Are you looking to grow the reach of your financial firm into a specific market? Perhaps you are a financial planner seeking to increase your client base in a particular locale – e.g. Oxford, or Reading.
Maybe your financial firm has already largely “dominated” your existing marketplace, and so you’re wondering about the viability of moving into another one.
Whether you’re looking to engage in the former (market penetration) or the latter (market development), it’s important to do the right due diligence beforehand. That means engaging in market research and planning. Yet how do you do this effectively?
In this article, our financial marketers here at MarketingAdviser examine this question in more detail. We hope you find this content useful, and invite you to book a free consultation if you’d like to discuss your own marketing strategy/campaign with us.
What is market research?
Market research, in plain terms, is the process of identifying the potential customers in a given sector, industry or area. This involves identifying the common features of this “segment” (e.g. age, income and interests) – as well as the problems they are facing, which you believe you can address.
There are many important aspects to this process. In particular, which products, services and brands are these people currently using to try and solve their “pain points”? In other words, what does the competitive landscape look like? Do these businesses already hold “most of the pie” in your target marketplace, or are there plenty of still-unreached customers?
Here is an example. Suppose you are a new financial planner looking to grow your client base, and you have chosen Surrey as your office location. You hope to bring aboard high-net-worth individuals (HNIs) largely from within 20 miles of your address. As such, to engage in market research it would be wise to take time to map out the commercial landscape before you.
At a minimum, this means trying to discern how many HNIs there might be within this geographic area. Moreover, it requires figuring out how many of these might already be served by existing financial planners, and how many are currently unserved. This will help determine your marketing strategy – i.e. whether you will largely focus your efforts on trying to prise people away from their existing provider, or whether you will concentrate on engaging unreached potential clients.
Why market research matters
What risks do you run by throwing time and resources into a marketplace – without conducting the proper research beforehand? The best-case scenario, of course, is that it makes little difference. The marketplace turns out to be viable, with minimal competition and ease of conversion. However, the worst-case scenario is that you launch into a market which is not large enough, where the competition is too fierce and the customers are too stubborn/disinterested to engage with your marketing.
By researching the market beforehand, you minimise – and possibly eliminate – the chances of the latter scenario transpiring. so, although it does present extra work at the outset, market research is always worthwhile. It could save you a huge amount of disappointment, loss and failure later.
How to do market research in financial services
So, perhaps by this point we have convinced you of the importance of market research. Yet how do you go about it properly? After all, it is crucial that your findings and insights are grounded on reliable data. It helps little to put a plan together which does not accurately reflect the realities on the ground.
Here, we can speak of two broad types of market research (which you may have heard of before) – qualitative and quantitative. The former refers to methods such as running focus groups and interviews with potential clients. Qualitative research is a powerful way to identify the opinions, mood and feelings about a product/service amongst people in your target market.
Establishing this information is very important. For instance, if you are a financial planner offering help with pensions and investments, you may not get very far if your target market largely feels that they do not need help – but would prefer a “robo-adviser” or “DIY” approach.
Quantitative research, however, refers more to approaches such as surveys. These can help you identify facts such as the size of the market in question and its main demographic features – e.g. jobs, income and family type/structure. These details are crucial for determining the viability of the market; i.e. whether it is big enough for you to grow and be profitable.
Finally, two other types of market research to consider are primary and secondary research. The former refers to research you carry out yourself – e.g. customer surveys and focus groups. The latter refers to research and data gathered by others, such as the Office of National Statistics (ONS) or Experian.
Most likely, you will want to consider a blend of these types of market research approaches when putting your own report together. This will depend on your timescales, resources and goals.
When you finally have your market research in a readily-available draft, think about running it past a few other people who you trust – and who have business experience. Despite your best efforts, it is likely that you will overlook a key piece of the picture. Extra pairs of eyes can help you identify weak-spots in your marketing plan and research, helping you steer clear of avoidable mistakes.
Also, consider searching online for example templates of market research documents which you could use for inspiration when planning your layout and structure. Be careful not to make your market research file too long. It needs to be “meaty”, but digestible.