For most investment management firms, the top line goal is to grow their assets under management.
Here’s the problem with using AUM growth as the primary measurement of the ROI of a marketing strategy:
It is a one-dimensional, pass/fail metric that doesn’t reflect the values most firms hold dear.
To wit: few firms claim to have a business philosophy of “asset gathering.” Growth? Sure, but most firms I know run from the “asset gathering” label as fast as they can.
Sales ≠Marketing: Goals vs. Outcomes
As I’ve noted before, sales and marketing are separate functions whose goals should be aligned, but distinct. And in that context, the best KPI for investment management sales should be AUM growth.
Insofar as marketing is concerned, however, AUM growth should be viewed as an outcome of a carefully-considered investment management marketing strategy. For firms that successfully meet and exceed their goals, AUM should rise.
AUM should thus be seen as a by-product and not as an end unto itself.
So if we take AUM off the table as a marketing goal, how should investment management firms measure the success of their marketing strategy?
I’ve written about the SMART goal setting methodology before, and for good reason: it can help firms to do a more effective job of quantifying and measuring their goals.
SMART is an acronym for:
“Increase our visibility” is an example of a terrible, non-specific goal. Instead, use something like, “Double our leads generated over the next 18 months.”
Lead growth is easily measured. But to really leverage the power of the methodology, firms should note how they plan to achieve that goal by using “sub-goals; strategies which a firm will need to meet in order realize their top-line goal:
“Blog 2-4 times per week.”
“Generate 1 marketing white paper per month”
“Send 2 marketing emails to our distribution list per week”
Have you accomplished the sub-goals that will help you realize your primary goal?
If a firm typically generates 10 leads per month, is 20 leads per month possible? That often depends on the investment niche in which a firm operates. The more common the strategy and buyer persona, the easier it would be to achieve.
"Attainable" sets the outermost limit of what’s possible.
If a firm has never generated more than 10 leads per month, even in its best month ever, is 20 realistic? Be careful to manage expectations properly.
The more aggressive the goal, the more flexibility a marketing team may need. In our example, if we agree that doubling leads is an aggressive, yet realistic goal, then 18 months is a nice specific number that offers the marketing team the needed time to develop and execute the campaign or strategy, and enable it to gain traction in the marketplace.
I think the most important takeaway here is the idea of goals versus outcomes.
Many, if not most, small- to mid-sized investment managers have an executive in charge of “business development” or who manages a combined sales & marketing function.
Small-ish firm, modest budget, lean infrastructure – I get it. That’s an apt description of the DQCOMM operation as well.
For those firms whose operations I just described, the management team has to hold those combined sales & marketing teams to a dual standard – broad awareness and lead generation-type goals must fall to the marketing side while managing the sales cycle must be seen specifically in terms of the sales function… even if they are headed by the same person.
When the lines between sales and marketing become too blurred, when there is too-strong a focus on AUM growth as the be-all and end-all for the sales and marketing team, they can easily compromise the clarity and the fairness by which a firm evaluates success.
Marketing with AUM growth as the primary goal can lead to messaging and an overall approach too heavily weighted on the “promotional;” rather than the helpful and persuasive.
Viewing AUM growth as an outcome, rather than a goal in and of itself, allows marketing teams to stay focused on those things over which they exercise the most control.