Attracting clients is hard work in the best of times. Increased competition adds to the challenge. One way to stand out is to make clear what product (or service) you offer and why an investor should consider your firm. In my experience, providing information in a straightforward manner is paramount. It’s easy for a saver to be overwhelmed by a seemingly endless assortment of products with different names, especially when many are already struggling to understand basic investment concepts. The American College of Financial Services gives Americans a grade of “F” in terms of understanding how to best prepare for retirement. In my experience, plenty of institutional fiduciaries likewise grapple with how to meaningfully compare two or more funds with overly complex structures and strange sounding or confusing names.
The importance of brand clarity hit home a few weeks ago when I excitedly showed my husband my toes, post-pedicure, decked out in a new color called Cranberry Kiss. He drily replied: “They look red to me.” A smart man with a PhD in finance, he does not follow beauty trends. He’s not alone. Others might simply look at the overall color and ignore attributes such as brand name or bottle design of competing items such as Big Apple Red, Sophisticated or Forever Yummy.
Customer indifference is not new. I’ve talked to investors who throw up their hands in despair when presented with too many choices. One lady recently told me that she did not want the headache of having to vet multiple funds so she picked the one with the name that seemed to describe the underlying portfolio strategy. Consumer research supports the notion that a buyer can have “too many” choices. From a service provider’s perspective, having your product lumped together with others is not ideal. On the other hand, having a name that seems “exotic” or is not self-explanatory can likewise lead to lost sales.
Understanding how to name a product is vital for a fund company, bank or insurance firm. While it may be tempting to rely on performance numbers alone to build assets, smart marketers and sales professionals know the power of keeping things simple, having a memorable and obvious product name and doing whatever they can to differentiate their product as a “must have.”