Winning over sophisticated institutional investors to your hedge fund strategy requires creating and managing your marketing effort the right way. Out-marketing competitors, turning prospects into clients quicker, and attracting more sticky assets actually necessitates an investment firm’s executive team to produce and oversee two marketing efforts, not one. And this requires having two distinct marketing plans.
The firms that have not yet recognized this have likely been less effective in their asset raising efforts. What is their approach? Hire a salesperson. Make a flipchart pitchbook. Tell the sales person to go convince people to hand over money for the hedge fund to invest on their behalf. Become frustrated when the salesperson is not quickly converting skeptical sophisticated investors into clients. What is it that such hedge fund firm owners fail to grasp?
There are two parts to marketing a hedge fund’s investment products to sophisticated institutional investors: sales marketing and communications marketing. Sales marketing is the process of selling to these prospects and their advisors. But what is it that the prospects are told? That’s the job of communications marketing.
The sales marketing plan
If you lack a written sales marketing plan you lack a playbook for managing your asset raising selling effort. So, before you can start selling effectively, you need to construct a sales marketing plan to lay out what you intend to do and how you intend to implement it.
Here are 10 recommended steps to take for building or refining your hedge fund firm’s sales marketing plan.
1. Start by determining what is the right target audience for your fund based on its characteristics.
2. Next, set a game plan for how you will find and make initial contact with prospective suspects who may be potential investors.
3. Select and prepare your hedge fund’s point person (this could be the founder/portfolio manager, in-house salesperson or, in some cases, a third-party marketer) for making the initial contact and later giving the round one in-person sales presentation. (Note: Preparing your point person requires having the content and selling tools needed to equip him or her to tell and sell your fund. This is a job for communications marketing, for which you need a separate marketing action plan.)
4. Qualify the suspects to determine which may actually be potential investors.
5. Determine what you will use in making introductory contact to persuade the prospective investor to take a meeting.
6. List what buyer-focused market intel information you’d like to gather from your prospective investor either during an initial phone conversation or your face-to-face get acquainted meeting.
7. Decide how you will use industry conferences to network with and sell to your prospective investors.
8. Develop legitimate reasons to make follow-up contact with your prospects throughout the selling cycle that will have buyer-focused value. This is a key task for keeping dialogue alive with prospects and increasing your investment firm’s ability to turn prospects into investors.
9. Establish a budget for implementing these steps.
10. Put all of this in writing, detailing the implementation steps for each activity. This way you will have a sales marketing plan ‘playbook’, which you can also tweak and enhance as your sales marketing plan evolves.
When these steps are completed, your executive management team will have a solid plan of action, as well as a better understanding of how to implement and manage its sales marketing process over the selling cycle.
However, your hedge fund firm still needs to craft and deliver to its salespeople compelling and consistent buyer-focused storylines and other content to use in both their verbal and written contacts with clients, prospects and those who influence them. This is not sales marketing, its communications marketing. We will address marketing plan construction for communications marketing in our next article.
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