In the first part of his article on brand and trust in the robo-adviser market, Simon Bussy, Principal Consultant at Altus, argued that for the small disruptor brands – the ‘Davids’ of this article – building a scale business by only targeting the end consumer is an expensive and difficult business – diversification is key. Diversification by target market, by breadth of product and service offering, by route to market.
For many small disruptor tech / investment firms the most obvious survival tactic is to convert to a B2B model, and aim to become the outsourced white label solution for adviser firms, banks, building societies, platforms and / or life companies.
The second part of his article below considers some of the key marketing strategies being deployed by some of the new ‘first gen’ kids on the block, the Digital Disruptors – either to target the D2C end consumer, or alternatively, potential B2B partners.
Robo marketing strategies
Given their digital form, robo-advisers typically use the internet, such as SEO, social media, and blog content, to promote themselves and draw potential customers to their sites. Some robos – such as Nutmeg (through Nick Hungerford), Money on Toast (Charlie Nicholls), Parmenion (Richard Goodhall), Wealth Wizards (Andrew Firth), and Moo.la (Gemma Godfrey)– very effectively use a senior executive to ‘front’ the brand in the media (typically radio, press comment, industry events).
Other firms, such as Personal Capital and MoneyHub, use free aggregation tools to attract potential investors to their sites, with the aim of converting them into paying clients.
Traditional marketing in an online world
Some firms are adopting a more proactive ‘push’ approach, marketing direct to the end consumer, a great example being Nutmeg’s widespread advertising on the London Underground and internet, which is not dissimilar to Betterment’s use of advertisement ‘toppers’ on taxi cabs in New York and San Francisco, or Personal Capital’s cleverly worded ads on the side of San Francisco buses.
Measuring success is critical. Betterment advises that around a third of new customers come through marketing (podcasts, websites, taxi top ads), another third from PR/media/content, and the final third as a result of referrals from other Betterment customers. In the first 2-3 months of their taxi toppers campaign (October to December, 2014), they reported that sign-ups using mobile devices jumped to 25% of total sign-ups from around 5% the previous year.
Embracing social media
Another firm to really embrace digital marketing and communications – and well as customer service being available through multiple channels – is the Italian robo proposition, MoneyFarm, which uses Facebook, Google+, Twitter and LinkedIn, as well as having a Pinterest presence. They’ve also experimented with national TV advertising. Client support can be accessed by telephone, Skype, email and webchat, and call backs for consultations can be scheduled.
Whatever the approach, the aim is the same – to target and engage potential customers with their message, to demonstrate their unique ‘value add’, and to evidence their expertise and stability, their competence to protect client data, and their treating customers fairly values and principles.
A small number brand new start-up firms we’ve spoken to have stated they will follow a ‘Build it and they will come’ approach – if the proposition and services are good enough, customers will come. A ‘pull’ strategy. Whilst admirable, based on the experiences of others, we would question how long this approach is sustainable?
For the time being, despite the financial scandals, customers’ trust – and money – will, we suspect, remain with the well-established financial organisations. – the ‘Goliaths’. But these organisations need to start working much harder – and quicker – for their customers, whose heads are beginning to be turned by alternative ‘David’ propositions……especially the digital native younger generation, who are clearly ready for lower cost, easy to use alternatives, and quite happy to look to non-financial brands to get it.
What do you think? Can the smaller disruptors engage with sufficient customers through a D2C model to be successful? Or do you agree they’ll need to diversify?
Which type of organisations do you think will be most successful – the Digital Disruptors (the original robo-advisers), the Big Brands (the banks and building societies, the life companies, the well-known asset managers), or the Data Giants (Google, Amazon, Facebook, Apple), perhaps in partnership with other financial services brands.
Let me know – be great to get some alternative views on where you think this fascinating market is heading….
