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Small fish in big pond or big fish in small pond? That’s the big dilemma facing most independent distribution firms as they confront growing competition in a rapidly expanding market. As mutual funds and capital markets become mainstream investment choices for Indian savers, there is a critical need for independent distributors to reassess their marketing and business strategy, if they are to make the most of the growth wave rather than getting swept aside by it. The right time to consider the “big fish in a small pond” strategy is when each of these small ponds are growing well. But, to become a big fish in your chosen pond, there’s a lot of work to be done – as some of the trail blazers among IFAs have so successfully demonstrated. |
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Think of the evolution of the medical profession over the last 3-4 decades. The pre-eminent position that your family doctor had in your lives has gradually diminished. The general physician who your parents consulted for all medical issues for everyone in the family has given way to a clutch of specialists that you consult. You go to a paediatrician for your children, to an ENT specialist for one part of your body, to a gastroentologist for another, and so on. And then you have the super specialists – specialists for particular fields of neuro surgery, diverse specialists for different heart related surgeries, and even sports medicine specialists who focus exclusively on medical needs of sportspersons. Who do you think are the more successful professionals today in the medical field – the good old general physician or the new age super specialists? Jack of all trades may not be the best way forward There was a time when distributors grew their businesses by taking on whatever business came their way. Many established distributors have an eclectic mix of clients – diverse sets of HNI clients – businessmen, professionals, corporate executives, a wide variety of retail investors – salaried savers, retired investors, small businessmen, and then a clutch of trusts, societies and clubs for good measure. Going forward, with increased competition and more and more sophisticated propositions coming into the market place, being a generalist may not be the best way to build your business over the next 10 – 20 years. Its perhaps time to identify which specialist pond you want to move into, and then build a proposition that makes you the best in that pond. For distributors who are starting out now, it is almost imperative to pick your specialization right away. For established players, you perhaps have the luxury of maintaining the existing franchise even as you devote incremental sales and marketing efforts in one area of specialization. Its time for focused niche marketing, especially for independent distributors and advisors. Niche marketing is way beyond tactical segmented initiatives There is an important distinction we must make here between sales strategies targeted at specific customer segments vs a comprehensive niche marketing strategy. Most distributors have tried sales strategies that focus on specific client segments – doctors, lawyers, young salary earners, retired professionals, SMEs and so on. But, what your firm is, doesn’t change fundamentally – you still remain a “generalist”. A niche marketing strategy is vastly different – it’s a proposition where you carefully choose one particular customer segment as your exclusive target audience. You work towards understanding this segment’s needs and circumstances better than all others. You work towards providing solutions to this one segment’s unique issues, with the help of your specialized knowledge and insights on their specific issues. You hold out to be an expert exclusively catering to this one segment’s financial needs. And you grow your business – perhaps much faster than you would otherwise have done – because you become the “go to” advisor for all investors in that segment – not just in your city, but across geographies. You grow more rapidly because the quality and quantity of references from this homogenous group of investors come in much thicker and faster than you would get in the traditional generalist mode. Niche marketing trail blazers within the IFA space Let’s look at a couple of examples of independent distribution and advisory firms that have succeeded in a big way with a sharply defined and well executed niche marketing strategy. Hum Fauji Initiatives An army man himself, Colonel Sanjeev Govila has built a rapidly growing super specialist financial advisory firm that addresses the financial needs of army families. He understands the world of army men and army families, perhaps better than most. With his intimate understanding of the lives of army families, his firm is able to provide solutions that address their deepest fears and insecurities, their stated and unstated aspirations. He is invited by army groups across the country to educate faujis on personal finances, which has given him a rapidly growing client base from across the country. For our faujis, Col Govila is fast becoming the “go to” man for all their personal financial needs. What Col Govila has done – by consciously positioning his firm as an exclusive super specialist for army families – is to have put his firm on a huge and sustainable growth path. He chose his pond, has become a big fish in his pond and is growing rapidly along with the growth of his pond. Keynote Consultancy, Rajkot : Can one imagine a 600 cr AuM in Rajkot? You can, if you are based in Rajkot but attract clients from literally all over the world. Rajeshbhai is a super specialist in the NRI segment. He understands the laws pertaining to NRIs, their taxation, their remittance rules and so on, better than most. He has a team of legal specialists who only cater to NRI’s legal and financial issues. Not surprisingly, these clients are happy to take investment advice as well from their trusted legal, tax and financial advisor. He travels across the world, conducting seminars for NRIs on legal and tax matters, often helping them solve complicated inheritance matters and remittance issues. And he strongly advocates investing in India – in equity funds as well as in NRI bonds and deposits. Rajeshbhai – like Col Govila – has chosen his pond, works almost exclusively to serve only this pond, has built up tremendous expertise in financial matters relating to his chosen pond – and has put his firm on a rapid growth path by growing along with this pond. Key success factors There are some common threads that run across both the stories of these niche marketing champions. They understand the needs and circumstances of their chosen client segment better than most. They bring rich knowledge and insights into creating solutions that cater to the specific needs of their chosen segments. They are able to scale up seamlessly beyond the geographic limitations of their locations, due primarily to their expertise being referred by a homogenous client segment across the country and indeed the world. Technology enables them to engage seamlessly with clients from diverse geographies, who seek their expert guidance. They have built strong sustainable moats for their businesses, based on the significantly superior propositions offered to their respective customer segments. They have far less to worry about in terms of competitive pressures. They have become big fish in their respective ponds. And the demand for their services in their ponds is growing rapidly, putting them on a high growth path. Way forward for established distributors and advisors Distributors who have an established franchise are unlikely to consider turning overnight into niche market specialists. But, there is significant merit, even for these established players, to reflect on whether its time for them to pick one pond where they will devote most of their future sales and marketing energies, in an effort to build rapidly growing businesses with strong moats. It begins with some introspection on what your natural skills are, where your deepest insights lie and which client segments can benefit most from your strongest skills and insights. Among the clients you have acquired in recent years, is there a pattern in terms of a homogenous set of client characteristics or features? Have you developed deeper insights on any one set of investors due to heightened interactions with this segment in recent years? There can be umpteen ponds that can be created in the field of distribution and advice. Lets take just one super specialist example to make the point. Consider creating a specialist proposition for retiring Central Government employees. Understand the service rules, pension rules, commutation of pension rules, health insurance benefits for retired officers, pay commission trends and all of the variables that go into financial planning ahead of and after retirement for Central Government employees. Talk to a large number of Central Government employees among your clients, your friends, your friends’ friends. Do enough research to enable you to come up with a checklist of unique challenges and opportunities that Central Government staff face when they move from employment to retirement. Find out how they addressed these challenges and seized these opportunities. Ascertain what “best practices” you can put together from this exhaustive research exercise. You are now ready to create your bespoke solutions – specific to retiring Central Government employees. Put together your marketing kit that speaks the language of this client segment. Put out a set of FAQs that establishes clearly the depth of your understanding of their unique needs and circumstances and some smart tips on how to handle them wisely. Put together a crisp investor education presentation that captures the essence of your insights – which you know will be very valuable to your target client base. Start executing these investor education sessions, get positive feedback and use this as reference to make inroads into large Government establishments in your city. Create a crisp video of your specialised proposition for this specific customer segment, including clips of some of your education sessions and positive feedback received in them. As you keep growing your customer base in your city from this client segment, let your clients know about this video – send them a link. If your specialist proposition is genuinely strong, you will see your video link being happily forwarded across the country. Central Government officers are spread literally across the country. You can get onto a national footprint faster than you would have ever imagined. That’s just one example. There can be numerous. The key is to first internalize the need to make that shift from being small fish in big pond to big fish in small pond. Then go about identifying your pond. Create your pond. And then own it. SOURCE: WEALTHFORUM.COM |
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