Just what is hedge fund marketing?
And how can marketing potentially make your firm stand apart?
I’d like to start with the proposition that many hedge fund managers think of marketing in vastly different ways.
Let’s start with some definitions.
Managers often define marketing as build relationships the traditional way – face to face. Tactics may include speaking or attending conferences, client appreciation events, networking happenings, and executive roundtables.
To some, this is more like sales than marketing.
Marketing Strategies May Include Traditional Marketing, Inbound Marketing, and Content Marketing
Traditional marketing is marketer centric – and may also consist of cold calls, emails to those who don’t know you and haven’t given their permission for you to contact them, and ads that interrupt.
I’m not going to focus so much on traditional marketing and/or sales methods as on a few others, as food for thought.
Some of you, maybe, might have heard of something called inbound marketing.
What is inbound marketing? Think of a magnet.
Inbound marketing is customer-centric – meant to attract and inform prospects with informative content – articles, whitepapers, and infographics, for example.
Inbound marketing is based on knowing your customers – their “personas”- and creating and leveraging content just for them.
With inbound marketing, the idea is that content should act like a magnet, to capture your prospect’s attention – so they come bounding in to your for more helpful information.
Then there’s “content marketing.”
According to one of the guys that coined the phrase, Joe Pulizzi, content marketing is focused on creating and distributing valuable, relevant stuff to attract and retain prospects.
And, of course, to get leads, clients, and revenue.
One way to look at it is that inbound marketing is a strategy and philosophy. And content marketing is the tactical.
What’s Your Marketing Plan?
However, and this is a big but, most emerging alternative funds and start-ups – those typically with less than $250 million in assets under management – don’t have a thought out and written down traditional, inbound, or content-driven marketing plan.
If this is your firm, you are not alone: 80% of hedge funds haven’t written down or systemized their marketing process. This is according to Bryan Johnson of Johnson & Company.
So what should be in a marketing plan?
Well, it should say who your ideal prospects are – their persona, firm type, demographics, and pain points.
The “what” may include what sales methods and marketing content you plan to use to discover and nurture prospects through the sales pipeline.
Are You Chasing Institutional Unicorns?
So…do you have a marketing budget?
Believe it or not, many emerging and smaller alternative funds without a marketing plan also don’t have a marketing budget.
Why budget when you don’t have a plan?
Raising capital costs money. Up front.
Funds that seek to outsource sales to a third party marketing firm are not typically commission-only.
The cost of a 3PM engagement may include competitor analysis, due diligence, positioning, consulting, and travel. And you pay them.
But only 1 out of every 275 or so funds with less than $250 million in assets establishes a 3PM relationship.
Most start-ups and smaller hedge funds waste valuable time and resources chasing institutional unicorns.
Most know that institutional investors, pension plans and the like have requirements on asset size, performance profiles, and years under management that smaller and startup funds don’t have.
While absolute returns – and a management pedigree – may attract some attention in some databases, they won’t necessarily find your ideal prospects or close sales.
Another mistake is thinking that your message is both clear and compelling.
Well, maybe not. What’s clear to fund managers may be Greek to prospects.
Also, does your investment story address the issues your prospects want addressed?
And…do you say how you mitigate risk?
Does Your Website Drive Leads?
Now, should your marketing plan include your website?
If you’re a modern hedge fund marketer, you may think that your website could be a hub of marketing and lead generation activity.
Of course, many fund managers – or at least their legal team – prefer that their website be gated. The idea is that the only way prospects may view beyond the home page is to self-identify as accredited and/or qualified.
Other fund firms provide a limited menu to the general public, perhaps a general description of investment philosophy, and or biographies of key executives.
And some firms, notably CTAs, have more expansive sites that may include blog posts and research papers.
My first question, among many…will you be satisfied if your site is at best a flat brochure?
When was the last time you thought of your website as a magnet for ongoing source for new leads, client referrals, and fresh business?
Or as your top salesperson?
Or at least as an additional method to attract potential investors?
If your answer is never, you might not be the only one.
But would you like your site to generate leads at all hours, whether you are awake or not?
If so, how?
Well, consider these additional questions if you – and your legal team concur – are looking to make your online presence a potential additional revenue stream.
Number one is: does your homepage have a “call to action” lead magnet that provides a way for prospective investors to download, let’s say, a research paper – so that you in turn acquire their contact information?
Does your site also have a “hero” home page image that’s relevant to your firm, your brand, and your prospective clients?
Does your homepage have a single sentence (or two) that describes how you can help your target audience?
And does your homepage let prospects easily find what they are looking for?
Hedge Fund Marketing is More Than a Website and a Blog
And then…do you have a blog? Now the word blog may be to “retail”…so we can call it a commentary section, or resource center for articles.
Or maybe you have an interest in creating article content but not the time or expertise.
So if you do begin to post educational information, what then?
What do you write about?
Each post should provide information and/or advice on how to potentially help solve your prospective clients’ big questions.
Each post should have a call to action that leads to a landing page that prospects can fill out in exchange for content.
As for frequency, once a week may be a good start.
But content marketing is more than just your website and perhaps a blog.
Have you create research papers, for example? (Or eBooks?) They are the informative, educational free offer that your prospects see on your landing page.
Do you have videos of your founder or other key personnel that show what you do and how?
Do you do email marketing? Beyond the market commentary. email marketing should help nurture your list of existing leads further through the sales funnel, and ultimately, into clients.
Do you have “snackable” content, in the form of shorter articles and infographics?
As always, bring your legal team in the loop before you execute your online presence, and have them review before anything is posted.
Your Landing Page is the Key to Driving Calls to Action
And here’s the secret sauce – it’s the landing page.
The landing page is where your prospective clients “land” when they respond to your complimentary white paper, or request for phone consultation.
If you are looking to generate new leads online, landing pages are the place to make that happen.
Prospects fill out the form and provide their contact information, and they get your informative and hopefully educational report.
And you, hopefully, get a lead.
I’ll say it again…landing pages and relevant content help you get leads online.
How Do You Know if You are Going to Attract Early Investors?
So let’s say you’re in start-up mode, or perhaps plateaued, getting some leads, either online or off.
How do you know if you are going to attract early investors to your fund – even before you go to market?
Here are some of the telltale signs, for which I credit my colleague Meredith Jones for listing:
First, you have a thorough business plan.
Second, you have an audited track record – in up, down, and sideways markets.
Third, you have investments from former fund colleagues. A seed investor helps, too, of course.
Fourth, you have service providers with household names.
And fifth, you have realistic expectations.
Here’s the contrast, though. Whatever your marketing plan, success will come slowly if at all if have you…
Rely on back testing to promote past performance.
Or are a solo manager with few if any references from colleagues.
Or your pitch book is too focused on performance and investment strategy, or is too long and too technical.
Or if your investment experience in only one type of market cycle, well, you may have a tougher sale.
Marketing is About Building Relationships
I’d like to get back to relationships, though.
I’ve heard a few managers – this is not you of course – have said something like “My fund sells itself.”
Many emerging managers may make the mistake of thinking that their fund’s style is so special, and their alpha so awesome that they don’t need to market their fund.
But silence may not be golden.
Perhaps high net worth investors and intermediaries need to be educated why about why they should invest in your fund.
They may need to be convinced, so they have trust and conviction in you.
Building trust takes time.
Informative content helps build trust over time.
Many emerging funds have also discounted the value of their existing investors.
Friends, family, business colleagues, and early allocators – are the best natural source for additional allocations, and for referrals.
Have you, for example, established a regular email calendar to update, educate, and inform your existing investors?
Do you take the time to continually build a solid relationship in person, over the phone, via social media, or with email? Do you explicitly ask for referrals?
So how many touches does it take to bake the sales cake?
A Salesforce study in 2015 found that only 2% of sales were made on the first contact.
In fact, 80% of sales were made between contacts number 5 and 12.
You Are Online Whether Your Know it or Not
Now, can you have a social media presence?
I know, I know, compliance. Your lawyers won’t let you. Or you haven’t asked them. Or you don’t understand what the Jobs Act allows, or not.
Or even if you wanted to, you don’t have the time or don’t know what to post.
Well, join the club.
A few fund managers tweet. Some write articles. A few are on MSNBC.
The regulations and procedures for being on social media may be complex, but there are services out there, such as firm called Smarsh, which help investment managers and advisors with the archiving aspect of compliance.
At minimum, perhaps its best to have a business page on LinkedIn and Facebook.
But managing your online presence is more crucial than ever.
You may in fact be online whether you know it or not.
Why? It’s the due diligence process. It now starts – and often ends – with Google.
Investors – big and small – use search engines as part of their due diligence process.
Between 2014 and 2015, key search terms such as ‘hedge fund manager’, ‘hedge fund’, ‘venture capital’, ‘CEO’ and ‘managing director’ increased between 25 and 50 percent.
What will searchers find about you?
So you are likely online whether you’ve done it thoughtfully on your own, or someone has done it for you.
Have you Adjusted Your Marketing to Match Investor’s Buying Behavior?
So the sooner you adjust your marketing to match your potential investors’ buying behavior, the sooner you may see better results from your marketing investment.
Think of how how you buy – many of us go online first to study up.
The more helpful you are online and in person, the more emotionally connected they may be to your business.
How to Potentially Stand Apart
A few takeaways then…
One thing is for certain…marketing is always changing, whether for hedge funds or widgets.
Traditional marketing, inbound marketing, and content marketing all have their place.
But a few thing may not likely change.
Like…many investors make purchase decisions emotionally first and, well, rationalize those decisions second.
Being helpful then actually helps people get to know you better, like you, start to trust you, and help you stand apart.
And trust is a requirement to getting the sale, as it may also be for hedge fund marketing.