Know-How Exchange : Strategy

I don't see a problem with going straight to the consumer. It sounds like the problem is to identify who these people are. Why are there so few possible clients? What characteristics do these people have?

Is the reason the client wants to use other professionals is that their idea needs the backing of a trusted advisor? I know someone that markets something to high net worth older people. It has to do with people selling their right to life insurance. This person who is doing this is always looking for people to refer them as there concept is a little on the edge in my opionion. I think there is no way someone would sign up if directly approached by this person, thus they rely on the counsel of others. Is this the scenario with your client.

If the idea is reasonable, cost effective and of sound advice they should market directly. Might they need help in identify these future customers? Probably so. This is where a good network of professionals that would come in contact with the clients comes in. Perhaps the network of professionals needs to be expanded. What other professionals would come in contact with these future clients. What organizations, foundations, charities, etc might this people be involved in.

I guess I am rambling now. I hope something I said helps.

Mike

Hi Paul.

Sounds to me that your client should take a top down/bottom up approach concurrently. I base this on my own experience marketing financial services & products to broker-dealers, RIAs, Private Wealth Managers and insurance brokers.

First, let's address Insurance Brokers, CPAs or other financial services agents. Given market opp is small, brokers will want to know what's in it for them:

- Does the financial solution give brokers a conversation starter for prospecting an untapped market?

- Does the solution provide them with sustainable fees or revenue stream?

- Will it be easy to explain/educate prospects about the solution?

- Is the salescycle short or time-intensive? What's the ROI?

Given the current market environment, they'll want to really understand any risk associated with the solution, so they can reassure clients preemptively.

Given the above, here are a couple of recs for positioning solution to brokers/CPAs etc.:

-Trust your instincts about marketing primarily to brokers who already work with the retail clients you seek and who may already have a base for understanding your product. You'll get more bang for your buck. It sounds like a broad-based campaign would be a waste of money and time given the small opportunity set.

-Trust your gut about the drip education campaign. But recognize that many in the financial services arena are still not plugged in to technology as much as other industries. For this reason, education needs to include brief emails, but also call campaigns. Make sure the materials you send very clearly spell out WIIFM (What's in it for me) factor.

-Provide brokers with educational materials they in turn can give to their clients. Materials should be relatively simple and clearly explain how the solution works, its potential benefits and the risks (which should not be hedged). Visuals work great.

-If you can, provide brokers with a custom email campaign they can send to their clients. Or better yet, ask them to provide you with a list and offer to do it for them, customizing it with their contact info. **But make sure they know when it's going out and they see exactly what you're sending.**

-Are you targeting small CPAs/brokers or large firms? If large firms, you'll want to educate top down within their home offices as well as target agents in the field.

Now on to consumer marketing:

-Trust is a definite factor when it comes to consumers purchasing financial solutions. And studies show bigger name brands (whether right or not) tend to be more credible in the eyes of consumers. If your client is not a recognized institution, they may not want to sell direct to consumer (at least not initially). But they should still market directly, urging consumers to contact their CPA or insurance broker and even providing referrals to specific agents.

-Again, education will be key. Communications should be succinct and easy to understand.

-Competition for the attention of boomers+ is fierce these days, so differentiators will be key to grabbing this audience. They don't want to be peddled to and they are increasingly wary of being the target of new products for fear they're not quite what they purport to be (i.e., reverse mortgages don't have the cleanest of reputations these days). Build trust first or direct them to brokers they trust for more info.

-If your client is a big name brand, well that's great. They're on much better footing for direct to consumer sales of financial solutions. Again, trust and transparency are critical. In my own experience, I found a broad-based survey coupled with a couple of qualitative focus groups (even online ones) to be really helpful in understanding how consumers of financial services make buying decisions--it's very rarely based on price.

-Money is personal for people. There is no way around it. So, in marketing a financial solution, companies must demonstrate respect for the individual and his or her efforts to earn/save/be able to retire/provide for family/leave inheritance etc. Given the market opportunity is small, I'm assuming you'll be able to develop a pretty clear profile of the target consumer. This should help to source quality lists and give laser focus to messaging.

There are also some financial services market research firms you/your client might find helpful. (I have zero affiliation with these firms.):

Financial Research Corporation
https://www.frcnet.com/frc_about.asp

Tiburon Strategic Advisors
www.tiburonadvisors.com

Hope this is helpful. I'm sure I covered some ground you've already trekked. Without knowing what your client's solution is, it's a bit tricky to get more specific with recommendations. But, best of luck!

Laura

Trust is a definite factor when it comes to consumers purchasing financial solutions. And studies show bigger name brands (whether right or not) tend to be more credible in the eyes of consumers. If your client is not a recognized institution, they may not want to sell direct to consumer (at least not initially). But they should still market directly, urging consumers to contact their CPA or insurance broker and even providing referrals to specific agents.
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jacksen

[URL deleted by staff]

You can have your cake it and eat it, too.

Create a list of local experts around the country who've passed a certification training of your product offering (it could simply having them sign up and take an online training for free).

To assist them, create targeted articles and case studies for the media that your target market cares about. Your articles would lead the reader to your site to answer some simple questions and connect them with their local expert.

Hmm. Half million insurance agents but only 20,000 prospects - definitely sounds like working through all of them won't work. Especially given the technical nature of the product. Why would they want to learn about a product that statistically they may never sell in their entire career.

Going direct to the customer could work. Basically, hire our own sales person who would be the expert and then do marketing to try to reach those specific contacts directly. This would take the insurance agents out of the loop. You use that money to pay for your marketing and sales. Hard part is to get at the customers in the first place.

Another blended option would be to get someone on your staff to be the expert who would step in and provide the technical info to the insurance agent. This way you can still use them to access their customers, but they don't need to try to learn a lot about the product. You would have to just give the basic info, still pay a decent commission, but take on the hard work of designing the plan for the customer yourself.

Its a positive vs a negative. You can be lazar sharp in your marketing- so don't even try to appeal to the masses cause they arent your market.

You only want 100 sales. Your client doesn't need anyone but one good inside person to create that. One. One person can make 50 quality dials a day. Quality, not just dials. If I was coaching, we'd set performance milestones, and the day isn't done till we hit that #. I can be a combo of direct users, orgs, whatever. That is 250 calls a week, 1000 a month, 12000 a year- and a close ratio of less than 1%. Just roll up your sleeves and make it happen.

Dear Paul

This is an interesting question which I would like to approach from a different direction. To do this I need to ask you some further questions.

The figures which you have given are useful, but without calculating the average gross profit or gross margin of the deal, you have no way of identifying whether a given mix of marketing and sales, each with their associated costs, is effective and sustainable with a view to an adequate net profit capable of justifying the use of the chosen model. Is it possible to reveal this figure? Also of use when contrasting the direct versus the indirect sales channel, it would be useful to know how the commission margin in the product is currently split to reward the supplier, your client and the person who is acting as an intermediary or broker.

The next figure to look at would be the estimate of the number of people who could theoretically benefit from your client’s product. The fact that you can identify a broker community of only 20,000 out of 500,000 insurance brokers must be predicated on an assessment of the number of end users who could credibly benefit. How was this figure calculated and from what research?

Notwithstanding the above information, I am a little uncomfortable with the assumed size of the broker community. Can the product be so specialised as to be restricted to what appears to be 2.5% of the general population or a higher % figure of the senior sector of the general population? If this is truly the case, then research in some depth must have been carried out to calculate the potential market size. Figures which are as low as 2.5% can easily be lost in the noise of a survey of only a thousand or so potential targets, so that finding alone suggests an extensive study.

What were the figures relating to the original research and have they been published or were they privately commissioned at considerable expense and thus remain secret?

If this work has not been done, then you client would appear to be guessing. This is not necessarily a show-stopper, because if they seek only to convert 0.5% of the supposed market, then they can afford to cherry pick, assuming that you can direct them to the appropriate people.

Armed with these figures, from the gross margin you can work out just how much you can afford to spend on generating each lead and what conversion rate you will require returning a profit. From the spread of the distribution of the gross margin, you can construct a matrix or table of possibilities which can mandate whatever sales and marketing mix is tenable for the different routes to market.

Finally, the sales model for the insurance, investment and equity release market has changed significantly over the last 30 years. It used to be common for suppliers to have a large sales staff, paid for either by commission only or by the employment of salaried sales people who can earn a bonus for hitting target, whether they sell directly to the end user or are deployed through a re-seller model. You simply don’t find this structure any more – once-upon-a-time, companies such as Hambro Life (In the UK) and Financial Planning Consultants had hundreds of sales people who worked largely by cold calling and personal referral to hit their targets. Remember the ads – “Wanted: Apprentice Millionaires. Two years ago I was broke and failing in life but now, thanks to taking control of my financial future by assisting people to realise their dreams I have an Aston martin and a house worth £2M” Yep! I fell for that one in 1979, but it did provide me with my postgraduate sales training. My boss, Mike Edge went on to found Chase DeVere which he recently sold for £130M.

This has largely been replaced by direct mail, advertising and web-sales. To give you an idea of why this is so, you only have to look at the cost of Google’s Pay per Click marketing. It is not uncommon for companies to pay $100 per click or more to generate leads from interested consumers. Working on the assumption that about 20% of these are hot prospects, the conversion rate is still only 20%, inferring that it costs upwards of $500 to generate each sale. If your client’s product has similarities with this scenario, then you will need to have quite a bit gross margin to make the operation profitable.

If you can come back with some of these figures, then I will endeavour to return to the question with further suggestions. Without these figures, any suggestions about the appropriate sales and marketing tactics are at best an inspired stab in the dark.

Best wishes


Steve Alker
Expirt