The two-word phrase “value proposition” gets bandied about quite a bit in the world of financial marketing, but what does it mean exactly, and what’s the point of focusing on it?
Simply put, a value proposition is a promise of value, whether explicit or implicit, communicated to a potential or existing customer. These promises can best be thought of as “differentiator statements.” In other words, what is the one thing that sets your ETF apart from the competition? What is its advantage over others in the space, and why should investors choose your fund over all the others?
Value prop marketing aims to get to the very heart of your ETF by isolating its core appeal to investors. By necessity, this must start by isolating your target audience. It may be tempting to say that your ETF is aimed at “all investors,” but this universe is impossibly broad and difficult to target. Rather, think carefully about what sort of investors would be most interested in your ETF. By picturing this ideal investor, you’re getting closer to drawing parameters around your key value proposition. For example, if your ETF’s target audience is an experienced, sophisticated investor, your value proposition can be framed in more complex, nuanced language. If your target audience is less experienced or sophisticated, the reverse is true—you’ll need to keep things straightforward and simple when appealing to this demographic. By zeroing in on your target demographic you’ll have a much better idea of what their concerns are, and by extension which aspects of your funds are most relevant to them.
Of course, your fund is more than just one core value proposition; this is part of the fun. Your ETF is a collection of advantageous characteristics that should appeal to an investor, but if you want to hook their attention, you’ll have to focus on the one key characteristic that is most salient to your target audience. After months or even years developing every nuance of your ETF, it can be difficult to gain an outside perspective. For this stage of formulating your value prop marketing plan, you may want to bring in an outside firm that isn’t “too close to the product” and can provide some needed insights on which aspects of the ETF may prove most appealing to your desired target audience.
Once you’ve isolated the most relevant, most impactful value proposition for your ETF, it’s time to formulate a plan of attack—what’s the best way to communicate this to your target audience? First of all, you should keep in mind that all marketing materials should build off of this foundational value prop. The fund’s website should locate this key value proposition front-and-center. Fund materials should trumpet this concept in call-out text and headlines. Lengthier enhanced fact sheets or investment cases should all position this value proposition as their main point, around which all supporting arguments revolve. Animated explainer videos, a critical component of any new ETF roll-out, should attempt to explain this key value proposition, piquing investors’ interest so that they seek out more detailed information.
By identifying their target audience and isolating the key value proposition regarding their ETF, ETF issuers will be better-positioned to provide structure and consistency to their marketing campaigns, and get investors that much closer to investing. The road to growing ETF AUM is never a straight, easy line, but value prop marketing goes long way towards simplifying messaging.