Fund Marketing: Are You Selling Features or Benefits?
Guest Article by Milton Lewin
Regardless of what product or service you’re selling, people buy benefits, not features. The problem is that most people sell features, rather than benefits.
Beer brands – companies that know quite a lot about buyer motivation – never make that rookie mistake. Beer commercials don’t promise features, whether it’s to taste better, quench your thirst, or give you a buzz. Instead, the benefits of drinking their product are what are sold: anything from making you more popular, to independent thinking, to attracting hot babes in skimpy beachwear. People drink Dos Equis beer not because of its malty aftertaste, but in the hope of becoming “The Most Interesting Man in the World.”
Master marketer Charles Revson, the founder of Revlon Cosmetics, summed up the difference between features and benefits this way: “In the factory, we make high quality cosmetics. In the drugstore, we sell hope.”
When considering any product or service – regardless of whether it’s a run-flat tire, a frozen pizza, legal representation or a hedge fund – potential buyers need to know how it will benefit them; otherwise, there are simply too many competing products in the marketplace. They ask or think: Will it make me, or my company, more successful? Will it help me make more (or save more) money? Will it protect me or my family from harm? Will it make me look thinner or younger? Will I be happier? Will people think less of me if I don’t buy it? These are the types of “benefit” questions that drive the purchasing process.
Fundamentally, what people care most about is themselves. Maslow’s hierarchy notwithstanding, the “What’s in this for ME?” question influences all human behavior. So whether you’re selling a product, service or yourself (looking for a job, for example), you must make clear to the buyer what specific benefits they can expect to receive from the purchase. And if you can’t make those benefits clear and compelling enough, don’t expect the customer to respond positively to your offer.
Base Expression of Your Benefits on Actual Customer Needs
Companies often invest significant time and resources to formulate marketing and sales strategies, but all too often those efforts rely too heavilyon internal knowledge and perceived market insights. The most seasoned and effective marketers, however, do everything they can, on an ongoing basis, to learn from their current, prospective and former customers. This information is critical, in order to create and communicate the benefits that will motivate their customers to do business with them.
To succeed, your company must learn why your customers do (or did) business with you; or, conversely, why they chose a competitor. You need to understand precisely how THEY think you’re different (enough) from your competitors. Your customers need to be asked: What specifically do they like (and not like) about you? Do they do business with you (and your salespeople or other company representatives) because they want to, or because they are required to? What concerns did they have that influenced their decision to buy or not buy?
There are likely a dozen or more questions that would provide your company with the insights necessary to understand what motivates your clients (and future customers). How you gather this information is a skill that requires expertise, and the practical value of that task should not be minimized. All too often, with no hard evidence to support their position, company leaders will state that, “Customers like us because of our….”, or claim, “We’re different from our competitors because of…..” But the details they provide in those statements are usually based on what they think, and not on what they actually know. And the difference between thinking and knowing in sales and marketing can be a fatal error. If your company needs to pay a qualified resource to gain valid customer insights, it’s well worth the investment.
Why Selling Benefits is Critical for Fund Managers
To succeed, fund managers must understand and embrace the importance of selling benefits, rather than features, to investors. Simply, investors are looking for benefits related to financial performance (however that’s defined by the investor) and to risk management, which is typically defined by a number of factors that instill investor confidence in the fund manager’s integrity and professionalism.
In a prior role, overseeing marketing for a mid-sized hedge fund, one of the first tasks I undertook was to create a list of questions for each institution that had invested in our fund over the past 18 or so months. While many investors choose managers primarily based on past performance, that’s far from the only investment criterion. In fact, experienced investors understand the importance of investing in the firm, rather than the fund. Effective marketers know that if past performance was all that was needed to sell a fund, they would simply need to publish their wiring instructions with their return numbers and then wait for the money to roll in.
By gaining insights from our actual investors to several questions – most of which related to issues unrelated to performance – our firm’s approach was validated, our core messages were tailored and our marketing strategy became largely a plug-and-play exercise that then accounted for substantial asset growth.
There are, for all intents and purposes, an infinite number of investment vehicles for investors to consider. No investor must invest in any individual fund. So if your fund is to be seriously considered, investors need to understand (or be helped to understand) how your fund fits within their current portfolio; how your fund complements their other funds, and what type of performance they should expect from your fund in various market scenarios.
Ultimately, every investor’s decision whether or not to invest in your fund will be based on how well you address this question: “How will I benefit from investing with you, both now and in the future?” If your response to that question is not clear and compelling, your fund has some heavy lifting to do before it knocks on another investor’s door.