Here is part two or our interview with Jerry Chrisphonte, CEO of HedgeFundDirectories.net, describing best practices in hedge fund marketing.
HFMA: Let’s say you are a service provider marketing to hedge funds and looking for a hedge fund database, what are some of the best practices for using a database in that marketing effort?
Chrisphonte: A really good question. I was actually talking about this yesterday with a potential client that we were speaking to. Obviously, when you’re doing e-mail campaigns or when you’re reaching out to fund managers or senior-level executives within a hedge fund, you have to keep in mind a couple of things. You know, you’re not the only person trying to reach out to them. And more importantly than that, their time is very scarce and you really want to have a relevant message when you approach them.
So I think some of the best practices when using one of these type of databases or directories is really having a plan when you approach the campaign. So for example, if you wanted to do kind of an outreach campaign to fixed income single managers in the U.S. and Europe, one I would do is I’d polish that list so you’re making sure you’re excluding all those funds that are non-fixed income.
Taking this a step further, where you’re not just doing an e-mail blast or an e-mail campaign, which is kind of cold and usually won’t get a very good response, but perhaps warming that up with taking a look at LinkedIn, seeing which one of those contacts or fund managers or principals would be in your network by a series of connections, warming up that lead through your network, and then after that maybe having an initial phone call and then following up that phone call with a bit of information in the form of an e-mail.
We’ve just noticed that the users of our service that kind of take a warmer approach or really kind of take the time to use their network and really build relationships, as opposed to kind of, hard and fast and, shotgun approaches to marketing really kind of have a better chance at being successful.
HFMA: So, taking the data from the database, identifying who those targets are, so whatever your segment is that you’re going after, but don’t go broad, go very targeted in that effort. Then identifying, whether it be through LinkedIn or your personal network, “Who do we know here?” or “Who do we know that knows someone here?”
Chrisphonte: Exactly. Because if you speak to service providers within the hedge fund industry, I’ll tell you, hands-down, far and wide they will tell you the majority of their business comes from their network. It doesn’t really come from, cold calling or cold marketing or e-mail campaigns; it really does come from their network.
While you’re using a system like ours, it’s great as an aid to your network. So to help you find out who the new fund manager is at a particular new launch or what the contact details are or an e-mail address if after you become familiar with them you actually can reach out to them, or really kind of help things along in the process or maybe kind of kick-start a campaign that might need some help. But you’re always going to have to do some warming up, you’re always going to have to do some follow-up. You should always do maybe some calls or some reach-out activity after that type of a campaign as well.
HFMA: And what about also looking for other clues as to what might be going on at the firm? So for instance, if they’re hiring for a particular position, where maybe they’ve got a new challenge that they haven’t had to hire for in the past and now they’re looking at it and saying, “You know, we really need to get somebody on board to handle,” whether it be the risk management side, be the technology side, it could be any one of the areas. What about looking at things like that, where you say, “As a service provider we provide a service that fits with that. We should be calling these guys”?
Chrisphonte: You said it. So one of the main things that any salesman or any hedge fund marketing professional should be doing is really getting your hands around what’s going on in the industry as a whole. So even myself, being in the industry, I get constant news feeds coming from Google, when we have kind of a hedge fund keyword search coming back to us, we get information from, Reuters news stories, publicly-available kind of daily newsletters within the hedge fund industry and we get all these to our inboxes. So me and my team here, we’re constantly reading up on changes in the industry, people that are starting at new firms, new firms that are kind of going under, new firms that are launching. And really we have to be involved in the industry; we have to really care about what’s going on, what changes are affecting us, and really kind of reaching out and trying to solve those peoples’ kinds of needs and wants and concerns.
HFMA: That’s good advice for both the service provider as well as the third-party marketer?
Chrisphonte: Yeah, of course.
HFMA: Because the third-party marketer is looking for firms with certain activity, right, to be sort of the triggers for them to say this would be a good time for us to be talking to them.
Chrisphonte: And I think in the third party marketing sense I have a couple of good colleagues that are in the marketing industry that are third-party marketers, it’s really one of those magical mixes if you’re going to become a third-party marketer for a hedge fund. Because you really do have to have a solid network of investors and really kind of the right investors for that particular hedge fund, because they are very selective in terms of what investors they like to work with and they are very picky in terms of what type of criteria, what type of minimum investment, what type of, lock-up periods they like to kind of impose on a new investor.
So it’s really kind of a magical mix finding a third-party marketer that has the right network, as well as has kind of the negotiation, the kind of pull power to kind of get the capital in.
HFMA: All right, now from the perspective of somebody looking at a hedge fund database, what are your thoughts – what are the things they should be considering when they’re evaluating hedge fund database providers?
Chrisphonte: Yeah, that’s a good question and probably a good point. You know, I’ve been in this space for five years – well, five years on with Hedge Fund Intelligence, so more like seven years now working for myself, I’m just going to clarify one thing. There are databases and there are directories. So, differentiating what you need.
If you’re an investor that’s looking to track hedge fund performance, really get a sense for just kind of maybe the top three executives or who the fund manager is, who one of the principals are, maybe who the owner is, and you really need to track strategies, assets under management on a monthly basis, and really get a sense for how the fund is doing as a potential investor, you’d be looking more towards a database. There are tons of hedge fund databases out there and tons of solutions to help you kind of mash these databases together so that you can really have a solid solution in terms of a database provider.
On the other hand, there are directories which are more geared towards sales and marketing professionals within the industry. There are only a handful of providers out there. And what you really want to do when you’re looking at a directory provider is a couple of key things. You want to get a sense for how they collect their information, how often they update their information. Another main thing you want to get a sense for is how they cleanse the data, so what’s the process by which they remove inaccurate and older contacts and what’s the process by which they add and pull in new contacts, whether it’s domestically or internationally.
So really just to kind of recap on that, so number one, getting a sense for whether or not you need an investor-focused database that tracks performance, and really kind of data points focus on investors in the industry, or whether you’re a service provider or sales professional that needs directory contact information to reach out to these professionals directly, they will give you typically more contacts per firm, and also will usually provide you with a phone number and an e-mail per contact.
And another point to bring in as well, when newcomers to the industry come in looking at database and directories it’s a bit overwhelming because there are tons of products out there; you really don’t know what is what and what you’re getting with what. One of the main things you want to take a look at when evaluating the databases or directories is really how they list. So what I mean by that is whether they list as a fund management company or as an individual fund. And what I mean by that is take, for example, AQR Capital. The management company, so the entity that runs their funds may have 200 employees that work across their six or seven different funds.
An investor-focused product will list each individual fund out, so if they have a U.S. version, a European version, a fixed income fund and an arbitrage fund, each fund will have their own contact details, their own fund manager, and their own kind of performance, which is a bit redundant for a marketer, yet for an investor it’s perfect because you are investing in that individual fund. For a marketer you really want to look as a top-down approach, looking at the company and saying, “All right, for AQR, who are the principals, who are the C-level executives, and who are the kind of contacts of interest to me, and what are their contact details?” So those are the kind of differences to really keep in mind when you’re evaluating one of these types of services.
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