The small-town advantage

Advisor: I have been reading your column regularly and have taken several of your suggestions and incorporated them successfully into my business. Every so often, however, I get a little frustrated when I see something that might be a good idea for an advisor working in a large metropolitan area but has little application in the small community where I have my practice.

It’s not just you, by the way. The industry seems to have the same bias. I often find product wholesalers and even my own company representatives coming to me with ideas for building my business that just wouldn’t play well in our market. For example, it may be fine to segment your client base and provide different levels of service to higher-value clients whom you usually only see at review time.

But my clients also are my neighbours. I see some of them every day – on the street, at my son’s school events, in the grocery store, everywhere. If I even were to hint that one client was “more valuable” than another, it would be all over town in no time and I would have a number of upset clients.

I’m wondering if you have any advice specifically for us “small-town folks.”

Coach says: You are absolutely right in saying that some ideas will work better in larger cities than in small towns. The other side of the coin, however, is that there are things you can do successfully only because you are in a smaller community.

I’ve had the good fortune to work with successful financial advisors in communities of all sizes. And I have learned that it’s not the population count that determines how large a practice you can build; it’s what you do with the opportunities available. As you have asked, however, let’s consider a few specific marketing, sales and service strategies you can use effectively in your market.

– More marketing choices. If there is an area in which I feel “small-town folks” have a competitive advantage over the “city folks,” it is marketing.

I think you have more choice of promotional vehicles, greater chance to personalize your message and, certainly, lower costs.

In previous columns, we have talked about the importance of choosing promotional activities that are appropriate for your target market. High net-worth prospective clients, for example, are less likely to attend an open seminar on investing than, say, a middle-income pre-retiree. HNW individuals are frequent targets of marketing appeals by advisors and, as a result, many prefer to meet a new financial advisor through a personal introduction from their other professional advisors or another HNW friend, associate, family member, etc.

To be sure, there are more HNW people in large centres; however, if they won’t come to your seminar, that is not a useful marketing activity. Our experience in smaller communities, however, is that the local HNW clients will attend seminars because they see them as more of a “community” event than a sales pitch. Consequently, using seminars as a business-development activity may be more successful in smaller cities and towns than in mega-municipalities.

Similarly, advertising often works better in smaller, local publications that everyone in town reads compared with metropolitan newspapers that are so crammed full of ads that people just skip past them. It is even better if you can arrange to be the “financial columnist” or, at the very least, a frequently quoted expert in your local paper or radio or TV program. That opportunity is rare in major cities.

Other promotional activities that I have seen advisors in small communities use to build their presence include: sponsoring children’s athletic teams, offering a small bursary to a student graduating from the local high school, hosting community group meetings in their offices, leading civic or charitable activities, conducting educational programs, making space in their newsletters or on their outdoor office signage to promote community events, and running for public office.

Again, it’s much harder to make an impact with these types of activities in a major city.

All of these activities – seminars, advertising, community involvement – not only serve to build your business, they also help promote you on a personal level. Your name, perhaps your picture and your business affiliation, will appear wherever you are active.

Your personal values are often reflected in what you do as well, adding to your brand image. That sort of profile and enhanced recognition makes it easier for people to refer clients to you. (“Oh yeah, I’ve seen/heard her name before.”) As a bonus, your profile in the community also helps to reassure and retain clients because they know you are an important part of the community and that you work with many of their friends.

Finally, there is the matter of marketing costs. Like many other expenditures, your marketing dollar simply will go further in a smaller community. Seminar rooms, advertising, sponsorships and lunches with clients and centres of influence all cost less in smaller communities than in a big city. Lower expenses on these items often can leave you with enough money in your marketing budget to do one or two really “big” things.

For example, one advisor in a small community about an hour away from a major metropolitan area whom I know hires a stretch limousine a couple of times a year to take one of his top clients and their spouse to the “city” for a night of dinner and theatre. The advisor encourages the guest couple to bring along another couple who are not clients.

The result is two personal introductions each year from very appreciative top clients, which often results in new clients for the advisor.

– Wider sales strategies. Although much of the conventional wisdom suggests that advisors should specialize in a well-defined target market, the truth is that focusing your sales efforts on a narrow group of people works only if that group is large enough to sustain your business.

For example, in a smaller community that has only three doctors, trying to build your practice around the medical community is unlikely to meet with great, long-term success.

Consequently, advisors in smaller centres tend to have more diversified clients. Although that may be, by some measures, less efficient, it often opens up additional opportunities for selling additional products and services. In other words, you are more likely to become the “one-stop shop” in a small town than a large city.

Having deep roots in your community also means you frequently will know everyone in your clients’ families, so you are more likely to work with grandparents through to grandchildren, filling all kinds of needs in between.

Similarly, and perhaps more important, is the network of relationships that you will build with other professionals in your market area. For example, when you’re doing comprehensive planning, you’re likely to be working with your client’s accountant and lawyer. Building relationships with those other professionals takes time, so it works to your benefit that you probably already know many of the lawyers and accountants in your community.

– adopting tiered services. Finally, since you mentioned service levels as a strategy that you might not be able to employ with the same rigour as would a more anonymous advisor in a big city, let me restate an important principle: client segmentation should never be used to discriminate among clients; rather, use it to define the level of service that each client generally needs and deserves.

By appropriately aligning your team resources with the right clients, most clients, in fact, end up being better served than in a “one size fits all” environment. You can still apply a tiered service strategy in a small community – it’s what you include at each level that will matter.

For example, one of the advantages you have is the opportunity for more face-to-face contact with clients, simply because it is easier to get around.

Second, as noted earlier, you often see people out and about in the community through the day, so service requests or simple relationship-building can take place far less formally.

What matters in the “small town vs big city” debate is how thoughtful the advisor is about the opportunities that come with the location and how creative the advisor is in taking advantage of those.IE

George Hartman is president of Market Logics Inc. in Toronto. Please send questions, comments and opinions on any aspect of practice management to george@marketlogics.ca

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