July 31, 2019
Studying the properties and composition that make up the FinTech ecosystem
Welcome to this week’s industry analysis with the FinTech Chemist. While I may not be literally mixing solutions and preparing reagents, I am studying and testing out the latest and greatest in FinTech. As the FinTech ecosystem becomes increasingly crowded, it’s no surprise that having a crystal-clear value proposition is more important than ever. Just like ‘Step 2’ of the scientific method, ask questions! Or in this case, three…
There are three questions to consider when formulating a value proposition:
All businesses have a value proposition, but very few of them have an effective value proposition. So, I took a deep-dive into this topic with John O’Connell, President & Founder of The Oasis Group. His firm specializes in helping wealth management & technology firms and individuals create & focus on their unique value proposition to generate higher revenue.
FinTech Chemist: John, thanks for taking the time to talk with me about such an important topic. Why did you start The Oasis Group? There is obviously a gap in the industry, so what challenges are you solving for?
O’Connell: Absolutely! For more than a quarter of a century, I’ve been working in and selling software to financial services firms. I’ve held management positions in established companies such as Oracle, Merrill Lynch, and KPMG. I finally decided to go out on my own and start The Oasis Group because I kept seeing this issue pop up in our industry. I like to use the example of RIAs. If you take a look at the market, there are about 14,000 RIAs out there today, and only 9 million US household would qualify as accredited investors. This means those RIAs are all going after the same pool of clients. How are they all differentiating themselves to not only bring in new clients but grow and scale the business well.
One of the biggest reasons firms struggle is because they don’t have a solid value proposition. For instance, when firms breakaway, or hit the $25–$35 million range, they begin to run out of those “friends and family” clients, and growth begins to slow. They’ve exhausted their word of mouth options and now have to truly market. That’s where The Oasis Group comes in. We can look at the existing client base, dig into the investment strategy around the customer base, and help firms build upon what they have to create a unique value proposition.
FinTech Chemist: You mentioned having to “truly market” once firms reach a certain point. While metrics are important to measuring success, it obviously goes way beyond that. When defining a unique value proposition, what makes a firm successful (or maybe not successful)?
O’Connell: It’s not about measuring – anyone can measure. It’s about how can you target that growth so you can get returns on investment. I see a lot of firms spend enormous amounts of energy on sales and business development training. I’ll use financial advisors as an example. All financial advisors have spent money on CRM systems. They spend a lot of time measuring AUM, and that’s not helping them grow their business or properly service their clients. It’s simply just showing where they are at a specific point in time. Having people dial for dollars is not generating the results people need anymore. Be honest: do you read solicitation emails? No, right? The lesson here is that you have to approach the market in a different way. This is why proper marketing and a clearly defined strategy that enables your target market is so critical. Take social media, for example. On all social platforms, you can listen, engage, and respond. The first two can actually help you discover your value proposition. This is why having relevant content that is driven by your value proposition is essential to building trust with your client base while growing the business. You constantly need to ask how you are approaching your specific market.
FinTech Chemist: What high-level advice can you off firms struggling with defining their unique value proposition?
O’Connell: Take a look at your existing client base for guidance. What commonalities do you see? Determine why that makes you different. Try to define a pattern within those demographics, and then ask yourself why you feel like your message resonates with that demographic. Your value proposition should always map back to your target demographic(s). Don’t be afraid to check out your competition either, and find out why you’re different in that space. Also, feedback is one of the best ways to improve your unique value proposition. Pay attention to how your target audience is responding to you and adjust your message accordingly.
A value proposition must be memorable, succinct, and most importantly, true. Your UVP should present a clear and concise explanation of why your business is the best choice for your target customers. To learn more about The Oasis Group and how they can help, visit: http://www.theoasisgrp.com. Now, onto my next scientific… I mean FinTech hypothesis adventure. And, as always, remember to take your vitamins!
Read the previous edition of The FinTech Chemist.