My kids love to celebrate birthdays at Chuck E. Cheese, ever hopeful that they’ll win big so they can get one of those “great prizes.” Their favorite game is Whac-a-Mole, with the older one whacking away at anything that moves and the younger one waiting for the prize tickets to emerge from the slot.
Watching them recently, I recalled a conversation with advisors and their questions about marketing. “Should I do advertising?” “Should I do direct mail?” “What about a Google Adwords?” “Social media is all the rage, what about that?” “How about direct mail?” It was like Whac-A-Mole. No strategy, just reactive tactics. Many advisors think that if they whack at enough tactics, something will stick and there’ll be prizes at the end.
My response to their questions is always, “It depends.” Some tactics are effective, but what works for one firm doesn’t guarantee success for another. Advisors should have a process for developing a plan. When I work with advisors, I use our Four Steps to Energizing Your Business Development and Marketing Plan:
Step 1. Goal Setting
Step 2. Evaluating Your Practice
Step 3. Identifying Opportunities and Setting Priorities
Step 4. Developing an Action Plan
Goal Setting
It’s been said that you can’t know where you’re going without knowing where you’ve been. For advisors, this means looking beyond the AUM target to the underlying drivers of AUM growth. You can see where new assets will likely come from by reviewing current year metrics such as:
• Referrals. How many client and center-of-influence relationships are currently referring? Are those enough to generate the type of growth the firm is looking for? What was the average AUM associated with each referral? How much more and what type of nurturing is required to match or exceed the current increase?
• Win rate. Of the prospects the firm met with, how many came on board? What was the average cycle time from initial meeting to conversion? To what were losses attributed? What will reduce the cycle time and increase the win rate?
These numbers enable a firm to set realistic targets for the following year and provide insights that can aide in defining focus areas for future marketing and business development efforts. The result of this first step might be:
Excellent article! Couldn’t agree more with Mr. Ozer’s perspective on this important topic (or his apt description of the approach many advisors take to marketing their firms).
Establishing practice development goals represents a great first-step in determining a marketing plan. However, it is also wise to consider the current state prior to embarking on a path forward. Thus advisors may want to assess a few key performance criteria prior to establishing a baseline for calculating their firm’s marketing approach:
• What is the firm’s historical level of client turnover?
• What percentage of the firm’s annual revenue is derived from cross-sell/ up-sell opportunities with current clients?
• How solid is the prospect pipeline?
• What is the firm’s prospect conversion rate?
• How long does it take to convert prospects to clients?
With answers to these questions firmly in hand, it is time to begin the marketing planning process. If the firm has not developed formal marketing plans in the past there is no need to worry. Good marketing planning is simply the process of asking straight forward questions with regard to the firm and its position in the market.
The good news is that the process of planning for growth can yield significant financial and operating benefits. In a 2010 FA Insight Study of Advisory Firms it was found that “Growth by Design†strategies were a distinguishing factor among top performing firms. Of note, these firms enjoyed better than average revenue yields, achieving 10% - 30% higher annual gains and generating 12% - 16% higher operating profits than their counterparts.
Cliff Campeau
Partner
Evolutionize, LLC
www.evolutionizemypractice.com