What RIAs Should Know About Data-Based Marketing

Asset managers and investment banks use data-driven marketing to great effect, leveraging both first- and third-party data to generate new client leads and convert potential customers into engaged users of their products and services.

Traditionally, independent registered investment advisors have relied less on marketing, preferring to generate new business through referrals, cold calling and community engagement. Bigger firms have also turned to acquisitions to fast-track growth in an increasingly competitive advisory landscape.

But, as explored by an expert panel during in a recent webcast hosted by ThinkAdvisor’s parent company, ALM, growth-oriented RIAs could likely benefit from rethinking their marketing approach — especially the opportunity to collaborate with external data providers and marketing agencies to create modernized marketing campaigns.

This is especially true under the more flexible marketing rules adopted in recent years by the Securities and Exchange Commission. Advisors still must exercise caution in how they present themselves to the public in published materials, of course, but there is more room today for telling advisors’ stories in an engaging way.

In addition to representatives of ALM, the panel included Stephen Love, group director at Ptarmigan Media. Love and his firm cater to Wall Street’s top investment banks and asset management firms to design custom solutions to grow brand awareness, increase engagement and generate leads.

As Love and the other speakers emphasized, best practices in financial services marketing have evolved dramatically in recent years, reflecting the digitization of the industry and the rise of artificial intelligence tools. By working with skilled vendors, Love said, firms of all stripes can find new sources of growth via data-informed marketing.

Where Does the Data Come From?

Before moving into paid marketing programs, the speakers emphasized, it is important for firm leaders to understand the data landscape as it exists today. Broadly speaking, customer data exists in various forms, and it comes from different sources and systems.

Data that companies gather directly from their customers is known as “first-party data.” Data obtained from partnership or purchased from external sources is referred to as second-party and third-party data, depending on the exact nature of the exchange.

There’s also a newer category called “zero-party data,” which is data that is voluntarily and deliberately shared by consumers through such pathways as quizzes, polls or public website activity.

Not all of this data is created equally, Love warned, but all data can be useful in some way if it is properly contextualized and organized.

The Types of Data

Generally, first-party data comes from a direct relationship with the consumer. It is collected with consent, which matters in the current data-security and privacy environment. It is also generally going to be individualized and accurate — making it useful for inputs into decision-making systems and even AI tools.

The type of information contained in this data can vary a lot — ranging from simple inputs like customer emails and phone numbers to information like purchase histories, support history and loyalty program info.

Second-party data is also individualized, and generally it is collected with consent. This generally includes information like customer feedback, customer surveys and website activity.

Second-party data shares a lot with first-party data, the experts noted, and in the context of financial services it can be particularly useful, given that second-party data providers (like ALM) are in the business of spending time and resources to ensure their datasets are accurate, timely and actionable.

Moving to third-party data is an important step, the panel explained, because it is often less clear to what degree the data was collected with consent. As such, this data is often presented in an aggregate form, potentially reducing its utility in the context of niche financial services marketing applications.

Another downside is that such data is often going to be shared widely for a variety of purposes.  This in turn means there is generally less of a competitive edge to be gained in niche markets by accessing and utilizing the information.

How Marketers Put Data to Work

Asked to detail how financial services firms can engage with external marketing resources, Love gave an overview of the typical process.

“When we onboard new clients, we start with a full session on measurement and data,” Love observed. “We ask that they bring in key sales, marketing and data professionals on their team. The goal is to start with a deep inventory on the data and resources you have access to right now.”

Getting this baseline spelled out helps to define how to proceed.

“Generally, we are going to be looking at what kind of first-party data the client has on hand, and what kind of data they could collect,” Love said. “This is a great place to start any project — for the reasons outlined above. These data sets are often unique and reliable.”

Second-party data that the firm has access to is also very valuable, according to Love, and it may make sense for firms to invest in such data sources if their own insights are limited.

“For example, Client A might only have reach and access to 10% of their potential addressable market in terms of first-party data,” Love said. “They can complement that effectively with second-party data. Lastly, you can rely on third-party data to fill the gaps, but you need to vet this data.”

From Leads to New Business

While the modern approach to marketing is more tech-enabled, the point of distilling and utilizing data remains to generate leads that an RIA, asset manager or investment bank can pursue and turn into new business. In this sense, Love said, it is important for a firm’s marketing leaders to engage in a two-way dialogue with their external marketing partners.

“For example, as we deliver leads, we need feedback info from clients,” Love explained. “It is useful to us to understand how many of our marketing-qualified leads are converted to sales-qualified leads, and then what percentage of that was converted to new business.”

For example, with one campaign for one client, Love’s firm might only deliver 200 leads, but if 175 of them ended up being quality, that’s a success. On the other hand, another campaign might generate 1,000 or more leads.

“That seems great, but what if only 25 of them were quality?” Love asked. “The key takeaway is that sharing that information back and forth really helps both parties — the marketers and the clients — to really be collaborative and drive performance.”

Common Roadblocks and Pitfalls

During the panel discussion, Love also took time to share some of the most common roadblocks and pitfalls to marketing success.

The first comes up when clients have access to a ton of first-party or second-party data, and think they need to use it all.

“Not all data is equal in this context, and you need to set clear goals,” Love said. “You can have a campaign with 25 key performance indicators, sure, but is that going to be effective? Oftentimes, a more narrow focus that is carefully crafted and considered will be a better way to go.”

Another issue is that clients fail to consider the taxonomy of their own first-party data. How are they cleaning and managing the data so that it can be reliably accessed? How are firms ensuring their growing data sets do not become overwhelming? How are they bringing the freshest data to the top of the pile?

“This is especially important when factoring in third-party data,” Love said. “If we are using third-party data, we need to make sure we are working with partners that really prioritize the delivery of fresh, clean and accurate data.”

Lastly, another big challenge is “connecting the dots.”

“Media agencies can provide you with so many individual points of data,” Love said. “But there needs to be a clear overall strategy for using the data and tracking performance.”

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