Winning over sophisticated institutional investors to your investment 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.
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.
In our article last month, we offered insights and tips for building or refining your money management firm’s sales marketing plan. Now, let’s turn our attention to the communications marketing plan.
If you lack a written communications marketing plan you lack a playbook, and the content, for arming your sales marketing staff with the tools they need to tell and sell the firm’s story throughout the selling cycle to raise assets from sophisticated institutional investors such as family offices, endowments and foundations, institutional plan sponsors and the investment consultant gatekeepers.
Important as this is, over the past three decades our financial communications and sales marketing consulting firm has observed that the majority of hedge fund firms it has come across, no matter their size, seem to be operating without any communications marketing plan of action. While investment management firms may take the occasional communications marketing related step every once in a while, in support of their sales marketing efforts, there often is no full plan of action. Also, many lack the full arsenal of content looked for in institutional investor due diligence.
Every hedge fund firm executive team should see that it has crafted and delivered 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.
Building your communications marketing plan
Here are 10 recommended steps to take for building or refining your hedge fund firm’s communications marketing plan.
1. Craft your short version storyline. This is the elevator pitch for explaining your fund and its strategy. It needs to go beyond stating just the category your hedge fund falls into and its most recent performance as that would communicate that you should be thought of as a replaceable commodity, and you certainly do not want to give that impression.
2. Craft your long version storyline. Its first use will be in how you communicate your beyond-the-numbers long version storyline at your first in-person sales meeting. Keep in mind that by the time sophisticated institutional investors grant you that round one meeting they have already read through your data and decided they were willing to give you a hearing. The two biggest questions investors have that your long version storyline should answer are What are your investment beliefs? and What is your investment process?
3. Decide which performance related data to standardize on presenting. Analyzing your performance, select which additional data is most appropriate to provide a prospect that can communicate performance attribution and performance characteristics that compares/contrasts your strategy to relevant external points of reference for the prospective investor. This is part of the content you have to market to answer the prospective investor’s question In what context should I view you?
4. Teach staff. Now, that you have your long and short version storylines, and performance attribution and characteristics data, teach this information to your staff and explain that they should consider these your ‘ammunition box’ of key content to draw upon for nearly every hedge fund strategy-related communication of yours to attract and retain assets.
5. Create three core marketing collateral documents. The first two are the monthly performance ‘tear sheet’ and flipchart pitchbook. These documents are the repositories for your numbers content. The flipchart also holds the standard info on staff, fund terms and service providers, and includes some abbreviated ‘billboard copy’ that in skeletal terms touches on investment process. The long version storyline belongs in a separate brochure format document. Sophisticated institutional investors require this content and want it in print, not just delivered orally.
6. Rethink IR communications and how to incorporate the long version storyline into your hedge fund’s letters to investors and research/analysis on fund holdings.
7. Determine which particular beyond-the-numbers content to use speaking at specific industry conferences to promote the hedge fund firm’s views on investing.
8. Decide how to use Internet based communications outlets and platforms for marketing content about how your fund manager thinks. Select which topics to address when and where. Write and distribute the thought pieces.
9. Determine when there is reason to employ media relations marketing and what specific elements of fund strategy-specific content to seek to promote that way.
10. Update regularly with the hedge fund’s salesperson learn what questions prospects are asking and determine whether there is a need to create additional marketing content to support their selling effort.
Once these steps are completed your executive management team will have built out a solid plan of action, and have a better understanding for how to implement and manage content creation and distribution in support of the hedge fund firm’s sales marketing process over the selling cycle.
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