How to grow a fintech business – Part 1
We were recently invited to a meeting where the Marketing Director of a fintech company told us how he was going to revolutionise the sector with the launch of their new venture. He explained that they would march through the industry, gaining market share like an indestructible army, as their technology destabilised the established players.
This might seem like a bold statement but, in reality, we’ve heard this story quite a few times over the last five years. FS Partnership specialises in financial services and we have an interesting perspective from working with lots of organisations across different parts of the industry over many years. We’ve noticed that the internet revolution of the late 1990’s has many parallels with what we see happening in financial services right now. Lots of capital investment in new technology backed by huge levels of ambition.
The truth is that even the most unique idea and seamless execution will lose its significance if your product is not positioned well in the marketplace. A strong and identifiable brand is vital to compete with your many innovative competitors, all of whom think they have the next fintech sensation.
There are lessons we can learn from the 90s which are applicable now. There are also lessons we can learn from the recent past which are equally important. First, let’s start with what you shouldn’t do if you want to be successful.
Choose your words carefully
‘Revolutionise’, ‘transformational’, ‘disrupt’ are all fashionable terms, intended to suggest energy and confidence, but can amount to just meaningless buzzwords when writing a plan. Criticising this type of language might seem like a strange starting point when discussing how to grow a business, but written plans containing these words create a level of expectation which most organisations are simply incapable of meeting. In addition, it encourages lazy thinking. People can get lulled into a false sense of optimism that growth is going to be straightforward. It won’t be.
Every part of the financial services industry is highly competitive. While people might poke fun at the established players, who appear sluggish and past their sell-by-date, they enjoy significant advantages. They have huge budgets, diverse experiences, well-oiled marketing machines and a loyal and uncomplaining customer base who lack the effort to seek out other options. Trying to break people’s established patterns of behaviour is difficult no matter which part of the industry you may be in.
Your customers don’t care as much as you
We find innovation fascinating. Some of the new developments in the industry are extremely clever and have been created by intelligent and highly skilled people. Being involved in a rapidly developing industry is stimulating. However, that’s from the inside looking out. The overwhelming majority of people you are looking to sell to aren’t interested. Trust us, they don’t care about financial services or fintech even a quarter as much as you do. Indeed, in a world where financial services is still regarded with suspicion and mistrust, you should prepare to face a hostile audience.
People care about their friends, families, their hobbies and plans for the weekend. If you are selling B2B then you are probably speaking to someone who is overworked and anxious about their job security. Getting anyone to give up their time to listen to what you have to say is not easy.
However, it can be done as people do make the time for new propositions if they are presented in a manner that is memorable and distinctive.
It would be impossible to summarise the components of an effective financial services marketing plan in a small article like this. Firstly, every business is different so all summaries have serious limitations. Secondly, all effective marketing plans require investment in time and high-quality analysis to create something workable.
We see too many briefs for marketing plans which do not correctly diagnose the dynamics of the market, and define how a company is going to break through the barriers to shifting behaviour. They don’t articulate how an organisation will build its profile in the industry when confronted with the giant competitors they are looking to replace.
With that said, there are certain areas that people should take time to think about.
What to say to people
If we had a pound for every FS marketing plan we’ve analysed that focused on rational benefits alone we’d have enough to fund several new fintech start-ups on our own. Articulating features and benefits is only half the job. In fact, it’s less than that. Psychologists have shown that most buying decisions are either too complex or too mundane to be made analytically. The buying process needs to be assessed in terms of different states of mind at different points. A disengaged audience may be driven more by impulsivity and emotion in their decisions. Conversely, those who are more inquisitive and proactive may be swayed more by rational propositions.
The development of a compelling story, along with features and benefits, is key to influencing people. We previously wrote an article about Aristotle’s Modes of Persuasion (you can read it here). Aristotle said that in any effective piece of communication there were three ‘appeals’: ethos, logos and pathos.
- Ethos is the source’s credibility, the speaker or author’s authority
- Logos is the logic used to support a claim, or the facts and statistics used to support the argument.
- Pathos is the emotional or motivational appeal; vivid language, emotional language and numerous sensory details.
What you say, and how you say it, is important. If you’re trotting out a rational argument without feeling or appeal, you’re going to severely limit your chances of success.
All too often, those responsible for planning their strategy get fixated with a specific marketing channel and don’t explore other options. It’s understandable. It’s human nature to focus on the short-term immediate priorities in lieu of longer term objectives with no immediate, measurable outcome. However, this approach can often be detrimental to innovation and future growth.
Quite often, for example, social media is used in excess to little effect. Social media can be highly effective in the right circumstances when designed to achieve a specific goal. But it is not a silver bullet and is often only effective as part of an integrated approach when used in the right way.
Good marketing plans are possible only if you take the time to diagnose the current situation and the challenges that the organisation is likely to face in the future. A plan can then both increase brand awareness (focusing on emotional appeal) and exploit this interest by sales activation techniques in the right channels (with well-timed rational arguments). An optimised, targeted marketing strategy can mean the difference between the waste of an organisation’s precious resources and the basis of something highly effective and memorable.
Don’t enter into Marketing speak
Unfortunately, many people in the marketing world have done a magnificent job of reducing its credibility. With meaningless phrases (brand love, content is king, ideation, etc…), a claim that the next latest new marketing technique is all you need to ‘win big’ (SEO, social media, etc…) and a complete dislocation from activity and commercial performance…it’s difficult to take marketing seriously sometimes.
However, if well thought out plans are created and delivered effectively, and liberated from marketing speak, then they will yield encouraging commercial results. We find it’s important to remove the jargon and speak clearly about how a company can increase market share.
Does it work?
We have helped both ambitious new entrants and established organisations to grow. One long-standing client in the payments industry has a talented team which includes some of the smartest people we’ve met in the sector. They asked us to get involved and help them to increase their visibility and presence, all with a view to speeding up their commercial growth.
They started by explaining in detail the technology they had built. It was fascinating, but slightly overwhelming and highly technical. However, they talked about it with good humour and had many great stories to tell.
A previous agency had advised that they spend sizeable sums of money on search engine marketing targeting technical keywords. The objective was to deliver traffic to web pages explaining complex concepts in detail. We told them to take a different approach and to invest in PR and to use their stories as a means for addressing the market in a more colourful way.
Over the last three years traffic to their website traffic has increased year on year, with a growing funnel of leads for their sales force. Commercial targets have been met and they are now known as specialists in what they do. Central to the strategy was to talk less about technology and project their personality more.
Supported by some well-timed sales activity on social media, they have now been able to walk through doors which had previously been forcefully slammed in their faces.
The summary bit at the end
The two minute guide to Part 1 of growing a fintech business would be…
- Be realistic about what you are doing. For most companies, what you are offering is not revolutionary enough to sell itself.
- You’re trying to speak to people who are likely to have little interest in what you have to say. Don’t just talk about features and benefits. It won’t be enough.
- It’s competitive out there – you need to invest time in creating a plan which tells a compelling story on many different levels (ethos, logos, pathos).
- Get the right balance between brand building and sales activation.
- Every business is different. Good marketing planners will be mindful of this and create highly refined plans which clearly demonstrate how you’ll acquire a particular reputation.
- Don’t think that one marketing technique alone will work. Integrated marketing may be less fashionable than digital marketing, but it helps to build a story at different moments in the buying process.
If you found this interesting, then look out for Part 2 coming soon…