The Follow-Up Series as an Integral Part of Hedge Fund Marketing

Following up with prospects is one of the most effective ways of growing your investor base. In fact, it might be the most effective way of growing your base of investors.

The trick to following up effectively is to follow up with every prospect and client. To gain the most out of your follow-up, you must follow up consistently and over a long period of time. The reason for this is simple: Prospects don’t invest the first time they encounter your hedge fund; they invest when they’re ready.

When Do People Invest in Hedge Funds?

A hedge fund is not a consumer product, which is why you cannot market it the same way Coca Cola markets its beverages. No investor invests in a hedge fund on impulse. Prospects tend to seek out hedge funds only after they have a good understanding of alternative investments, and even then they don’t make a decision to invest with a hedge fund upon first contact. Nevertheless, the fact that a prospect isn’t going to invest with you at the outset doesn’t mean he won’t invest with you in the future.

When you follow up with all your prospects, you’ll be more likely to get a call from one of these prospects when he makes the decision to invest in an alternative investment. And it’s because you’ve already established a relationship with the prospect.

Relationship-Building for Hedge Funds

Hedge funds have a poor reputation in the general public and mainstream media. When you first make contact with a new prospect, the prospect is likely carefully analyzing your every claim. His is evaluating the legitimacy of your hedge fund, probing to see if your hedge fund is like the ones seen on television – i.e., scams.

A scamming hedge fund is unlikely to keep constant contact with its prospects. By consistently following up with your prospects, you’re building a relationship – something a fraudulent investment company wouldn’t do. Relationship-building is trust building. And trust-building gives prospects a sense of security. This is usually enough to make you the #1 choice for financial counsel, when your prospect is finally ready for investing in alternative investments. And when that prospect does become a client, your relationship/trust/security-building efforts will become loyalty-building efforts.

Putting Your Hedge Fund’s Name in the Prospect’s Mind

After your first contact with a new prospect, you are likely hoping that the prospect is thinking about your hedge fund. After all, you’ve got a great hedge fund manager, a groundbreaking investment strategy, and a strong past performance. But your prospect is a busy man – too busy to be keeping your hedge fund on the top of his mind. He might even have forgotten the name of “that impressive hedge fund.”

So when it comes time for that prospect to invest, he’s not likely to recall your hedge fund. When your prospect gets together for a dinner with family and friends, and the conversation turns to investing, your name’s not going to come up. That is, unless, you’ve been following up with your prospects, keeping your name on their minds.

In your effective follow up, you both educate and remind. You let your prospects know how your hedge fund deviates from the norm, both by directly stating so and by demonstrating it by doing something few other hedge funds do – maintaining constant contact. Then, when investment becomes a topic at the family reunion or coworker’s birthday party, your name will come up.

Hedge Fund Loyalty-Creation

The larger a hedge fund gets, the harder gets to keep clients loyal. Big, $50 million AUM and above hedge funds don’t have the time to be constantly following up with all their clients. That’s the chink in their armor. That’s where a smaller hedge fund or hedge fund startup can win.

When you spend the time and effort to contact your clients, you’ll be building loyalty with them. This form of loyalty-building is reciprocal: You show your clients your appreciation and that you’re thinking about them, and they’ll do the same. You’ll be more likely to get more referrals from the clients loyal to you. These clients will also be more likely to invest more in your hedge fund.

In a way, consistent follow up with your clients is a way of making each client believe that you are prioritizing him over all else.

I hope this article convinced you of the necessity of a follow-up series for your hedge fund. In a future article, I will be posting a sample follow-up series that you can use as a template for your own hedge fund’s follow-up system.