What is it that makes your financial planning business different from the others?
Are those things the same things as what your clients and potential clients would say?
This is where the concept of “market positioning” comes in, and it’s tremendously important to a financial planner’s marketing. In brief, market positioning refers to the distinct “space” in your prospects’ minds when they think about your brand or service.
Within that mental space, your prospects will attach certain feelings, images and associations with you which will put you in a certain position in their heads – relative to your competition and to alternatives.
For instance, consider the following in other industries:
- A clothing company might position itself and its products as a symbol of status and luxury.
- A computer business could choose to position its PCs, laptops and tablets as the most technologically advanced and innovative.
- A provider of household supplies might position itself as the cheapest provider of its products compared to all of its competitors.
Market positioning is vital for financial planners since people tend to think that “different is better”. If your business is the same as the others, however, people tend to assume negative things about you.
So, what are some of the ways a financial planner can position itself to its target market?
Here are some options you might want to consider if you are just starting out with your new financial planning business, or if you are a more established firm thinking about re-positioning:
(The following options are credited to Michael Porter and his Generic Strategies)
Option #1: Cost Leadership
The first of two broad options open to financial planners is to attempt to grow their share of the market by positioning themselves as the cheapest alternative.
For instance, do your competitors charge at least a 1.5% investment management fee? By offering to do it for 1%, you can sweep in and possibly even syphon off some of their clients onto your own books.
Lots of businesses and industries compete in this way, so it is an option open to you.
The aviation industry is probably the clearest example, where consumers are typically after the cheapest flight – leading the majority of airlines to lower their prices to the point where they are barely breaking $20 in profit per ticket sale.
You need to be careful with this approach, however. Bear in mind that you need to be confident that you will be able to keep on holding the number 1 spot as the cost leader in your market.
If others are able to come along and undercut you, then it is not a sustainable advantage and you should probably consider the second option.
Option 2: Differentiation
This type of positioning involves making your services different and more appealing than those offered by your competitors. Quite often, your prospects are willing to pay more for a service which offers greater benefits, experiences or status.
How can you differentiate yourself, then, if you’re not relying on being the cheapest?
Here are some options which companies in other industries have used, which you could consider:
- Speed. Amazon, for instance, revolutionised online shopping by enabling people to order an item from their website and have it arrive the next day. In financial services, are there any aspects of your service where you can sustainably offer faster service delivery? Does this matter to your clients and target audience?
- Reliability. Think of BMW – these cars are certainly not the cheapest but many people are willing to pay more because they think these are less likely to break down. Are there any areas where your service is seen as more reliable than the alternatives, such as in portfolio performance?
- Service. Many of us appreciate the value of great customer service at a company, especially when alternatives have been severely lacking. Perhaps the staff are rude or see customers as “just a number” or “a transaction.” Could service quality and speed be a way to distinguish your financial planning business from the others around you?
- Design. This tends to work well with certain product-based industries. It’s one reason, for instance, why people like to buy Apple Macs rather than a cheaper, more efficient laptop from another brand. In their minds, it looks cooler! This is harder to pull off in services industries such as in financial planning. However, the style and quality of your branding can be a factor here. People tend to trust financial planners which “look the part” more than those with a cheap, DIY logo and brand which clearly did not receive much care or investment.
- Relationships. Are your client relationships different from your competitors’? Perhaps theirs are more transactional, intermittent and formal whilst yours are more regular, long-term and friendship- based. Could this be an area where you can appear different to your prospects?
- Features. Are you a one-trick pony, or do you offer a range of services? One is not necessarily better than the other – it depends on your target audience. Some people want a service or product with lots of extras and “bells and whistles” bolted onto it. Others want a clean, simple solution.
- Technology. Is there any software or innovative technology that you are using and have access to, which your competition does not and which your prospects would value? Perhaps you have an app which provides regular investment performance reporting, for instance. Be careful here, however, as technology moves quickly and it’s hard to retain a sustainable advantage in this way without continual investment in new technological capabilities.
Which strategy to choose?
This is the million-dollar question and the “holy grail” in strategic marketing for financial planners. Once you know the answer to that, you are setting yourself on a very strong footing for the future.
The positioning strategy you choose will depend on a wide range of factors which are beyond the scope of this article. However, to get started you should think about auditing where your marketing is right now, and considering where you want to be in the future (i.e. your marketing objectives).
From this point, you can start to think about which strategic options might be most appropriate to get there. This is the stage where your positioning strategy might start to come together.
The best thing to do, of course, is to speak with someone who has assisted many financial planners over the years with producing a marketing and positioning plan, to shed light on your own situation.
That’s what we can offer here at CreativeAdviser. To start a conversation with a member of our financial marketing team, please get in touch today to book a free consultation.