The financial services industry-banking, investments, insurance-represented more than $1.25 trillion in GDP in 2012, employing almost six million people. Every sector and sub-sector of this industry is intensely competitive, each company constantly striving to dominate its market share. On a macro-level, firms are often nearly indistinguishable from another, offering similar slates of products and services at a similar price, quality, and level of customer service. On a micro-level, however, the scene is much different-the competition is fierce.
Everything moves at light-speed nowadays-new product introductions, service enhancements, marketing and sales campaigns-and the goal of modern marketing is not to win competitive battles, but to render them unnecessary. Astute managers understand that competition for a company's services occurs in the buyer's mind-by controlling the environment, the most effective marketing strategies dictate the outcome before the battle is ever fought.
Six Keys to Winning the Market Battle
Even though technology has vastly increased the channels by which you can reach out and touch your prospective customers, expanded capability is only as good as the message it delivers. That message is your competitive advantage in the mind of the prospect.
1. Understand the Needs of Your Potential Customer
In a world where virtually every service can be easily replicated, individual companies often disappear in a landscape of clones, indistinguishable from one another. In that competitive environment, there is only one winner-the low-cost provider.
If your company is in that fortunate position, your strategy is clear: flood marketing channels with declarations of your cost advantage and let your competitors scramble for the crumbs. The only drawback to this strategy is the low margins required to maintain price superiority. If market share drops, profits quickly ebb away.
A more effective approach to long-term success requires an intimate understanding of the needs of the customer population. A 25-year-old, single engineer doesn't have the same lifestyle, earnings level, and disposable funds as a 60-year-old, married vice president of a local car dealership.
The low-cost provider in the financial services industry wields a hammer, and every customer is a nail to be bludgeoned with a single theme. Take the time to analyze your present and former customers and identify their commonalities. Understanding the reason behind who stays and who leaves is essential to building your business.
2. Know Your Advantages and Shortcomings
What makes your company different from your competitor down the street? Why should a prospect purchase from you versus someone else? Successful companies have advantages that none of their competitors can easily duplicate. Consider the following unique advantages that might make a difference to prospective customers:
When analyzing your company's capabilities, be as objective as possible-false pride only ends up costing you money and time, leaving your customers vulnerable to competitors. If you find that you lack advantage in one or two of the above elements, develop and implement a plan to improve your capabilities.
3. Set the Stage in Your Prospect's Mind
The purpose of marketing is to create an image of your business in a potential customer's mind, describing your key attributes and linking them directly to the needs of that customer-a process some marketing experts call "branding." If done successfully, your company is always going to be the prospect's first and only choice.
Many Wall Street firms once enjoyed a unique position in potential customers' minds. Merrill Lynch was the average investor's stockbroker, bringing Wall Street to the masses; Blue Cross Blue Shield Plans dominated the health insurance business; and everyone trusted the "good hands" of Allstate.
It is a new world today, however, with a different set of prospective clients. Your financial services company has the incredible opportunity to create new bonds, based entirely on your ability to make a connection in the minds of your prospects between their needs and your services-a connection as instinctual as 1 + 1 = 2.
While this may seem like a difficult task, consider when someone asks you for a referral to a physician-do you have to think about it? How about a barber or a hair stylist, a plumber or an electrician? There are considerably more physicians and barbers than financial services firms, yet you can identify a referral with little effort. That is the goal when setting the stage in your prospect's mind.
4. Make Your Prospect's Decision Easy
If your prospects know nothing about you, it's going to be hard for them to select you when an opportunity arises. Regardless of your marketing budget, you can create a unique identity in prospective customers' minds by focusing on a limited, simple, and repetitive message or benefit.
The waste and excess of past years' marketing campaigns have been largely eliminated thanks to the internet and telephone. In fact, technology today allows precise segmentation of the consumer market, allowing you to pinpoint your prospects down to their zip codes and street addresses. Even mass media like radio and television have evolved into multiple outlets serving limited markets, making that channel available to small businesses for a reasonable cost. On top of that, you can leverage your marketing budget through blogging, guest posts, and social media that all target your audience.
Establish a marketing budget and strategy that you can maintain for a minimum of three months, repeating the cycle as finances allow. Select your channels and your prospective audience as carefully as possible and create a relationship of trust, perfectly aligning their needs and your services. Marketing is an investment that becomes more valuable as time goes by - you want to plant your message in the most fertile ground possible and keep tending the seeds until they mature.
5. Confirm Your Customer's Wisdom
It is essential that the conversion of prospect into customer occur easily and quickly. A balky, overly bureaucratic enrollment process can create second thoughts over the decision to buy. While the nature of a financial services relationship dictates the collection of specific information, declarations, and legal permissions, that collection should be logical and easily understood by the prospect. This is your first opportunity to show customers they have made the right decision in choosing your firm.
A financial service relationship may necessitate special computer programs that require downloading and installation on your customers' computers. It may also require communication links through emails and mobile phone texts. In some cases, connections between your computers and the customer's bank are necessary.
Review your account enrollment processes and all client-firm communication protocols to ensure they are easily understood, easily implemented when necessary, and secure. Any electronic links should be protected against hacking or theft - a single lapse in security can undermine all of your previous efforts to establish a long-term relationship and bring into question all of your other market claims.
6. Continuously Reinforce Your Customer-Firm Relationship
Often, financial services firms focus too much on converting new prospects, ignoring the needs of the customers they have. According to various studies reported by the Chartered Institute of Marketing, converting a prospect into a new customer costs three to fifteen times more than retaining and selling to your existing customers.
Never forget that the customers you already have are your competition's prospects. Reward them with constant improvements in service and let them know about those improvements through regular social media communications. Reinforce your brand.
Despite the plethora of financial services companies, opportunities to establish a unique niche in the industry always exist. Rather than attempting to be all things to all people, analyze your market and target those prospects for whom you can provide a unique benefit. Exploit your advantages and force your competitors to do battle on your chosen ground, the space in the customer's minds where you have superiority.
What is your marketing strategy?