Going back through the eons of time, I can recall a number of the key marketing principles that were ground into me time and time again; the importance of research and knowing your customer, understanding buyer behaviour and the role of the four P’s (product, price, place and promotion) among others.
However in my day-to-day work with financial advisers today, the principles that I find myself returning to more and more to address the challenges of advisers are Segmentation, Targeting & Positioning (STP). Many advisers today recognise the importance of these strategies as they attempt to make best use of their limited marketing resources, be they time or money or both.
So to start this 60-second marketing lesson, here is a definition of each, as set out by Philip Kotler, the grandfather of marketing education.
- Market Segmentation: Dividing a market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes.
- Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
- Market Positioning: Arranging for a product (or service) to occupy a clear, distinctive and desirable place relative to competing products (or services) in the minds of target consumers.
What’s happening in the financial adviser market in Ireland?
Many financial advisers realise that a “one size fits all” proposition just doesn’t cut it any more. Either for the client who is looking for more than a generic service, or for the adviser who cannot profitably or successfully deliver the same service to all clients irrespective of their value, characteristics, needs etc.
As a result, many advisers are undertaking segmentation exercises, analysing their client bases and potential markets, most often by value. Others are also segmenting but by different dimensions – some are focussing on SME’s, others on specific professional groups.
A smaller number are then going on to specifically target sub-sections of their client bases and target markets at the expense of other groups – for example focusing all of their attention on clients of a certain value. In this case, some are even offloading their lower value clients to truly target their desired groups. Others are identifying specific occupations that they will target and also those that they won’t. And then sticking to this!
Finally, a relatively small number are taking that final step of actually positioning their business and all of their communications to appeal directly to their target market, even at the risk of alienating other potential customers.
Why STP is so important for financial advisers today
It’s this final step of having the courage to position yourself within a specific target market (or even a niche) that is a step too far for many advisers. They struggle with the thinking that while business might be quite tough today; it might actually be easier if you narrow your focus! How does this make sense?
If you offer a generic service to clients, they will recognise this. They won’t feel any particular connection with what you do, as it is not targeted at them. Instead if you have a clear target market and all of your communications are aimed with that group specifically in mind, the customers within that group will connect with your messages and are more likely to view you as a specialist who is out to serve their specific needs.
There are lots of very good financial advisers operating in the Irish market. At the end of the day, how are you going to stand apart from the crowd if you offer a very generic service?
Is a niche positioning viable in the Irish market?
My view is that it is 100% viable. Indeed you can build an extremely successful business based on a niche strategy! I’m not saying that it’s easy – you need to first of all very clearly and carefully segment your potential markets. You then need to decide the markets that you will target and have a clear strategy for building presence and scale in these markets. And finally you need to relentlessly build your positioning and re-affirm it time and time again.
I’m a believer and would argue that I practice what I preach in this area! There are 1,000’s of marketing consultants out there but not many that position their business specifically around meeting the needs of the financial adviser community. I’m really happy that I’ve pitched my tent there, attempting to meet the needs of a community that I admire and enjoy working with! Thank you all for welcoming me into your world and helping me to grow my business! I passionately believe that you can do the same within your chosen markets.
Do you have any views on this topic? Is a niche strategy viable? What are the challenges you face in running with this approach? All your comments as ever are very welcome.