Tag Archives: brand strategy

Managing Brand Strategy…When Your Name is on the Front Door

selldorf-home-olvrAny business founder / owner whose surname serves as their company’s brand name has a unique challenge. If (s)he’s built a successful business that relies on the efforts of its employees, the founder of an eponymous business eventually will need to address brand transition; particularly if it’s a B2B or professional services firm.

Brand transition involves shifting market perceptions of the firm away from the individual founder(s), and toward an enterprise-based brand positioning. Over time, this means moving brand perceptions away from “Smith & Company: Jack Smith’s business,” and arriving at “Smith & Company: The business that Jack Smith built.” Or better yet, eventually “Smith & Company: Who was Jack Smith, anyway?”

The brand transition strategy goal is to have a company’s stakeholders – including clients, prospects, referral sources, vendors, etc. – understand that its value proposition is based on the collective talents and experience of all the people who work there; not solely or largely on the individual whose name is on the front door.

When it comes time for a founder to sell or step out of their business, a marketplace identity that relies heavily on that individual’s personal credentials, relationships or charisma will serve to erode the brand equity they’ve worked so hard to establish. It can also reduce enterprise valuation, and handicap the near-term effectiveness of the company’s new owners; particularly when those new owners are the marginalized employees who intend to grow the business.

Ideally, and years in advance of considering their exit strategy, founders of eponymous firms will have the foresight to consider the internal and external advantages of building a strong management team and showcasing that group’s intellectual capital. This requires a founder to put the welfare of the company ahead of their desire to promote themselves. And this can often be a tough task for people with strong personalities who’ve leveraged their ego-driven determination to build a successful venture over 20 years or more.

In our experience, many company founders give little or no thought to the task of shifting market perceptions away from themselves, and have not considered the benefits of a more institutional (and scalable) brand presence. Or they will recognize the issue with very little time left in the game, and then seek to apply some quick or simplistic remedy, such as advertising, to change market perceptions.

Other than ignoring the brand transition issue altogether, company founders have two options:

Re-brand to a Generic Name: To wit: “Smith & Company is now SmiTech Consulting Group!” This can be a viable strategy for eponymous firms at any stage of their lifecycle. These initiatives involve lots of planning and moving parts, and include heavy investment in communication tactics over at least a 6-month period to re-educate stakeholders.

Even with careful planning and coordination, a portion of brand equity will be lost in any re-branding effort, because some stakeholders will never remember the connection between the old and new brand names. Over time, however, re-branding to a generic corporate name can be worth the near-term market confusion for eponymous firms.

Go Cold-Turkey: Forget about orderly brand transition. Founders looking to jump-start an initiative to build an enterprise-based brand should consider going cold turkey, simply by disengaging themselves from the marketing & sales process altogether. This can be accomplished in a discrete manner, or in a more dramatic fashion.

One company founder we worked with, for example, called in his senior team and asked them what immediate and longer-term steps they would take, with respect to business development, if he died of a heart attack that morning. (He was the company’s top rainmaker.) After assuring them that he had no medical problems, the management team spent several hours in a white board session that provided the raw material for a very effective brand transition plan that the founder endorsed and implemented with great success.

The tactics generated in that company’s “cold turkey” planning session were neither complex nor sophisticated. Instead, they were straight out of the Marketing Communications 101 playbook, and included:

–      Thought leadership content based primarily on ideas of interest to clients; not related to the accomplishments of individuals at their firm;

–      Sharing the spotlight across the entire organization, involving all types of editorial and public platforms;

–      Reconfiguration of all public facing materials, notably the firm’s website, to reflect the collective strength of their organization;

–      Internal recognition and encouragement for all employees to promote the firm.

Many notable eponymous firms have succeeded in brand transition: McKinsey, Ernst & Young, Skadden Arps, Korn Ferry, etc. The back-stories are unavailable on how those firms accomplished that goal, and whether the change was managed in orderly fashion, or was the lucky result of internal chaos.

Although we’ve not found any research on this topic, we suspect that for every brand transition success story, there are at least 10 examples of firms that have failed; not simply in terms of brand identity, but more importantly, in terms of the company’s survival. Too often, a founder’s unwillingness to acknowledge the contributions of employees ensures that there will be no brand legacy when they leave the business…and sometimes in advance of that.

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A Few Marketing Best Practices for Alternative Investments

Although the lion’s share of alternative funds have yet to dip their toes into Lake Transparency, some small funds are cutting a path for the rest of the industry, in terms of smart marketing…if that’s defined by how clearly they explain their value proposition, and by how well they create investor interest.

Although it doesn’t provide a complete picture, very often you can gauge a fund’s marketing savvy by its website, which in our online world serves as the mother ship for a company’s brand.

So based solely on their websites, here are two small funds that can serve as examples of marketing best practices:

  • Monterey, California-based Topturn Capital – a single, low volatility hedge fund, and
  • Lake Forest, Illinois-based SilverPepper – a liquid alt firm offering two sub-advised funds

And here’s why these two firms are exceptional:

  • Both funds demonstrate that small firms can market themselves very effectively. In fact, smaller funds have a marketing advantage over larger competitors. Fewer people often can mean less politics, a more flexible compliance viewpoint and fewer opinions from the peanut gallery, which serve to dilute core messaging and can kill great ideas.
  • Both funds tell engaging, believable stories about themselves. Their stories explain their investment philosophy and commitment to their business in very human terms, directly related to their own life experiences. They don’t pontificate; they connect with people.
  • Both funds use video to tell their stories. Seeing and hearing fund principals makes those individuals and their firms credible and likeable. This visceral connection is critical in a business where “management” is consistently cited as a leading factor in fund selection.
  • Both funds display thought leadership. Their intellectual capital is showcased, but not in a self-serving manner. Topturn Capital, in particular, succeeds in maintaining market interest and increasing its credibility through well-written blog posts on topics ranging from Ebola to the market impact of presidential cycles.
  • Both funds understand the importance of brand strategy. All of the website elements – content, messaging, design, navigation – support a well thought-out effort to differentiate their firm’s value proposition, and to make it memorable. These are not cookie-cutter marketing solutions; and they reflects pride, creativity and skin in the game.

Admittedly, the SilverPepper website pushes the marketing envelope, in terms of what’s acceptable to most hedge fund compliance officers. But here’s what’s significant about the emergence of liquid alt firms like SilverPepper: because of their retail orientation and facility with sophisticated marketing tactics, that emerging asset class will indirectly drive hedge funds to show greater courage and creativity in marketing in the years ahead.

For most hedge funds, whether they emulate Topturn Capital or SilverPepper, the adoption of marketing best practices – or any marketing practices at all – is long overdue.

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This article appears as the March edition of “Marketing Alternatives,” a monthly column published in the Barclay Insider Report, a newsletter produced byBarclayHedge, a leading provider of alternative fund data.

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The Road to Hedge Fund Transparency: Marketing Essentials and Potential Pitfalls

To survive and prosper in a marketplace where transparency and trust are now valued by investors and promoted by regulators, hedge funds will be increasingly required to build a rational and risk-averse approach to external communication. Ideally, those plans will also avoid many of the non-productive tactics that marketers are known to promote.

Here’s a marketing roadmap designed to achieve that objective:

Build your brand strategy first. This internal discipline yields a unified view and clear expression of what your firm seeks to achieve for investors, how it addresses that goal, what makes it uniquely qualified for consideration, and why investors should select and trust your firm. An upfront articulation of the firm’s value proposition serves as the cornerstone of a written marketing plan that should include: tangible business goals, appropriate marketing strategies and tactics, calendarized activity, budgets and accountabilities. Any firm that operates without a formal plan (which should be simple, and not take months to create), eventually becomes a victim of “trust me it’s working” marketing. No plan = lots of wheel-spinning + no tangible business outcomes.

Create a bona fide website, not a proxy. In an online world, websites are the mother ship of market transparency. If a hedge fund is unwilling to provide on its website essential information related to its capabilities and credibility, then the firm is not really serious about market communication. Ideally, your website should express institutional values, explain investment processes, showcase human capital, provide examples of thought leadership and include inherent 3rd party endorsements. It’s not a sales pitch or report card. Your website will generate investor interest by allowing visitors to draw their own conclusions about the firm and its potential to help them achieve their goals.

Leverage your firm’s intellectual capital. Thought leadership – which is overused marketing jargon – is a strategy that leverages knowledge and ideas to engage target audiences. Effective thought leadership can involve a broad range of marketing tactics, but should always be designed to achieve measurable goals; not to simply have people think you’re smart. A hedge fund’s intellectual capital represents its most powerful market differentiator, and can be showcased without giving away any proprietary information or methodologies.

Harness the market reach of LinkedIn. LinkedIn has become an important due diligence tool for investors, intermediaries and the financial press. Most hedge funds understand this, and either provide a very basic firm profile, and / or allow its employees to post their personal profiles on LinkedIn. But to harness LinkedIn’s enormous market reach and professional clientele, hedge funds must establish a buttoned-up institutional persona that’s consistent with the firm’s (bona fide) website; ensure that its employees’ profiles enhance the firm’s brand positioning; and take full advantage of appropriate user groups on LinkedIn to raise brand visibility and display its thought leadership. 

Hold off on Twitter and other social media sites. Twitter can be a great information source, and most hedge funds should use it exclusively for that purpose: to listen rather than to speak. Few hedge funds have the time or social media sophistication to engage safely and consistently on Twitter, and the compliance risks are significant. Facebook is simply not an appropriate channel for hedge funds, and posting comments on independent blogs or online publications will not yield meaningful results.

Manage press exposure selectively. Beneficial media exposure can provide valuable brand credibility. But this is a high-risk tactic because reporters have agendas, can make mistakes, and are not in business to make your firm look good. However, hedge funds should proactively seek media exposure through participation in targeted editorial opportunities – such as bylined articles, OpEd pieces and certain types of feature articles – if they provide total or nearly complete control over what’s published. Although guest spots on financial news channels such as CNBC can fuel the ego, these are high-risk opportunities that most hedge funds should avoid.

Unfortunately, most media coverage yields no marketing value, because it’s simply hung like a hunting trophy on a firm’s website. To benefit from the implied 3rd party endorsement, beneficial coverage must be properly integrated into the firm’s direct communication strategy with clients, prospects and referral sources.

Merchandise conference participation. Investor conferences are high-cost tactics that can be effective for hedge funds. But these events also yield low results because firms fail to properly re-purpose the related thought leadership they’ve produced; which can serve as raw material to influence target audiences that are much larger, and sometimes of higher value, than those in attendance at the conference. Doing all the heavy lifting (in terms of content preparation, travel, time away from office and home), but failing to benefit from that investment – both before or after the event itself – represents a tangible opportunity loss.

Forget advertising for now, and perhaps forever. Regulators have not made it easy for hedge funds to understand the rules of the new advertising game, so the industry is better off encouraging the very large players – with deep compliance muscle – to be the first ones on the field. But there are more significant reasons why most hedge funds should never include advertising in their marketing plans. Notably, institutional advertising is expensive, requires a long-term commitment to be effective, and is very difficult to measure or generate a market response. More importantly, at most hedge funds there is an extensive list of marketing strategies and tactics (for example, building an effective website) that should be addressed first, and that will provide a more meaningful return than advertising.

As market dynamics of the investment world drag hedge funds, however reluctantly, into the new era of transparency, there is some good news for those firms. Hedge funds have long demonstrated their ability to sustain a successful business enterprise without traditional marketing tactics. So any benefits that effective market communication might provide for them are very likely to result in incremental asset growth.

Additionally, because hedge funds do not currently depend on marketing for survival, they can act in a deliberate, strategic manner. Hedge funds have the luxury of being able to design and implement their marketing programs incrementally, and to focus on doing a limited number of things very well.

In that regard, other vertical industries may eventually point to hedge funds as examples of best practices in branding and marketing. But at the current rate of change, that’s unlikely to occur in our lifetimes.

 

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