“The brown? Or the pink?” According to a recent FT article[1] it’s one of the first questions that digital interface designer InvestCloud asks wealth managers when discussing the two extremes of the website ‘look’ it provides.
The article goes on to explain that ‘brown’ features very traditional imagery while ‘pink’ is more contemporary, or at least …less serious with cartoon rockets etc. Brown is for those wealth managers whose client base is more baby boomer, while pink is designed to appeal to millennials.
While the language of baby boomers and millennials is easy short-hand, brown vs pink reflects choices … there’s a lot more to it than just a colour palette – the answer to the ‘brown vs pink’ question should be the culmination of a ‘strategy conversation’ … covering the key questions: ‘where to play’, ‘how to win’ and ‘how to configure (to win)’. These are the three pillars of an effective growth strategy.
Companies that are serious about growth are serious about marketing – putting the customer at the centre of everything they do BUT in a world of multiplying customer touch points and rapidly changing customer behaviours … becoming, and staying, customer focused is increasingly difficult to do.
In financial services different individuals will attach different weights to varying core human emotional drives, and these drives influence how people think about their wealth, financial freedom and financial literacy – and hence can form the basis of a financial services segmentation (and contribute to the ‘where to play’, ‘how to win’ and ‘how to configure’ answers). The three constructs that drive financial decision-making, attitudes and behaviour are:
Perspective: how people view and connect with the world – whether they have a more optimistic/worry-free, as opposed to a more pessimistic/more anxious, view of the world, including their view on responding to constant change.
Intent: where an individual is in terms of the challenges and goals they set. It embraces the congruence they are trying to achieve and the creative expression they want in their lives, including the need to support, care for and contribute to others.
Command: confidence, control and competence, whether people see themselves as being driven by events or able to manage their lives and contribute to others.
We then identify segments based on perspective, intend and command which inform our understanding of how client expectations differ, what different client experiences are various segments looking for, how their investment objectives differ, how they wish to receive and process information etc. etc.
Why is this important? Well the world that wealth managers have known is changing. Research from financial services journal ‘Investment News’ (July 13, 2015) indicated that $30tn is expected to pass from baby boomers to Generation X and on to millennials – “customer segments that many investment advisors do not understand because they don’t know how to connect with their clients’ children . . . who may be technology-savvy and expect a very different service experience than their parents did”[2]
Customer segmentation helps companies use finite assets to “over-invest” in high value customers whose needs align with their capabilities … each customer segment represents a different opportunity, has a unique set of needs and requires a different value proposition that resonates
‘Where to play’ throws up questions for wealth managers to address, such as
- What market opportunities exist or can be created that are both attractive and achievable?
- Which segments of customers should we focus resources on – today and tomorrow?
- What type and amount of market activity resides in each segment?
- What is our portfolio of business and the relative weight if investment?
‘Where to play’ sets a clear and structured strategic framework – to identify, evaluate and focus on the right market opportunities.
Once we have a view of the landscape and can identify the value generating opportunities within it, we can ask the ‘how to win’ questions.
- What should the company do for each set of customers?
- What do individual segments do (need, want or believe) and why?
- What is the product offer to target the attractive opportunities?
- How should we present that product offer in terms of a client experience?
- Through what means or channels, and with what message (brown or pink)?
And finally how do we configure our internal systems and processes to deliver the value generating offer and experience? ‘How to configure’ may suggest transformation of our channel or go-to-market strategy, product or process innovation, business model innovation or a change in our marketing communications systems.
Advisors unable to prove they are effective at establishing relationships with clients’ children and serving the next generation will find their client base inevitably erodes and as a result their business value falls. This is why – where to play, how to win and how to configure are such important strategic questions.
“InvestCloud says brown may still be the right choice for traditional wealth managers, but it argues that it is towards the pink end of the spectrum that more need to move — in order to present a different persona to a different generation of investors”
But importantly you can’t run 2 personas in parallel without causing dissonance – i.e. confusion in the mind of the client as to exactly what you stand for. Strategy is about making these choices – neatly summed up as ‘pink’ or ‘brown’
[1] http://www.investmentnews.com/article/20150713/FEATURE/150719999/the-great-wealth-transfer-is-coming-putting-advisers-at-risk
[2] https://www.ft.com/content/48eeceb4-538f-11e8-84f4-43d65af59d43
