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Fishing Where the (Rich) Fish Are

With apologies to Jeff Foxworthy, you may—or may not—be smarter than a fifth grader. But we are willing to bet anything that you are smarter than some of the traditionalists setting strategy in the financial services industry. And therein lies a tale about figuring out a way to fish where the biggest number of profitable fish are, even if you don’t know how to do it today.

We’ll explain, using the financial services industry as an example of what not to do.

Let’s see if this thinking sounds familiar:

“If we want to get the biggest bang for our distribution dollar, we need to target the most affluent decision-makers and avoid everyone else.”

On the surface that kind of reasoning makes sense. Selling financial services typically requires a lot of face-to-face meetings and handholding, so you need a big return for your investment.

But three huge things are wrong with this approach if your job is to create or market new—or even existing—products or services.

First, your competition is approaching things exactly the same way. Think about all the companies that have announced a big international push in the past couple of years. Just about every one of them says they are going to target the same four countries, Brazil, Russia, India, and China, because that is where the most opportunity is. Do you really want to go head-to-head against all those other marketers? The most bountiful rewards go to those who find substantial—unmet and unnoticed—customer needs, which brings us to the next point.

You and your competitors are currently ignoring the fact that a lot of people are being underserved, because they are seen as not worth the effort. Wal-Mart, Cracker Barrel, and the scores of entertainment venues in Branson, Mo., have figured out how to make an awful lot of money from people not perceived to have much to spend.

Third, the world has changed. Women should now be a target for the financial services industry. We expect most readers to feel this is a painfully obvious point. But common, and obviously outdated, wisdom suggests that male heads of household are the financial decision-makers. That may have been true in the past, but not today. For example, the industry’s own research shows that 95 percent of women are involved in financial decision-making and 25 percent are the ones actually doing the deciding. Yet the industry has done a lousy job of relating to women.

These opportunities are huge, and some pioneers are taking advantage of these gaps. Wise Up delivers financial planning that is very relatable for a key segment of Gen Y and Gen X women, as do, ING Direct, and LearnVest (full disclosure: a former client).

Heck, Suze Orman was named one of Time magazine’s 100 most influential people. She’s had one of the highest-rated shows on CNBC for 10 years and has written nine best-selling books on finance for the common man (read: woman). Meanwhile, a prominent New York investment firm raised minimum assets for an account from $100,000 to $250,000. We don’t think they are targeting Gen Y with this strategy.

Thinking differently is always difficult. To make it a bit easier, try asking three questions:

1) What are the top two or three things that your industry will “never” change? People were always going to rent movies in person from a free-standing store; they were always going to buy insurance from an agent; and they were always going to get their copyrights and patents from a lawyer. And, guess what, when someone gave them an alternative (Netflix; E-surance, Legalzoom) they jumped at the chance.

2) Who are you unknowingly (or knowingly) ignoring? What are three ways you could segment and serve a different part of that market profitably? Nintendo went after the segment of the market that does not play video games. Sounds like a dumb decision for a company in the video game business, right? Only to those who never heard of a Wii.

3) What causes the consumer the most angst about your industry? Many men are embarrassed to buy ED drugs at the local pharmacies, and an entire industry has sprung up to provide the medication by mail. Buying a new car is an extreme hassle—going to the dealership; dealing with often less than reputable salespeople. Today, not only can you buy online, but you have access to (roughly) what the dealer actually paid for the car.

If you don’t come up with answers to these three questions, your competition probably will.

Maddock is chief executive, and Vitón is president, of Maddock Douglas, an innovation consultancy that specializes in inventing and launching new products, services, and businesses. Maddock and Viton are the authors of Free the Idea Monkey (ISB Publishing, 2012), and Maddock is the author of Brand New: Solving the Innovation Paradox—How Great Brands Invent and Launch New Products, Services, and Business Models (Wiley, 2011).

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