The Power of Analytics: Harnessing Data to Improve Your Marketing.
By Daniel Jason.
Hedge fund asset raising is tough: competition is high, money is tight and there are hundreds of different options available to an investor. On the flip side, managers are in a far better position to raise AuM now than ever before, through the combination of hedge fund marketing legislation in Europe, the US and technology like ‘big data’ analytics.
In the States, the dust has finally settled from the Jumpstart Our Business Startups (JOBS) Act and managers know where they stand: the SEC and CFTC have both given the legislation the nod of approval and the jokes about high-end super bowl ads for hedge funds have more or less subsided. In Europe, the Alternative Investment Fund Managers Directive (AIFMD) has come into force, meaning any unregistered funds that accept European assets must rely solely on reverse enquiries.
These pieces of legislation combined have created a marketing ‘Goldilocks Zone’ for hedge funds, where their combination is forcing managers to think about both their outbound marketing – broadcasting their ‘message’ to qualified investors – and inbound marketing – creating a strong brand that can prompt reverse enquiries.
It’s too early to say how deeply the JOBS Act and AIFMD will change hedge fund marketing – I don’t think we will be seeing multi-million dollar hedge fund ads on the ‘Jumbotron’ very soon and managers will continue to want to raise assets in Europe – but both pieces of legislation are prompting a more fundamental communications change in the industry.
For the first time, managers are creating digital marketing strategies, seeing the value in setting up new, informative websites around their strategies, sending emails around their thought leadership, having fund managers talk generally about their strategies in videos, optimising firm LinkedIn profiles and thinking about online advertising in institutional facing publications.
Underpinning this new marketing activity is analytics. Managers can track how investors move across digital channels – engaging (or not) with marketing emails, websites, LinkedIn, Twitter and anything else set up – as they search for information on a firm’s team, strategy, differentiators and more. They use their mobiles, laptops, iPads, and PCs to do so, spending an average of three and a half minutes collecting the information from pages they need and exiting pages they don’t need in less than half a second.
Trends start to emerge from the data: which pages, reports or strategies do investors value? What are you emailing them that they don’t value? What are they using your website for and how did they get there to begin with? Who are these investors and do you know them already? Technology makes it possible to capture this engagement across email, website and other platforms and automatically synchronise it with your existing CRM, so investor activity is recorded against an actual name. This allows managers to do more of what works and less of what doesn’t. It also allows for highly targeted communications with specific investors and on a larger scale investors can be segmented into different profiles, showing which ‘type’ of investor responds better to what.
This technology has existed for a number of years, but managers have only recently been able – maybe willing – to utilise so-called ‘big data’ analytics. This is because permissive legislation like the JOBS Act made general solicitation – through websites, video, social media, digital adverts and more – legal for hedge funds and therefore the collection of all this data possible.
Knowing your audience is the cardinal rule of both sales and marketing. Combining what managers already know about their prospects with good data, can be the difference between identifying and growing a lead or losing out to competitors. Similarly, combining good data on existing investors with what you already know about them allows managers to cross sell or replicate success with other targets.
If managers don’t fully understand why they get the results they do, it’s impossible to replicate success and avoid failure. Investment decisions aren’t trial and error processes and with the current legislation in place and technology available, marketing doesn’t have to be either.
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