(July 2003) When you speak about investments, you are usually talking with clients about how to improve their portfolios or maintain their asset base. But what about your investment in your business? How have you invested in yourself?
Do you know your four Ps? These marketing principles, when connected to the financial advisory practice, can help you focus your business.
Price: A good marketer needs to set the right price for the product or service sold. However, in the financial services industry, the price of a product is somewhat predetermined, with set commission rates or fees, for example.
You might not be able to do much about the price of the products and services you sell, but you can do something about what your client gets for that price. Staying ahead of the competition means providing better service, better support and more frequent communications. When you can’t lower the price for clients, raise the bar on what you provide for the price.
Product: Your good-old mutual funds might not be that different from Joe Advisor’s next door. So ask yourself this question: What do you sell to your clients? Investments? Your advice? Tax and estate planning?
The answer to this question is fundamental and far from obvious. It’s important to know the answer, however, because you need to develop your edge or angle to differentiate yourself. What makes you different and better than the next advisor? You may think it is the front or back systems or the fact that your target market segment is middle-income clients. Perhaps you have over 20 years of experience while your nearest competitor has two. Other differentiators might be your strategic alliances, your compensation structure or another industry specialty.
It’s immensely important for you to be clear about where you are and where you want to be. Then you’ll know what makes it legitimate for you to claim market share. As the industry matures, there are only two positions you can adopt: cost domination (the Wal-Mart model), where you offer everything at unbeatable prices; or focus (niche), where you develop a specialty advantage, based on product, geography or knowledge and gain market share in a segment of that market.
For my money, the way to go is niche. Cost domination is a game for fearless players with hugely deep pockets. Besides, can you sincerely say you are a specialist in every single type of product and service offering?
Promotion: Products are sold, not bought. As a financial advisor, promoting yourself is usually more important than your products or services. You need to work hard and gain visibility and reputation. There are a number of ways you can promote yourself. Do you advertise? To whom? Do you volunteer in your community? Do you rely on word of mouth or reputation? Referrals? Do you have specific, focused events for your clients?
In these markets, your gain is your competition’s loss — and vice versa. Be sure to use the proper tools for your target market to differentiate yourself in the minds of clients and prospects alike.
Place: With this term, I’m referring to how you distribute products and services and communicate with clients. Do you contact your clients and prospects directly? Does your assistant? Do you tier your clientele, and adapt your services and communications accordingly? What do your clients expect from you? What does your competition do? Knowing what your clients expect and what other advisors offer can help you to determine what you want to offer.
The four Ps of marketing are quite relevant to your business. As for all concepts, these four terms are meant to structure your thinking about where you are in your business development, and where it can take you.
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Pierre Saint-Laurent, M.Sc., CFA, is the president of AssetCounsel Inc. and a columnist for Advisor’s Edge. He can be reached at email@example.com.