First, a special thank you to Chuck Hammond for asking this question on Koffee Talk. If you would like to listen to the mini-podcast, click here. https://lnkd.in/e4HpSZq
We, as marketers, get this question a lot. And, it reminds me of a story. I read this many years ago in the back of a church bulletin, and honestly, it’s stuck with me to this very day.
A man wakes up in the morning, after sleeping on an advertised mattress, and he pours himself a bowl of advertised cereal, drives his advertised car to the office, and then asks his receptionist if anyone called today. She says only the newspaper asking if we’d like to advertise. The man says, “No, advertising doesn’t work.” Then, a few months later when the man’s business is failing, he calls a realtor to advertise his business for sale.
So, we ask you, does advertising work?
Another point I’d like to bring up is that the average person experiences over 5,000 advertisements per day. Yes, over 5,000. Think of it like this; you wake up in the morning, open your medicine cabinet: 15 advertisements; you drive in your car, turn on the radio: 10 advertisements; you open a webpage: 6 other advertisements. Add that up over the course of just one day, and it’s over 5,000 experiences.
Now that raises a challenge…how can you as a business owner and we as marketers rise above the noise, so you can stand out as the “go-to” retirement plan team?
Well, Fidelity Investments did a study of RIAs and how much they spend on marketing, and they found that the average RIA spends 1.8% of their gross revenue on marketing. Now, the Small Business Administration recommends businesses spend 8% of their gross revenue, so we in financial services have a long way to go. Fidelity also found that offices that increased their marketing budget from 1.8% to 2.4%—not even a full percentage higher—experienced 40 percent more client growth, 23 percent more asset growth, and 20 percent more revenue. Wow!
Now, back to our original question: is marketing an expense or an investment? Do you remember the Malcolm Gladwell book, The Tipping Point? Well, in case you missed it, it was about necessary input and the “tipping point” when output would surpass input. It’s a natural shift that happens over time and the beautiful thing is that this happens in marketing.
Why am I bringing this up? Remember earlier, we talked about the average person experiencing over 5,000 advertisements per day. Therefore, if you do 1 advertisement, it’s going to get lost in the sea of marketing. And, if you do just one, you most likely will not see a return on investment. So, we would say that is an expense. However, if you do a series and you allow for time, then yes, you’ll most likely experience a return on your investment.
Let’s take a moment and talk about time. Realistically, how long does it take you to convert a cold prospect into a new retirement plan client? Think about that. Now, double it. That is a marketing cycle. In order to evaluate if your marketing is successful, you need to go through two marketing cycles to compare results. From our experience working with retirement plan offices, they experience a 14 month sales cycles, so as marketers, we need 28 months of working together and consistently marketing in order to truly evaluate and assess the marketing campaigns ROI. Therefore, if you are marketing in the 401k space, and you’re not seeing immediate results, that’s okay. This industry has a very long sales cycle, which is good because your clients stay with you for many, many years.
Ready to start?
What can you do today? It’s best to start small. Look at your LinkedIn page, make sure it is strong. Examine your foundation of marketing materials, such as your website, brochures, and pitchdeck. Are they elevating your brand to the level of expert? Are you proud to share them with plan sponsors, prospects, and trusted industry peers? What is your marketing budget (including both time and dollar investment)? Once you’ve thought about these things, think about where you want to grow your business.
We’ll leave you with one last thought: do Coca-Cola, Apple, or McDonalds still advertise? Even though they are household brands, the answer is yes, they still advertise. So, does marketing work? Yes, it’s an on-going investment that builds your brand for future success.
 Mandese, Joe. “Here's The Ad Sentiment Index, What's Yours?” Media Post. September 25, 2014.http://www.mediapost.com/publications/article/234896/heres-the-ad-sentiment-index-whats-yours.html
 Boykin, George. “What Percentage of Gross Revenue Should Be Used for Marketing & Advertising?” Chron. http://smallbusiness.chron.com/percentage-gross-revenue-should-used-marketing-advertising-55928.html
About 401(k) Marketing
We believe the retirement plan industry can do better. Our clients are the best professional retirement plan advisors in the business. They care deeply about saving America’s retirement future. We are proud to share their voice through industry writings, professionally-designed brochures, and marketing collateral. We assist in promoting their businesses through referral networking and content marketing. 401(k) Marketing is a based in San Diego, CA. Check us out at www.401k-marketing.com.