Marketing Your Hedge Fund: The Big Picture

What follows is an overview of the general steps you will need to take to successfully market your hedge fund. Each step is quite involved, showing that hedge fund marketing isn’t exactly a simple process. But the fact that the overall process is malleable means that it can work for any hedge fund, big or small. Follow these steps for hedge fund marketing success. Later, I will delve into each step more deeply.

Plan Your Overall Marketing Strategy before Running Any Tactics

This step sounds obvious, but it really isn’t. It’s way too easy for a hedge fund CEO to tell the marketing department “we need to start doing social media.” The marketing department will correspondingly begin running a social media campaign. But is it integrated into the overall marketing strategy? Usually not.

It’s best you have a road map of the path your investors will take from the first impact you make on them to the final pitch that brings them aboard. Only in this way can you know whether a specific marketing tactic falls in line with your overall marketing system.

Define Your Ideal Investor

Before you design any marketing materials, you need to know who your ideal investor is. It is not “anyone qualified to invest in hedge funds.” It must be a specific type of person or institution. Define him. Draw him. Interview him in your mind.

Here’s what’s counterintuitive about this: The more you know about that one ideal investor and the more you market specifically to that one investor as opposed to a general audience, the more of the investors you will get, total, both including and excluding that ideal investor.

Think about it: Who does Apple market its technology to? Apple commercials feature hip, young adults, ages 20 to 30. Yet who buys apple products? Both the hip and unhip. Both the young and old. If Apple marketed to everyone and his mother, they wouldn’t have been able to establish them as the hip alternative to standard technology.

You need to be more like Apple if your goal is to attract as many investors as possible.

Create a Database

You need two databases, actually: one for prospects and one for investors. By capturing the information of every prospect who passes you by, whether or not he invests in your fund, you give yourself the advantage of reestablishing contact with him.

• For prospects, this means remarketing to them.
• For investors, this means strengthening your relationship with them.

Both tactics are good for business. Finding a way to capture information and store it in a database in an integral part of your marketing strategy.

Form a Tribe

If you don’t want your hedge fund to become a commodity, you must form a community around it. Doing so requires a frame shift. You must differentiate yourself from other hedge funds so that the tribal culture is something like “us against the world (of hedge funds).”

Forming a tribe is not easy if you have no way of differentiating your hedge fund, which is why proper positioning is crucial. But once you have that positioning and have formed good relationships with your initial investors, you are well on your way to building a tribe.

An established tribe is somewhat like the holy grail of marketing. It’s like an option contract that never expires: Your tribe’s members will naturally market for you. For free.

A hedge fund without a tribe is a commodity. A hedge fund with a tribe is a cultural phenomenon.

Nurture Your Tribe

A tribe requires upkeep. But all your upkeep activities will show enormous ROI. This is why nurturing your tribe is a critical part of a successful marketing strategy.

You nurture your relationship with you tribe just as you would nurture any other relationship: communication.

For a hedge fund, daily communication with clients is not necessary, making this task rather easy for you. Monthly to biweekly communication is enough.

Communicate through meaningful media. Avoid email in favor of physical mail. Avoid tweets in favor of phone calls. Be interesting. Be educational. Be useful. Be human.

Create Snares

Snares are bait used in inbound marketing to capture prospects’ information, which you will put into the database. Snares are usually content or valuable physical gifts that would interest your target investor. You make the exchange of a snare for information.

Some good ideas of snares include:

1. Educational material: books, online guides, and courses.
2. Informational access: software and databases.
3. Discounts: commission-free trades, free consultations, and reduced-price membership programs

Once you have your snares, place them in areas in which your ideal investors will be turning their eyeballs:

1. Websites.
2. Magazines.
3. Newspapers.

The correct media plus a snare can give you a sizeable database within a month, allowing you to jumpstart your hedge fund startup.

Content Marketing and SEO

Face it, no business can be optimal without an online strategy. Content marketing and SEO gets you free traffic. With the correct type of content, much of that traffic will contain members of your ideal demographic.

Use your content marketing and SEO to bring prospects into an area with your snare, allowing you to add them to your database.

Good content marketing and SEO is often the hardest part of building a successful online presence. Either hire an in-house marketing department or outsource these tasks to an out-of-house marketer who knows what he’s doing. Be sure read the articles on his website before you even consider hiring him for content marketing.

Copywrite, Don’t Write, Your Marketing Materials

Successful marketing materials are not written by people deep inside the hedge fund. Often, knowing too much about your own business keeps you from understanding how a prospective investor will view your fund.

This is why you need a copywriter to write your marketing material. Unlike most in-house writers, a copywriter’s key focus is to get a response from your marketing material. Copywriting is a skill that takes years to perfect. So no matter how much you believe you can take care of the writing in-house, take the safe route and hire a copywriter who can guarantee results.

Tip: Most high-level copywriters ask for royalties in addition to or in place of fixed fees. They do so because they know their copy generates results and want a piece of the pie.

Define Your “Black Box”

Don’t throw everything out there. Keep some of your hedge fund’s investment strategies behind a wall. This “black box” strategy stimulates curiosity, making interested investors reach out to you to request more information. The act of investors contacting you before you contact them is exactly what you want.

But note that there’s a difference from stimulating creativity and purposely being vague. Clarity is important in all your marketing and copywriting. Present yourself in a way that hints at there being more to your strategy – that you have some secrets up your sleeve you’re not revealing – without specifically saying you have secrets.

For example:

Bad: “We have a secret arbitrage strategy that can make you lots of money.”

Good: “A new market regulation has allowed us to employ a newly opened method of arbitrage to gain growth in areas that were previously stagnant.”

Establish Authority

In the hedge fund industry, all funds are attempting to climb the AUM mountain. I have news for you, it’s unlikely you’ll ever get to the top. This is just realistic thinking. So don’t bother waiting to get to the top before you start claiming you’re at the top.

What?

What I mean by this is that you can always be at the top of one such hill on the bigger mountain, regardless of where you are in the big picture. Maybe you don’t have more than $20 million AUM. But if you positioned your hedge fund properly, you might be the only hedge fund standing on top of the “entertainment mountain:” the only hedge fund that has recognized the human nature in spending excess income on entertainment and thus heavily investing in companies that produce entertainment. Thus, you can claim yourself the authority figure on investing in entertainment.

This type of positioning allows you to use terms such as:

1. The Only
2. The #1
3. The First
4. The Most Trusted
5. The Biggest

As an authority in your small niche of investing, you can make yourself the go-to source for information on investments in that area. You can even draw investors away from other types of funds and financial vehicles and attract investors who wouldn’t otherwise be interested in hedge funds with this kind of marketing.

Follow Up

Ad successful hedge fund marketing campaign must be ruthless in its follow-up process. Don’t hire a Japanese person for your follow-up process, instead hire a psychopath. You cannot risk losing a customer just because you want to be perceived as polite.

A successful follow-up process includes email marketing and follow-up phone calls. Be in contact with every unconverted lead on your list until he either converts or opts out of your database. Don’t be afraid of opt-outs. An opt-out was just a space-filler anyway. If you can’t get them to invest, having them on your list is meaningless.

Update

Be continually updating your marketing process. Don’t fall behind your competitors because your current marketing system is working. The environment always changes. Technology changes. Investors’ needs change.

What this step really means is that you must test. Test new copy. Test new marketing tools. Test new forms of social media. Test everything you can until you know what’s optimal for your campaign.