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Increase AUM with Marketing Automation: Client Retention in Volatile Times (Part 1)

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Increase AUM with Marketing Automation: Client Retention in Volatile Times (Part 1)

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It’s only natural for your clients to be concerned about the extreme market volatility that we have experienced since the beginning of the year. Don’t let these concerns turn to panic because you were unable to send timely and relevant communications to them. Join financial services marketing experts Joe Paone and Mike Madden for our upcoming webinar, "Increase AUM with Marketing Automation: Client Retention in Volatile Times" to learn how leveraging marketing automation can help you retain clients during periods of market uncertainty.

It’s only natural for your clients to be concerned about the extreme market volatility that we have experienced since the beginning of the year. Don’t let these concerns turn to panic because you were unable to send timely and relevant communications to them. Join financial services marketing experts Joe Paone and Mike Madden for our upcoming webinar, "Increase AUM with Marketing Automation: Client Retention in Volatile Times" to learn how leveraging marketing automation can help you retain clients during periods of market uncertainty.


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  • ©2006 Marketo, Inc. CONFIDENTIAL
  • And with that let’s get going!

    Brief introduction of Joe and Mike.

  • Joe: roughly 8 years experience working for asset management companies. Worked for a very large firm with trillions in AUM, a mid-sized firm with tens of billions in AUM, and a smaller firm with a few hundred million in AUM.

    Mike, my counterpart in this webinar has worked at both small and mid sized asset managers in various marketing roles. In fact, Mike also implemented marketing automation from the ground up at a mid-sized asset manager.

    I mention this upfront to let you know that Mike and I both have hands on experience working in marketing at financial services companies during various different market cycles. We understand the importance of maintaining AUM and retaining clients during turbulent markets. We also understand the immense pressure many of you face while attempting to drive AUM, whether it is through acquisition, asset consolidation, client retention, or simply attempting to attribute results to a particular marketing campaign. That doesn’t even take into account the unique challenges, such as compliance, that come with working in asset management.

    In this webinar, we hope to give you actionable advice that will help you retain clients during market volatility. We’ll discuss the benefits of leveraging marketing automation to increase retention, segment your investors, and get the right message to the right investor at the right time. Which, in my view, is one of the most powerful things you can accomplish as a marketer and one that is extremely challenging in a highly regulated and often antiquated industry.

    For the purpose of this webinar we will focus more on the challenges faced in mid to small asset managers, although much of what we are going to discuss is certainly applicable to larger firms.

    You can see from the agenda, we will start with a brief…
  • These headlines speak for themselves and I have no doubt that all of you on the line are intensely focused on the market as it relates to your business. The beginning of the year was one of the worst stock market starts to a year in history. I’m sure you all felt it, whether in the volume of calls your fund managers or investment advisors received or in the anxiety around the office.

    After a period of relative calm in the markets, where volatility was relatively low and stable, we saw many different factors lead to a substantial increase in volatility during the later half of last year.
  • The chart on the slide is the VIX which measures volatility. What obviously stands out in that 1 year chart is the flash crash of mid August. And I’m sure you probably all remember where you were on August 24th when it happened and that seemed to be the turning point. And since then, we’ve had China concerns, domestic and international growth concerns, different headlines about negative investor sentiment, and to top it off the Fed raised interest rates last year, but now there is uncertainty about their future plans. All of this has lead to persistent elevated volatility.
  • It virtually doesn’t matter which asset class your clients are in. Equity indexes are deep in the red as measured domestically by the major indexes and internationally by the MSCI World. In the heart of silicon valley, where we are, dozens of companies have literally had their valuations cut in half. Of course, some asset classes are positive for the year, but chances are your clients have equity exposure. And if you work for an equity manager, chances are it has been a challenging few months.

    With the credit crisis still fresh in peoples’ memories, and the visceral feeling of loosing half their net worth, your clients have probably experienced a rollercoaster of emotions over the past 8 months. I think we can all agree that when performance is good and you are able to beat your benchmark, your clients are happy. But when the tides turn, even if you are beating your benchmark, you find that clients can be unforgiving when their account balances start to go down. In other words, performance helps sell your service and keep your clients happy, but when you can’t use performance as a selling point, or you don’t want to, it’s imperative that you effectively communicate with your clients. And this is where it is so important to get the right message to the right investor.
  • The stat on this slide speaks for itself and again underscores the importance of client retention. We pulled this from a study done by PriceMetrix on client retention.

    This number is pretty scary. And if you think about why this is there are definitely multiple components.
    Investors have access to more information than ever and can instantly evaluate their performance versus others.
    In some respects the asset management industry is involved in a race to the bottom. Low cost ETFs and robo-advisors are applying pressure to traditional asset managers that charge a percentage of AUM
    If you work for an asset manager that is paid a percentage of AUM, and have 1 in 4 people turn over every two years, that could spell big trouble for your firm. Couple that with negative performance and you understand very quickly why retention is key during periods of market volatility.
    Interestingly though, outside of performance and fees, the study showed that most critical part of the investor/advisor relationship is after the 2nd year (once the “honeymoon” period is over). This is the period when clients are most likely to churn. The reason cited in the study is that investment advisors were not able to effectively demonstrate their value. Of course, performance and fees are part of that. But what is almost as important, in my view, is effective communication. How can a client understand the value you are bringing, if that value is not effectively articulated? And if you work for an asset manager with hundreds or thousands of clients, how can you have consistent, personalized conversations at scale? And if you have both B2C and B2B clients (meaning individual investors as well as other investment managers), your job just became even more complicated.

    One other thing to consider: In periods of high volatility, like we’ve been in, this number may be higher.
  • Effective communication is hard with most existing financial services companies. Especially when you need to do that at scale, compliant, and with investor segmentation in mind.

    Depending on the size of your firm you may have a CRM that is either out of the box (like SF) or if you are a larger firm you may utilize a proprietary system that requires middleware to integrate with an email service provider or other marketing solution.

    You may not even have a CRM and you are keeping track of clients through excel files.

    You probably use an email service provider like a constant contact or yesmail. And if you are a larger firm you may keep client information separated from marketing. In those circumstances, as a marketer, you have to work with other teams to pull client data (typically from SQL).

    Regardless of what tools you have available, I’m sure that you’ll agree that effective communication in times of market turmoil is most likely extremely challenging with your current set up. You may end up defaulting to only communication to “High priority” clients through individual phone calls. This of course, is not a marketing function, and is extremely time consuming and resource heavy.
  • The right message to your clients can be broken down into two components.

    Those components are:
    Timeliness: Being able to react swiftly to sudden market movements will help give your clients piece of mind before the financial news can sway their opinion. Think of this as being proactive rather than reactive. You may be reacting to news in the market, but you are communicating proactively with you clients. It is obviously much better if you can provide a personalized touch at scale rather than having to call each and every client to update them proactively.

    And second is Relevance: Knowing each of your clients and their needs is the key to retaining them. Each investor is probably with you to accomplish different objectives. Some might be seeking growth with a long time horizon. Others may be seeking income. In either case, sudden changes in the value of their portfolios can and should require different communication in order to be relevant. We will talk about this in more detail shortly.

    To highlight the importance of these two pieces: I was working for an asset manager during the August 24th flash crash. I won’t bore you with all the details that occurred during that day. But the bottom line is that the flash crash happened on Monday and it took us several days to send out communication to our clients. So we weren’t very timely. We were also not able to properly segment our audience and ending up sending the email to everyone. This of course meant that it was relevant to everyone. In fact it had a somewhat negative effect than we intended. Because we couldn’t properly segment our investor audience we ending up sending that communication to investors that probably didn’t know or care about what happened on Monday. And we effectively gave them a reason to worry by bringing this to their attention. The exact opposite of what we were trying to do, which was calm investors. Instead of reducing the number of calls we received, we actually increased them.

    You can no longer afford to send mass emails to everyone investor in your database.
  • Timeliness and relevance are nearly impossible to get right if you doing simple mass marketing or mass emails to communicate with you clients.

    The key is getting the right message to the right investor at the right time (and also within their preferred method of communication).

    And now I’ll pass it over to Mike Madden to discuss how marketing automation can you address this challenge of client retention through effective, personalized, communication. I can’t stress this enough, if we had the ability to do proper segmentation and personalization in my previous roles, and actually automate the process, it would have saved me hours of time and dozens of headaches I’m sure. So with that, I’ll pass it over to Mike.
  • Thanks Joe! So, Marketo’s marketing automation solution can help you stay relevant and timely to all of your clients, regardless of current market conditions, by several key ways.

    Automatically segment your clients based on demographics and behaviors
    It’s very difficult to stay relevant when running mass marketing campaigns to all of your clients or prospective clients for that matter. We are all individuals and we like to be marketed to like individuals. It builds trust and a greater tie to a brand. Marketo allows you to efficiently segment each client into unique buckets and run automated communications to them in a timely and relevant manner.
    Engage your clients throughout all market conditions with personalized and automated emails
    In one of my past roles, I was a marketer for a mid-size wealth management firm with tens of billions in AUM and we used an email service provider to send out marketing email campaigns. That email tool didn’t allow me to personalize my emails at scale for different demographics or behaviors. And it was extremely time consuming to just get one email campaign out the door. Between pulling the list to having compliance review and approve my email creatives, it could take upwards of 3-4 days to send a campaign. And if I was attempting to react quickly to changing marketing conditions, my campaign would be less effective if they were sent days afterwards.
    Using marketing automation, I was able to build emails and campaigns in minutes rather than days, empowering me to send the right message at the right time. The best part? I could even automate communications.
    Create a single view of your clients
    To have 1:1 conversations with your clients, you need to really know them – what they care about and what they do in every channel they touch. Powered by a smart marketing database, Marketo gives you a 360-degree view of each client across the web, email, social, and mobile channels. What does this mean for you? You can tailor your communications to clients where they, as individuals, engage the most. If one client responds the most to email, you will know. If another responds the best on your web site, you will know. This helps you tailor your marketing communications to each client to really get the message across.
    Measure and track marketing campaign effectiveness and prove ROI.
    Marketo is an all-in-one platform that unifies all of your digital marketing channels under one central hub. You will be able to report and track campaigns from the very first touch all the way to a sale. Most importantly, you’ll be able to measure the effectiveness of your dollars spent for each and every client that you bring on board or retain.
  • To stay relevant and tailor your communications to each individual, you can define and build segmentations for your clients that update in real time. Above, I’ve illustrated a few different possible segmentations that you might explore.

    Target Accounts, Organizations, Industry, AUM, Investment Strategy, Client Behavior, Portfolio Size, Investor Persona and Region.

    The next step is to start developing even more advanced and targeted segments taking into account behavioral data, scoring, etc.

    If you have marketing automation solution like Marketo, it’s easy to do; you need to define what behaviors you want to listen to (for example, last engagement or web site visit, attendance to your event, specific asset download or specific score threshold). The more precise your segmentation the more targeted and relevant your campaign messaging and overall client communications, which will ultimately drive higher engagement, conversions, client satatistfaction and retention.

    Because the digital communication will be so tailored and personalized, this will reduce time spent on the phone and inbound calls by clients.
  • Something that I found useful in my marketing campaigns was to segment by investor persona. Every client has unique investment objectives and knowing those key objectives will help you further tailor your communications to them.

    For instance, some investors are more savvy and tactical. They prefer to be more hands-on about their portfolio mix and trades. Because of this, maybe you would want to consider emailing tactical investors at a higher frequency because they demand more communication.

    On the other hand, some investors are passive and may prefer less communications because they are long-term focused investors.

    The point here is this: if you know what your clients care about, you can tailor your communications to them. You’ll be able to take the personalized touch and feel of a 1-1 phone call and extend it into all of your digital marketing communications. And when there is a sudden shift in the markets like we’ve experienced recently that require a personalized touch with your clients, a strategy like this will help with your retention.
  • Next step, is to look at the messages and products in your marketing portfolio and map those products to your segments. First, you’re looking at what products are owned by your clients and where the white space is. The x on this slide represents current product ownership by a particular segment and the white space represents paths or opportunities for cross-sell and asset consolidation. This map will come very handy when you start building your retention and cross-sell marketing programs. Another way to think about it is that x on this map represents retention programs and topics and white space represents cross sell opportunities.

    And don’t forget to prioritize your most promising segments!

  • Finally, you determine your tactics. We use a mix of programs designed to engage our clients across a variety of channels, including email, social media, events, web, etc.

    The point of this is that through marketing automation like Marketo, you’re able to engage with your clients across channels in the manner of which they most prefer.
  • Who is Brinker?

    Brinker Capital is an investment management firm that provides customized investment products and services for financial advisors and their clients, who include high-net worth individuals, employers, institutions, endowments and foundations.


    With a large lead database of over 10,000 advisors, it was difficult for Brinker Capital to determine which message should go to which advisor. Also, the existing system could only generate mass email blasts, and could not produce targeted marketing campaigns or provide prospect behavior details. Brinker needed a solution that would enable them to develop and manage targeted marketing campaigns, and produce success results to send to sales and executive management—all of which could be integrated within their CRM,


    Following extensive research on several marketing automation products, Brinker Capital selected Marketo based on its ability to create targeted marketing campaigns, track and understand client behavior, and to score and segment their lead database. With Marketo, Brinker can now design their own email templates and build out marketing programs with targeted, multi-layered campaigns. In addition, they are able to determine quickly which campaigns are effective and provide detailed program success reports and analytics to sales and management. Further, they can instantly see what parts of their website are generating the most activity and market to that audience more appropriately, or flexibly adjust their campaigns and themes to drive improved results.
  • ©2006 Marketo, Inc. CONFIDENTIAL