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Give us your toughest questions on how to market your fund. We'll give you no-nonsense opinions and insights to help build your brand and grow AUM.

About February's Question

Is your fund prepared to acknowledge that brand perceptions are at least as important as its track record? Then you’re half-way toward the goal of competing effectively against better known funds. Your quest to be considered a “safe choice” by allocators involves thinking and acting exactly like your most successful competitors, in terms of marketing communications.


Gordon G. Andrew
Andrew + Selikoff Partners

Q: Our fund’s performance is good, but our brand is not well known. How do we overcome this visibility / credibility challenge, particularly when we’re pitching large investors?

Fund Manager
West Port, CT

A: The biggest and most enduring injustice in the world of professional services marketing is that, very often, a firm with strong brand perceptions will be selected over a more qualified, but lesser-known firm. The old adage, “No one was ever fired for hiring IBM,” still rings true in every industry. And funds that understand this market dynamic, and that build a marketing strategy to address the underlying human issues, can gain market acceptance and beat larger and better-known competitors.

The central, unspoken issue embedded within the selection process for any type of investment fund (or professional service) is easy to understand. All decision-makers require a certain level of comfort and confidence necessary for them: 1. To propose a relatively unknown candidate to their “boss” (however that’s defined), and more importantly, 2. To rationalize their selection of that unknown candidate; and worst case, to defend their decision should their selected provider fail. Avoiding responsibility for a bad decision is always the top priority.

By taking either of these two steps, decision-makers put skin in the game. Their personal welfare – notably, keeping their job – will always be far more important to them than selecting the most qualified firm. So regardless of your firm’s size or brand stature, this inherent “career risk” is the key obstacle that must always be overcome.

Here are three ways your firm can achieve that goal through marketing:

Don’t Exclude Your Firm from Consideration
Small funds can exclude themselves from consideration by investors in two ways. They either focus exclusively on quantitative characteristics of their firm (and refuse to acknowledge the human side of decision-making)…or they never attempt to solicit investors considered to be “out of their league” (either for lack of inertia, or for fear of failure.)

Although it would be reckless to devote all or most of your fund’s marketing efforts to “low probability” investor prospects, excluding them altogether represents an opportunity loss. Solely from the standpoint of marketing skills development, and regardless of the outcome, pitching your firm to tougher prospects will increase its effectiveness in those leagues where it is “entitled” to play. Most high handicap (struggling) golfers will attest that they perform on a much higher level when paired with better players. That same performance dynamic holds true in marketing your fund.

The opportunity loss in not hunting for larger game is that you can never know a prospect’s current situation, mindset or future plans. They may be unhappy with their current providers and are seeking a change, or their new strategy may involve a broader portfolio of smaller funds. It’s always better to lose (and to learn from your losses), than it is to not enter the game at all.

Think and Act Like a “Safe Choice”
If your fund is prepared to acknowledge that market perceptions are at least as important as its track record (an enormous hurdle for many funds), then it’s half-way toward the goal of competing effectively against better known brands. The other half of your quest to be considered a “safe choice” by allocators involves thinking and acting exactly like your most successful competitors, in terms of marketing communications.

Here are the five marketing assets applied by successful funds:

  • A well-articulated value proposition: Until you have a clear understanding of why and how your fund is of value to investors, and are able to express that in a clear, concise manner, don’t invest in any marketing tools or tactics.
  • An effective website: As the mother ship of your brand, and the most important public-facing expression of your fund’s value proposition, your website needs to go beyond “what we do” and “who we are.” It must also provide insights into “what we believe,” “how we think,” “how we operate” and “who validates our credibility.”
  • Bona fide thought leadership: This self-generated content showcases your fund’s intellectual capital, which builds confidence in its potential to succeed. Bona fide thought leadership does not promote the firm, or include a rehash of performance results.
  • Inherent third-party endorsements: These credibility tools can take many forms, ranging from published articles in respected publications, to speaking engagements at industry conferences. The quality of these types of indirect endorsement are more important than frequency.
  • Top-of-mind awareness: To maintain familiarity with your brand in the marketplace, your fund will need to pro-actively reach out to its current and prospective investors and referral sources, ideally on a quarterly basis. The information you send to those target audiences must be relevant and of interest to them.

Associate with Established / Trusted Brands
If your fund has little or no brand stature, one of the quickest and most effective ways to change that dynamic is to directly associate your brand with specific firms or individuals who already possess the market credibility and respect that you’re seeking. There are a number of tactics you can apply to benefit from this brand-related “halo effect.”

For example, your quarterly outreach to target audiences (referenced above) might feature interviews with respected investors, or with well-known subject matter experts. Or your fund might host a series of by-invitation-only webinars, or in-person roundtable discussions, featuring recognized authorities in a particular asset class or investment style.

Regardless of the specific halo effect tactic(s) you apply, the underlying strategy remains the same: to create an editorial product or host an event that enables your fund’s brand reputation to be positioned – in the minds of others – as being in the same league as the well-established third-party brand(s) that you are promoting.

Many funds possess some of the marketing assets outlined here, and few funds possess all of them. An extremely small number of funds are able to apply these tactics in a consistent manner, or view marketing as an ongoing business discipline, rather than a list of items to be checked off.

Those funds that understand the human dynamics of decision-making, and apply marketing to build its brand stature, are capable of competing at any level, and often do not remain small very long.

 

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