up to 75% of their decision-making process online, in advance of contacting potential suppliers.

The most significant aspect of society’s rapid adoption of the internet is that we’ve raised nearly two generations of young people who have increasingly less direct social interaction with humans, and who rely almost exclusively on electronic devices to supply the information they need to make decisions about everything. Those generations are now starting their own companies, are moving into managerial positions, are raising families of their own…and are making personal, business and investment decisions that affect the fortunes of individual enterprises and the entire economy.

So if your company relies exclusively on personal relationships and referrals to drive engagements or revenue growth…it is living on borrowed time, as relationships become less personal; as human referrals are replaced by online content; and as lack of online transparency is viewed in a negative light by your friends, family and referral sources.

Referral Sources Require Nurturing and Validation

The Old Boy Network may not be dead yet, but it requires a far greater amount of effort to maintain it properly. Here’s why it makes sense to nurture your personal and business relationships through an online presence:

  • Referral sources have many choices. As strong as your relationships may be, peoples’ allegiances and motivations will always ebb and flow. A consistent online presence helps to drive top-of-mind awareness that keeps you high on their list.
  • Referral sources want to refer “safe choices.” Their personal reputation is always at risk when your contacts make a referral, and their comfort level is increased when their recommendation is validated by online content that is consistent with their opinion of you.

Notwithstanding how much time you invest in phone calls, lunches, conferences and rounds of golf, those Old Boy Network nurturing tactics simply cannot compete – in terms of consistency, market reach and “conversation” quality – with what online visibility offers. When it comes to business development, your Old Boy Network is becoming irrelevant.

Reliance on Rolodex Marketing is an Opportunity Loss

Regardless of the size of your Rolodex inventory of family, friends, club members, fraternity brothers, former business associates, vendors and clients…you will never scale your business, on a long-term basis, by relying exclusively on that group of people to drive business growth, either directly or indirectly.

Rolodex marketing may be a reliable way to jump start your firm, but it will fail to sustain momentum, simply because you will eventually overstay your welcome with those sources. Your contacts are a diminishing asset, in terms of business development.

Marketing to your existing contacts always makes sense, as a means to maintain awareness and to encourage engagement and referrals. But limiting your marketing strategy to this finite group is short-sighted at best, and represents a lost opportunity to establish awareness and generate interest among an unlimited universe of prospective customers.

So…If you’re a professional services firm that’s ready to sell the way that people buy; to take greater advantage of your referral sources; and to expand exponentially the volume of potential clients, there are three “bare essentials” of online visibility that include: maintaining a robust website, building a comprehensive presence on social media platforms such as LinkedIn, and consistently producing non-self-serving Thought Leadership content.

However…If you’re still not convinced, good luck with your Rolodex-based marketing strategy. If your firm is a “lifestyle” business, rather than a serious enterprise, your Rolodex may be all that you need…for now, anyway.

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The 2 Most Deadly Sins of B2B Marketing

deadly sinsThere are two major reasons why marketing is failing at your small- or medium-sized B2B firm:

You view marketing as business triage. Your company applies a collection of tactics (often labeled as a “marketing campaign”) only in response to a problem; typically involving the loss of a key client, or decline in revenue. When business is good, little or no time is invested in marketing. When business (inevitably) takes a dip, only then does marketing becomes a priority.

You expect marketing to deliver immediate results. Either because your company always views marketing on a “cause & effect” tactical basis, or because marketing triage must be applied quickly to revive an ailing company, the marketing function is given insufficient time to produce tangible results. It’s no surprise that marketing professionals have the shortest tenure of any corporate function in the asset management business.

The hard truth is that very few B2B business owners either understand the marketing function, or have the discipline to design, implement, measure and adhere to a consistent marketing approach that builds brand equity and market engagement over a sustained period.

To establish the infrastructure and internal culture necessary for the marketing discipline to succeed, we offer the following simple path:

  • Create a Written Marketing Plan. This need not be in a 3-inch binder; a two-page document is often sufficient. Include goals, strategies, responsibilities, timelines, budgets and ways to measure results. Without a Marketing Plan you’ll waste lots of time and money. And unless it’s a written document, you won’t have commitment or accountability.
  • Gain Senior Level Commitment. The honcho in corner office (which might be you) must understand, endorse and support the Marketing Plan. This involves more than lip service. If your Plan isn’t properly staffed and funded at the outset, there’s no real commitment to marketing.
  • Do a Few Things Very Well.Your marketing success will be based on the quality and effectiveness of a limited number of strategies / tactics. Firms sometimes go overboard, thinking there’s a correlation between the size of its marketing investment and business results. But less is usually more, in terms of marketing ROI.
  • Build and Nurture your Database.Direct and easy access to your company’s clients, prospects, referral sources and opinion leaders is essential. Without an email pipeline, the marketing value of the content you create is close to zero. If your firm’s thought leadership simply sits on its website or social media, you’re missing the opportunity to build relationships with people in your target audiences.
  • Create Meaningful Content. Self-serving, long-winded white papers and research reports have very limited appeal. Generate content that validates your company’s intellectual capital, that’s easy to read, and focuses on timely topics that people have a genuine interest in.
  • Drive Top-of-Mind Awareness. To be included on the short list of candidates for an assignment or sale, you need to build awareness with key decision-makers. To accomplish that goal, share your content directly with target audiences on a quarterly basis. (More frequently than that, and you may be viewed as a pest.)

Most importantly – with apologies to Glengarry Glen Ross – B2B firms must commit to:

A…..Always

B…..Be

M….Marketing

…for the discipline to be effective. Otherwise, the traditional short-term, hair-on-fire approach to business development will keep your company from ever reaching its full potential, regardless of its quality or reputation.

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Survival Skills for the Hedge Fund Apocalypse

GrimReaperThere’s an increasing volume of negative news regarding the “exodus from hedge funds,” in favor of less expensive alternatives such as liquid alts and “engineered equity” products. Although many large investors still maintain significant assets in hedge funds, the industry’s ratio of contributions to withdrawals has turned south, and the near-term outlook for hedge fund growth is not encouraging. Small and medium sized funds are likely to be hardest hit as the asset class falls out of favor.

There’s no short-term marketing panacea to offset what may be a rough road ahead for hedge funds, which is a storm that hedge funds have helped to create. More specifically, the industry’s collective lack of basic communication skills is a major contributing factor to the increased levels of investor dissatisfaction. Contrary to what’s reported in the Wall Street Journal, hedge funds are not helpless victims of volatile markets, poor performance or high fees. Instead,hedge funds are now paying the price for their own inability or unwillingness, over at least the past three decades, to explain themselves properly.

Although there are exceptions (which include those funds most likely to fare well over the long term), hedge funds are notoriously inept at expressing to prospective and current investors the “what, why and how” of their value proposition. Collectively, fund managers may be geniuses at left-brain, quantitative skills; but often fail miserably at managing right-brain storytelling skills, or at hiring right-brain people to manage those tasks properly. And unfortunately for fund managers, it’s those right-brain-related communications skills that can have the most significant influence on investor interest and loyalty.

Here’s the underlying problem: most managers continue to believe – despite a growing mountain of evidence – that investor engagement and longevity is based exclusively on fund performance. So that’s the basis on which they pitch their fund, as well as the standard by which they communicate its value to investors over time. In their opinion, nothing but performance really matters.

What those managers won’t acknowledge is that investors seek fund characteristics that have little or nothing to do with performance. In fact, what investors really want is validation that their allocation decision is sound, that the fund manager is transparent and accessible, and that relevant issues are discussed immediately and honestly.

The most recent de-bunking of the performance myth was produced by Chestnut Advisory Group (Investors Want Hedge Funds to Hedge), which further validates that high returns are not the top reason why investors allocate to hedge funds. Nearly 80% of the investors they surveyed indicated that “risk management” played the most important role in manager selection.

And that’s the fundamental marketing challenge for fund managers: building investor trust through clear and consistent communication, regardless of whether their performance meets, exceeds or falls short of benchmarks.

Building trust through communication in any profession – whether you’re selling accounting services, running for public office, or managing a hedge fund – means establishing and managing customer expectations. Here are three ways your fund can accomplish that goal:

Explain what you believe in. Investors care about what you do, how you do it, and even how you are different from other funds. But explanations of features and benefits do not drive behavior. What actually incents them to allocate and remain with you is based on the power of why. Investors need to know what drives you, what inspires you, what excites you. Your fund’s goal is to do business with the people who believe the same things that you believe. So you need to explain what you believe in.

The power of “why” goes far deeper than marketing strategy; in fact, it’s a human need deeply rooted in our biology, and serves as the foundation for all of our decision-making. To gain a better understanding of the concept, watch this 18-minute TED Talks video (Start With Why) by Simon Sinek. There’s a reason why it’s been viewed more than 26 million times since 2009.

Tell them exactly what you’re thinking. Too often, investor communication consists of boiler-plate, generic language that regurgitates news media headlines on the macro-economic factors that influenced portfolio performance. It’s a rationalization of why (most often bad) things happened, and provides no real perspective on the manager’s thought process. There’s zero insight into the quality of the manager’s thinking, or whether any thinking took place at all.

The investing world is well aware of the frank, detailed explanations in the annual report shareholder letters of Warren Buffett and Jamie Dimon, but a more relatable example of effective investor communication is available from Phil Goldstein of Bulldog Investors, an activist hedge fund focused on extracting value from under-performing closed end funds. Drill down into this newsletter’s (The Brooklyn Investor) coverage to get a sense of Phil’s no-nonsense communication to investors. His communication is simple, sincere, fun to read, and most importantly…builds investor respect and trust.

“Man Up” when things go sideways. It’s difficult to believe that any fund manager would be so short-sighted as to report performance when it’s positive, and then go silent when it’s not. But this spineless communication approach happens with some frequency, and most often involves managers who peg their value to investors solely on performance. For investors, in terms of trust, this is equivalent to playing a round of golf with someone who only writes down his score for a hole when he shoots a par, birdie or eagle. “Good times only” fund managers will always have difficulty finding any investors willing to play that game.

The medical profession provides an interesting corollary that demonstrates the potential benefit of communicating bad news. The University of Michigan studied the impact of improved communication related to medical errors. When their doctors began to explain to patients why an error had occurred and what steps would be taken to avoid it in the future, medical malpractice lawsuits dropped 65%. Customers – whether they be patients or investors – understand that the there are no guarantees in life, and most will respond positively to honest communication.

There’s a tangible payoff for setting and managing investor expectations. According to the Chestnut Advisory Group’s research, trusted asset managers will:

  • Raise significantly more capital
  • Be engaged more quickly
  • Be retained far longer
  • More easily up-sell and cross-sell

That’s a fairly decent return for any hedge fund manager, in exchange for an investment in clear, forthright, consistent communication with current and prospective investors.

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Eulogy for My Dog Frank

imageBig Frank was not the perfect dog. Unlike most Labs, he couldn’t be trusted around small children, he would always find an unattended bag of garbage, and he was a total bully at dog parks.

A true alpha, Frank guarded the community water bowl in our kitchen, and demanded total control over whatever chew toys, tennis balls or bones were made available to our three dogs. He was large and always in charge of our pack.

Despite his personality flaws, Frank was a gentle, handsome and affectionate animal who has been a great companion and friend to me over the past 14 years. During that period of my life – which included some significant disruption and personal turmoil – Frank was always there for me, with his big smile, happy otter tail and horrible breath – to help put my problems into perspective.

But Frank was much more than a family member and therapy dog, because he represented a very personal human connection. Frank’s father was a beautiful, perfect Black Lab named Covey, raised by my son-in-law, Blake. Frank’s mother was a skinny, nervous Yellow Lab owned by my friend Gery, who died of cancer a few years ago, and whose passing continues to affect me deeply. So for me, Frank has represented a physical connection to my friend Gery, and Frank’s passing has forced me, once again, to acknowledge that Gery is really gone.

Putting Frank down was very tough. Much tougher than I expected. People who have put down animals that they love understand how heartbreaking that decision can be. With Frank, the quality of his life had greatly deteriorated, and we reached a difficult tipping point…where allowing Frank to live any longer was more for our own benefit than it was for his. We wanted Frank to leave this world with some dignity; even if that meant crying every time I looked at his face after we made his very last appointment with the vet. So we let Frank go, and mourn our loss.

I’m not sure why people love dogs so much. In many respects, they are a pain in the ass. As dog owners, we spend our days feeding them, letting them in and out of the house, grooming them, taking them for walks, picking up their poop and hairballs, and paying for vet bills.

But we love dogs despite the time and resources they demand. We love their innocence. Their lack of guile. Their eagerness to please. Their pure devotion. We respect their ability to fart, stick their nose in our crotch, and lick another dog’s butt without any hesitation or shame. We love dogs because they connect us loosely to the world of wild animals. Because they can jump three feet in the air, catch a frisbee in their mouth and bring it back to us. Because they don’t ask us for help with math homework. Dogs are children that never grow up. We love them because they need us. They give our lives purpose.

The sad irony in our love affair with dogs is that one of nature’s greatest gifts to mankind also serves as one of the cruelest reminders that life is very short. Short for dogs, and for us as well. When they pass, we cry for them…and for ourselves.

There will always be a place in my heart for you, Big Frank. You were a great dog.

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Why Social Media is WRONG for Asset Managers

acc009-reluctant-bride-cake-topper-mainThe latest round of blather regarding why and how asset managers (in this case, hedge funds) should use social media can be found in this month’s publication of a research study conducted by the respected marketing firm, Peppercomm.

Entitled “Everyone’s Tweeting About Hedge Funds, Except for Hedge Funds,” here are some of that study’s “key findings” and recommendations (…complete with my sidebar commentary):

  • Mentions of hedge funds on social media in 2015 were up 46% over the prior year (… and I’m at a loss to understand why this information has any value.)
  • “Despite this uptick…” (the study noted), only 11% of the 314 largest hedge funds had a social media presence in 2015, representing less than a 10% annual increase (…and I’m at a loss to understand why there should be any correlation between mentions of hedge funds in social media, and hedge fund use of social media.)
  • The study’s social media usage growth figure excluded hedge fund participation (at 73%) in LinkedIn (…and I do understand why: because this would have changed the study’s conclusion.)
  • Hedge funds need to get with the program and start using social media because, according to Peppercomm (…and I quote them here, verbatim) :

“Every time hedge funds shy away from the social media conversation, they throw away important thought leadership and content opportunities for themselves and for the industry.”

Apparently, there is now a “butterfly effect” in marketing, where an individual hedge fund’s failure to use social media can handicap the entire asset class. On behalf of semi-rational marketing professionals everywhere, I apologize to the global hedge fund community for unhelpful “market research” like this.

Other than sketchy research, there are at least three additional reasons why hedge funds, as well as a boat-load of other asset classes, should NOT be using social media:

Reason #1: There are marketing essentials, far more important than social media, that you are failing to do well.

Here’s a quick diagnostic of your fund’s marketing sophistication, based on a very short    list of marketing essentials that are far more critical to asset growth than social media, and that MENSA-level hedge fund quants, who can speak in equations, often have difficulty understanding:

  • Brand and Marketing Strategy: If you don’t have a written Marketing Plan, you’ve already flunked this part of the quiz.
  • Website: This is the mother ship of your brand. Lots of funds have websites, but very few of those sites provide meaningful insights into the firm, or deliver compelling reasons for investors to learn more about them.
  • Sales Collateral: Investors and allocators wince in pain when they hear the word “pitch deck.” Most pitch decks are incomprehensible.
  • Sales Process: If you think this means endlessly sending out emails and making phone calls, you’ve flunked this part of the quiz as well.

Reason #2: Your compliance guy is correct. The risks of social media really do outweigh their benefits.

Given the regulatory environment, compete with its fuzzy marketing rules and government agencies looking for any reason to put “Wall Street types” behind bars,  social media represents an accident waiting to happen.

For disaster to strike, all it takes is a summer college intern, who wants to be helpful by posting or tweeting an item or comment that hasn’t been cleared, or that gets garbled while he’s also texting a friend to meet him for lunch. And the intern (or full-time marketing associate) will not be entirely to blame, because most funds that attempt social media won’t have formal content standards, a tight approval process, or monitored implementation. It’s a lot of work, and few funds have the experience or the resources  to managing social media properly.

Reason #3: You should never drag a reluctant bride to the altar. It doesn’t end well.

Hedge funds avoid social media for a variety of stated and unspoken reasons. For example: They don’t understand how it can drive asset growth. Or they don’t want to be bothered by the operational disruption it might cause. They think it might diminish the opaque communication on which the cachet of hedge funds is founded. Or they think the sales and marketing function is beneath their station.

All of the combined reasons, rational or dumb, for why hedge funds don’t use social media may best be summarized in this way: as an “industry,” alternatives are simply not ready to use the tactic. Most hedge funds know their limitations, and are correct to resist something they don’t understand or  believe in.

The validation for this theory is found in the large scale hedge fund adoption (73%) of  LinkedIn. Funds may currently be passive LinkedIn users – supplying only their profile information, and avoiding   any posting of content or user groups comments – but their very presence demonstrates that they are willing to use social media platforms when it makes sense to them, and when they think the risks are manageable.

All of the research studies, and hair-on-fire forecasts of missed “thought leadership” opportunities, will never change the collective mindset or marketing velocity of asset managers who are hard-wired to be methodical and slow-moving. In fact, like supporters of Donald Trump, marketers’ excoriations and rational evidence in support of social media may even drive left-brain financial managers to a more well-entrenched position, ensuring that they will never dip their toes into the pool.

Conversely, by teaching fund managers to walk before encouraging them to run – in terms of marketing tactics – and by helping to deliver tangible business outcomes (not social media “likes” and “shares”), marketers will earn their trust and respect. At that point, fund managers rather than marketers will drive the interest and discussion regarding ways that social media can help them.

Until then, marketers need to back off hedge funds with respect to social media.

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