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Sales Focus Shifts to Key Accounts, Partners

As far as improving mutual fund distribution is concerned, consider the typical odds: the average asset manager's external wholesale team is made up of 40 individuals, and if they conduct roughly 20 meetings a week, they can reach about 8,000 financial advisers every quarter.

That isn't bad, until you consider that there are about 500,000 financial advisers across the country.

"So, you're reaching just a sliver of the people," said Steve Miyao, chief executive officer of kasina, a New York-based consulting firm. "And besides the quantity, do you know that you are reaching the right ones?"

Communicating the right message to the right customers at the right time is perhaps one of the greatest challenges facing today's sales and marketing executives as they strive to maximize distribution efforts in an increasingly diverse market. As marketing and operations executives descend on Miami this week for the 23rd annual National Investment Company Service Association Conference & Expo, Miyao is offering them this bit of advice: sharpen your focus.

Take key accounts, Miyao said, where the future is driven by developing strategic models to concentrate firm resources more effectively. Fund companies should also build deeper relationships with fewer partners, he said, and work more closely with sales to keep them updated on partner activity. Hold fewer meetings and increase targeted marketing, he also suggested.

Of note, Miyao said, is determining which customers and/or sales partners merit greater focus. That decision, he says, will be based not just on assets under management, but on additional factors, including product/service fit and share of wallet, or how much of your customers' business you can control.

Say, for example, an asset manager has at one end of the spectrum a small broker/dealer that accounts for $20 million of business annually and has an upside of $10 million in the near future. At the other end, meanwhile, is a top-tier firm that accounts for $200 million annually and has a growth potential of another $200 million. Certainly, Miyao said, an asset manager's sales and marketing executive doesn't want to overlook the little guy, but today's ultra-competitive market compels them to move additional resources to the $200 million customer.

At the same time, they don't want to lose the additional $10 million from the small broker/dealer, Miyao noted. Funds can still reach those secondary customers by building up the internal sales force (see MME 1/31/05). At the same time, "hybrid" teams of internal and external salespeople can work exclusively with top-tier financial advisers, while "a second set of internals would work with advisers who are not among the top tier," he continued.

"That enables you to have more reach and a more targeted message. That's how you address the issue of not being able to reach all of them, as well as the issue of reaching the right ones."

And finally, there's marketing, where the future is driven by a model that de-emphasizes product and places greater focus on customer segmentation and targeted marketing. Asset management firms, Miyao said, must move away from a broad segmentation scheme and begin to define needs-based customer groups.

Miyao cited, for example, what a recent kasina study called the "self-sufficient adviser," one of six behavior-based, or "persona," segments. The self-sufficient adviser doesn't like interaction with wholesalers. Rather, they prefer to be provided strictly with product information, like recent performance and underlying assets.

On the other side of the scale is what kasina characterizes as the "advice-seeker," a financial adviser who welcomes help from asset managers and usually carries about 38 clients to the self-sufficient's+ average of 255 clients. The advice-seeker tends to work with a broad array of products, whereas the self-sufficient might sell mutual funds exclusively. In addition, the average advice-seeker client is a $68,000 account, while the typical self-sufficient client is a $215,000 account.

"So, selling to these groups is very different. By knowing [their behavior], you can do more targeted marketing and better influence the sale," he said.