The Mutual Fund Imagination Gap
By Jennifer Connelly
Originally appeared in Money Management Executive.
"Inventions have long since reached their limit, and I see no hope for further developments,"
Julius Sextus Frontinus, Roman engineer, 10 A.D.
This quote seems completely ridiculous when looking at it over 2,000 years after it was said. However, it illustrates a mentality that was, and continues to be, woven into the DNA of creativity and using new ideas to build brands.
Frontinus' statement is pervasive throughout the history of innovation. Even Harry Warner, president of Warner Brothers Studios famously asked in 1918, "Who the hell wants to watch movies with sound?"
Many fund firms still retain this defeatist and short-sighted view, especially when attempting to build sustainable connections to their audiences.
If you ask 100 people which companies take an innovative approach to both the products they make and the community of rabid brand enthusiasts they foster, then more than likely the majority will mention a certain technology company that's named after a common fruit or the coffee chain with the funky green logo.
While many firms won't publicly admit that they are out of ideas, using communications approaches that rely solely on the old methods - regardless of their effectiveness - or copying those strategies used by competitors is akin to acknowledging that the well of imagination has run dry.
Imagination is an intangible metric; the black sheep of a family where efficiency, maximum utilization of available resources and return on investment receive the lion's share of attention.
Take website banner ads. These were supposed to revolutionize advertising, which led to a gold rush among technology companies to gain a greater foothold in the market.
The company that has become synonymous with search won, while others licked their $6.2 billion wounds in defeat. The winner realized that ads needed to be tailored to the individual, rather than the masses.
However, while some industries experience success with them, overall banner ad click-through rates in the U.S. are a paltry 0.10 percent according to data from MediaMind. Even in the face of a tactic that works one out of one thousand times, the safe response from companies who continue to pursue strategies heavily reliant on banner ads is that they raise awareness.
Unfortunately, awareness rarely translates to action. Just look at smoking. By now, everyone is aware of the health risks and prices for tobacco products increase every year. Yet according to the Centers for Disease Control, smoking rates are decreasing at a rate far more anemic than the government hoped. Awareness isn't the problem, the imagination to communicate a solution is.
This isn't to say that fund firms lack imagination when they build their companies or create new products. Often, it's this imagination that fills a previously unmet need or creates a sea change in a particular industry. But communicating that imagination still lags.
Mutual funds become shackled by either the safest or most outlandish approaches. Education is one of these safe bets. Firms often believe that an education gap exists in their industry and it's their role to bring an issue to light and present themselves as the solution. Often, these education gaps are manufactured, backed with little to no research. Also, advisors and investors are smart enough to know when they are being sold under the guise of education, leaving them with the impression that they are being talked down to.
Then there's thinking "out of the box." Firms are quick to throw a Hail Mary to make a big splash when, in reality, there's nothing wrong with the box. In fact, inside, or on the periphery of the box is where their audience is.
There are no shortages of great ideas that can come from working within or on the edges of the box. Take Promark Financial, for example. The company markets life insurance and retirement planning. Several years ago, they took the traditional approach to seminar selling to a new level by launching a series of Promark Kids Workshops. Fifty-minute sessions are held with 12-15 parents in an interactive, engaging environment. At the end of the session, the organization gets $500. There are no strings attached and no intrusive follow-ups.
This approach flies in the face of the traditional ways companies in their industry do business. Promark Financial is giving money away to strangers who may not ever become customers. Yet the results have been remarkable. An average nine out of 12 participants request follow-up appointments, which represents nearly double the standard for industry seminars. The company didn't diverge from who they are or what they do, but found a way to successfully work on the edges of the box to both educate and drive action from their audience.
Imagination isn't dead, but because of its intangible nature it can be terrifying. There are a lot of great mutual funds out there that simply fail to communicate their greatness because of the inherent need to focus on return on investment, rather than the return on imagination. When it comes to closing this gap, it's not a matter of "if you build it, they will come," but rather, if you bridge it, they will act.
Tags: Branding, Mutual Funds, Brand Awareness