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What Does Your Brand Promise?
What Does Your Brand Promise?
How branding impacts your ability to retain assets in a rough market.
Recently, a client asked us for our thoughts on a puzzling business issue — assets in their mutual funds are falling — but at a much slower rate then their competitors and the industry leaders. While good news, on the face of it, our client rightfully wondered if there was more to this.
We agreed — while better-than-average performance may hold investors’ attention (read: assets) for some period of time, how investors perceive the firm’s brand can have equally significant impact on their behavior.
For brands that take a leadership approach — telling an “our process is better, and so are our results” story,the firm’s brand is effectively promising continued success and leadership. If the firm is unable — even for a brief period — to deliver on this promise in the form of consistent, above average performance, investors and intermediaries will be, understandably, disappointed about returns, and may also have a more poignant emotional reaction — anger. The result? They may move their money out of your funds and programs, and simply because they are angry, you may never get it back.
At this point in our industry’s understanding of what makes investors and intermediaries tick, we know that emotion (or behavior, if you prefer) plays a significant role. We know that we cannot predict investor behavior based on logical responses to events and circumstances. And in fact, there is much academic research today is devoted to understanding how emotional responses to events drive investors and industry players to behave.
In unidirectional markets, brand promise and positioning is less critical as success is much easier to achieve. In multi-directional markets, it is clear that we must acknowledge the role brand promise plays, and we must find ways to respond to it effectively.
Key questions to ask about your firm’s brand include:
- What is our “core” story?
- What does our story say in an up market?
- What does it promise in a down market?
- Is there a disconnect between how the story works in an up or down market?
- What do we need to do to refine the story for this market?
If you do find that your story doesn’t play well in this market, you may need to find a way to creatively fine-tune your brand’s promise to support long-term business growth through multiple market cycles. What’s your experience during the rather rough ride of the past two years? How has this affected your brand?
