Many financial services companies have been relatively unscathed by the effects of COVID-19. While revenue may be stagnant or down a bit, these companies haven’t faced the same situation as those in retail or entertainment.
For financial services companies to succeed going forward, they’ll need to:
- Very quickly shift their marketing dollars from offline to digital.
- Implement content marketing programs that will position them for short- and long-term success.
How has COVID-19 changed marketing within financial services?
COVID-19 has forced several material changes. It has also compressed changes that would have happened over several years into a couple of months. Examples include:
- Automating back-office and investment functions within financial advisory and wealth management firms.
- Implementing AI within portfolio management.
- Shifting toward digital marketing and away from traditional marketing.
Financial services marketing has been notorious for over-reliance on personal networking, events and trade shows to drive new client acquisition. But now, those marketing vehicles are no longer available or are significantly impaired.
Since COVID-19 is far from over, it’s reasonable to expect that over the next 18 to 24 months, there will be many more waves of limited or global lockdowns. As a result, these offline marketing vehicles cannot be relied upon for the foreseeable future.
What other adjacent industries have been affected?
The situations in other industries are similar to that of financial services. Good examples are business services, insurance and skilled trade services.
However, for financial services firms, this situation much worse because of their heavy reliance on their traditional offline marketing methods. Now that those are gone, the majority of their budget now has to shift very quickly to these other channels.
What are the biggest pain points for financial services companies?
There are many. In my conversations with CEOs and CMOs, two issues rise to the top of the list:
- New client acquisition and existing client nurturing through digital marketing.
- Commoditization of services through AI and automation.
The bottom line is that the market has shifted. These companies are struggling to remain visible and relevant to new and existing clients.
Whether they’re wealth advisors, banks, hedge funds or others, every financial services firm is facing increased competition and margin compression.
Even worse, these firms are forced to rapidly shift large portions of their budgets that were originally allocated for offline marketing toward digital marketing. The challenge is that those media channels may not have that scalability.
Let’s use an analogy to help illustrate this problem. The U.S. bond market is approximately three times the size of the U.S. stock market. If bondholders decided to sell all of their bonds and move the proceeds into the stock market, the stock market would skyrocket.
The same thing is happening right now with financial services digital marketing programs. There aren’t many options available. As in the fictional bond market example above, prices are going up dramatically. For example, it’s not uncommon now to see companies spending 20, 30, 40, 50 or even 100 dollars per click. Think of it — they’re spending that much to draw just one visitor to their site! That’s insane!
It likely means negative ROAS (return on advertising spend) for these companies. The bottom line is that financial services companies are quickly careening toward a point where nearly all marketing is simply unprofitable.
Luckily, there are still pockets of opportunity remaining, if they can move quickly.
Where is the salvation for financial firms?
There are a couple of areas where financial firms can still get scale and positive ROAS. They include:
- Content marketing.
- Social media marketing.
- Influencer marketing.
These three vehicles still have plenty of runway available for growth. Why? Two reasons: First, they’re newer marketing channels, and second, most financial services companies never made much of an investment in these channels before COVID-19.
Now they may prove to be their salvation.
All hands on deck: Financial services firms need to go all-in on content, social and influencer marketing while they still can.
Immediately, you need to launch a crash program in content, social and influencer marketing. If you don’t, your company will be locked out of these marketing channels within 18 to 24 months as your competitors very quickly gain footholds in them and build defensible positions. There are only so many organic search results that bring in new clients. There are only so many influencers.
No doubt, this is a scary prognosis.
Financial services companies are not the only ones who are changing behaviors. Their customers have been impacted by COVID-19, too. High net worth investors (HNWI) and ultra-high net worth investors (UHNWI) are increasingly going online for financial advice and guidance. They’re also scrutinizing their financial and wealth advisers much more closely. With the loss of in-person consultations, they’re questioning the value that their financial “partner” is providing them.
This is a red flag warning financial services companies that more nurturing is needed, more often. Content marketing can fill the gap. Through micro-segmentation, content marketing nurturing programs can be closely tailored to the needs and desires of investors and delivered in a way that strengthens the relationship.
What specific steps should financial services companies take now?
You can implement a couple of strategies right now to start generating results while investing in the future.
Get a blog launched and regularly updated. If you don’t have a blog set up and operating, that’s the very first checkbox you need to tick.
Implement analytics on the website. Implementing Google Analytics or a comparable content analytics solution is critical. Without it, every dollar you spend on digital marketing will perform sub-optimally.
Set up social media accounts. Believe it or not, while many HNWIs and UHNWIs might be Baby Boomers, they’re increasingly becoming social network savvy. Financial services companies need to follow their clients and learn to interact with them in their medium of choice. Get those social media accounts up and running. Examples include LinkedIn, Facebook and Twitter. Just having a social presence is not enough.
Each social network needs to be updated regularly. This is where financial services companies are falling short.
Create content.I’m not talking about research reports. Many financial services companies create or license this information. Instead, I’m referring to content that educates your clients and provides thought leadership regarding the issues they face. That can be anything from tax and estate planning to HNWI and UHNWI lifestyle.
This type of content is where the vast majority of financial services firms struggle. Most executives are incredibly skilled and have decades of experience under their belts. They know their industry and products backward and forward. They know their industry niche like no one else does.
The challenge is being able to take significant time away from their day jobs to consistently write enough high-quality content internally to power their content marketing program.
Investment executives simply don’t have the time, desire, or literary expertise to create, publish, share, and amplify content. The bottom line is that it’s not a good use of their time and doesn’t drive sufficient ROI.
Optimize your website. The website needs to be structured to efficiently turn visitors into prospects and effectively nurture existing clients. Whether it’s a newsletter registration, gated e-guides, and e-books, or even a simple contact form, visitors need ways to move through the sales funnel.
Implement influencer marketing. Once the website has been optimized and expert content is being published regularly, it’s time to start adding amplification, promotion, and influencer marketing capabilities to the mix. Content needs to be promoted and amplified beyond the confines of the website. That’s where influencer marketing can help.
Tempesta Media’s Chikoka™ lets companies create their own brand ambassador program of micro-influencers. These individuals can promote the company’s content on their social media networks.
This is an excellent way to quickly expand the audience, introducing new prospective customers to the company. Because of its scaling potential, influencer marketing is a great target vehicle for offline marketing dollars. The more money that can be allocated toward content promotion and amplification, the more quickly digital marketing programs will gain traction.
Nurture leads. Once leads start rolling in steadily, it’s time to focus on nurturing them to success. Nurturing is more than getting on the phone and having a conversation with a prospective client.
Most prospective clients aren’t going to make an immediate, knee-jerk decision and move some or all of their capital to another firm. There’s a certain comfort in staying with a known entity even if its performance is subpar.
It takes months of nurturing to build that relationship before they ultimately pull the trigger and switch. Even then, they may move part of their portfolios and wait to evaluate the relationship and results before they consider moving the rest.
This is where drip (or nurturing) email marketing comes into play. Most financial services should, by now, have some sort of a CRM or database containing all their prospects and clients. Now is the time to segment those prospects into various groups. Create content that focuses narrowly on each segment. Then start sending out that content regularly via email. If it’s done consistently, many prospects will develop increased brand affinity and ultimately move part or all of their relationship.
Content marketing managed services providers – filling the quality and scale gap
To truly scale these digital marketing channels, financial services companies need to have a trusted partner with industry expertise and experience. They need a firm that can scale up content without sacrificing quality. They need someone who can weave content, social and influencer programs together into a cohesive client acquisition and retention program.
These vendors need to be able to produce at least 16 new, quality content pieces each month. Why 16 or more? Because that’s the level of content production where companies begin to see a significant and sustained lift in new visitors, inbound leads and bottom-funnel results. It’s kind of like having a hot air balloon, but only filling it one-third of the way with gas and leaving the other two-thirds empty. The balloon is never going to get off the ground.
Financial services companies do a disservice to themselves and their clients by producing content less frequently. For the company, producing less means not gaining market share. For their clients, it means risking becoming invisible to the company … and opening the door to a competitor.
The financial services industry has been completely disrupted as a result of COVID-19. Now is the time for wealth management firms, financial advisers and others to quickly shift their marketing budgets from offline to digital avenues and take advantage of the changes that have happened in the marketplace. Developing a sustainable inbound marketing program is the key to success.
If implemented now and done well, these new digital marketing programs can drive results and become strategic assets for the business. But if not, competitors will do so. If they succeed, the barriers they create will make the costs of entry prohibitive. At that point, laggards are boxed into a future of an eroding client base and ever-increasing margin compression.