A Rich Message in the Stars

For the high net worth community, says Caroline Garnham, the concept of ‘constellation marketing’ means making your customers available to other companies to market to – in the knowledge they will complement each other and not compete.
 
In these times of austerity, should wealth managers be cutting down on their marketing budget or increasing it?
 
Many wealth management businesses spend huge sums of money on marketing, including sponsorship, PR projects, websites, brochures, seminars, air travel and adverts, with little attention to measuring the success of this expenditure in acquiring new clients or retaining existing clients.
 
A study in 2011 by consultancy MDRC reveals the average cost of acquiring a high net worth client has risen 71% to £13,572, up from £7,930 in 2008. The rise, the study reports, is down to a sharp increase in operational inefficiencies, which added 31.3%, while rising salary costs added a further 29.7 %.
 
The report, UK Wealth Management: Client Acquisition Costs, also reports few wealth management businesses have a clearly articulated client acquisition strategy and generally fail to understand the costs.
 
What is clear is that social media marketing makes traditional budget headings outdated and unhelpful. Can evenings at the opera or days on the golf continue to be justified, other than as nice jollies for the staff? Most marketing done by relationship managers or partners is seen as networking, but as the use and value of LinkedIn becomes more obvious, can the cost of acquiring these networks offline be justified?
 
Organisations relying on face-to-face networking should urgently ask whether the expense of air travel, hotel bills and lost man hours out of the office is really justified.
 
When it comes to embracing social media, however, the first thing to remember is that it needs to be understood – and an effective organisation needs a tailored social media strategy.
 
And where it’s best practice that relationship managers should be trained to use LinkedIn, care should be taken with Twitter.
 
Twitter, used properly, raises name and brand awareness just as effectively as a good PR campaign and for a fraction of the cost. However, just as quickly as it can enhance a company’s image, it can also damage the brand’s reputation.
 
Negative tweets need to be monitored and addressed immediately. For a brand to be enhanced by the use of Twitter, tweets must be carried out from one central hub; must be in a clear and consistent voice and the message understood and repeated.
 
A professional firm should not only use Twitter and LinkedIn to raise awareness of the relationship manager or partner, but also for driving traffic onto the company website.
 
The US is leading the way in utilising social media. Morgan Stanley has trained its relationship managers to use LinkedIn effectively to make introductions, get meetings in the diary and keep up with contacts. Financial companies in the UK should start copying their US counterparts now or risk missing out on the cost-effective, time-efficient advantages of social networking.
 
Similarly, company websites should action ‘analytics’ as a matter of course for wealth managers to find out just who is visiting the firm’s site, how long they stay and the articles being read. Feedback should also be sought on how easy the website is to navigate; how well it portrays the organisation; the quality of the information and layout, and the services being offered.
 
It’s key too that relationship managers and partners should become familiar with their websites, so that they are in a better position to cross sell services and find out what is going on within their organisations. For having your own website, like having your own brochure, is only a cost-effective marketing tool if it’s visited and read by the target audience who ideally obey the  ‘calls to action’.
 
A traditional PR campaign centres on crafting your message to match your target market and using the right media to reach it, whether B2B or B2C. If you want to target wealth managers’ marketing directors, for example, this magazine is ideally positioned with its readership of marketing decision makers. However, if a wealth manager wants to target a prospective client, then the FT is a more suitable medium.
 
When it comes to marketing, there is a growing realisation of the power of aggregation and the concept of ‘constellation marketing’.   It means a company’s marketing message placed with similar messages from similar companies (…yes, competitors!) because that is exactly where the target audience go to compare brand values, statistical success, relevance of case studies and effectiveness of  communication.
 
The benefit of constellation marketing was proved by Luciano Benetton. He placed five shops in five different locations in one town and five shops, with slightly different products and names in one street in another town of similar size and demographics. The shops in the one street sold twice as much as the shops in five different locations.
 
Family Bhive, the social networking site for high net worth individuals, found a similar response when it surveyed community: 91% enjoy the aggregation of expert opinions. For them it matters not that two businesses might be covering the same material, just as two shops next to each other may have similar stock. The fact that the articles were from different experts was important. Similarly, whereas the industry average openings for newsletters is between 10 and 15 %, for the Family Bhive newsletter, the openings are closer to 35 % and rising as they contain opinions and notices of events from various corporate clients.
 
Other research by Family Bhive was similarly informative and again proved the power of aggregation. The ultra high net worth community enjoy exclusive events where they receive a high quality level of service and meet those with similar tastes and lifestyles. A good example was the private pre-auction tour of Christie’s modern art sale items by the Head of Contemporary Art at Christie’s earlier this year, only available to members of Family Bhive with a verified personal wealth of £5m or above. They felt comfortable to make connections and their enjoyment was palpable.
 
Little wonder that the Family Bhive research shows that 94% of individual members enjoy the events hosted by our corporate members. Furthermore, many of the high net worth attendees ‘connect’ with their host at these events; most will have researched their host on Family Bhive and 12% will engage in a business dialogue.
 
The research also reveals that the UHNW community wanted to get information of luxury goods and services.
 
However, they like choice, which is why aggregating stellar brands in one digital platform, ‘constellation marketing’, is so much more effective than ‘affinity marketing’ which normally combines only two brands.
 
With the digital revolution now in full swing, constellation marketing on a digital platform will help those stellar organisations to buck the austerity trend, kick out old habits and blaze a trail that others can only look at in envy in the years to come.