No, we’re not talking here about the award-winning Wachowski film: The Matrix (as much as we love it here at MarketingAdviser).
Instead, we’re looking at the Ansoff Matrix – something less culturally-mainstream, but almost certainly more practically useful to financial adviser’s and their marketing.
In all likelihood, as a small business owner you have likely often stopped and asked yourself:
- How can I grow revenue for my financial advisory/planning business?
- Are there any new products or services which might do the trick?
- What about breaking into a new market?
These are great questions which the Ansoff Matrix can help you answer…
How the Ansoff Matrix helps financial adviser marketing
The Ansoff Matrix (sometimes called the ‘Product-Market Matrix’) is all about looking for opportunities to increase your business revenue through new opportunities.
The focus, in other words, is all about growth. So for financial planners who are startups or small business owners looking to increase their client base, this is great news.
Market Penetration
Take the top-left box, for instance (“market penetration”). Here, you are asking yourself whether it is possible to sell more of your existing products/services to your current target market.
For example, suppose you are a pension transfer specialist dealing in the area of final salary pensions. Does a sufficiently big enough market exist for you to keep selling that service into it? Indeed, is the market big enough for you to sell that service in higher volumes?
This can have huge implications for your business objectives and strategic planning. For instance, perhaps there are enough people looking for a pension transfer right now to keep growing your business by exclusively selling pension transfers to that market.
However, perhaps you see that number falling in the not-too-distant future. In which case, perhaps you need to expand your services and/or look at entering a new market?
Product development
Perhaps you have identified an opportunity to present a new product or service to your existing target market.
For instance, the emergence of “Robo Financial Advice” might be put into this category – where digital/software solutions sell computerised financial advice to the markets typically dominated by the manual, face-to-face services of financial advisers.
Whether Robo Advice will eventually supplant financial advisers is hotly contested, and remains to be seen. Regardless, the emergence of the service illustrates this part of Ansoff’s Matrix nicely.
Market development
Is there scope for you to introduce some of your existing financial services to new markets?
For instance, perhaps you have traditionally just focused your financial advice services towards locally-based high net worth individuals. However, suppose that you have noticed many of your clients are connected with wealthy British expats living in South East Asia.
This group of people can, in many ways, be seen as a “new market” from the perspective of your business. It could be a market that you could enter with a competitive value proposition.
For instance, perhaps many of these expats are looking for FCA-regulated, fee-based financial advice rather than the commission-based solutions they might often come across.
Diversification
This is where the boat is pushed out furthest from the shore, metaphorically speaking. Here, you present new products or services to a different market.
For instance, perhaps you are a small financial adviser business offering pension advice, investment advice and tax planning to local clients. However, you have recently merged with a wills and probate company which has the capacity to offer these services further afield.
Here, you have the opportunity to present new services (wills and probate) to a new market (e.g. the wider region, not just the local area). You have therefore engaged in Ansoff’s diversification!
Issues to Overcome
Of course, whichever of the four options above might be most suitable for your situation, pivoting your financial marketing and overall business strategy is never easy.
Each of these presents their own unique challenge and questions to address. For instance:
- Market penetration – Would you perhaps need to change your office’s opening hours? Would your marketing strategy and investment need to change (e.g. increasing marketing spend)?
- Product development – Has the new product/service been tested before in this market? If so, did it work and would your value proposition be able to quickly and meaningfully stand out from any competitors or alternatives?
- Market development – Have you done enough research into the new market to confidently identify a strong need for your product/service, which is not already being met? What are the legal, logistical, financial and other challenges involved with entering this new market?
- Diversification – Do you have the skills or technical know-how to develop this product/service, and present it to a new market? If not, will you have the capacity to introduce those skills and know-how to your business within realistic resource limits and timeframes?
Conclusion
The Ansoff Matrix is a valuable tool for financial advisers when it comes to finding opportunities to grow revenue streams, develop profitable new products or services, and increase their market share.
Of course, assuming one or more of Ansoff’s four options might be right for your business, it’s not enough to simply know what you should do. A set of SMART objectives needs to be agreed to focus the business towards them.
From there, an appropriate and realistic strategy then needs to be devised to move the financial services business in that direction. As part of this plan, you should detail the exact resources and activities (e.g. tactics) you will use to implement your strategy, and include mechanisms to review progress and make meaningful optimisations where necessary.
We hope you found this guide to Ansoff’s Matrix helpful. Please get in touch if you would like to arrange a free, no-commitment marketing review and consultation with one of our specialists.