Becoming Indispensable...

At Cognito we have only two types of client: financial firms and those that deliver solutions to financial firms. We've talked in this blog about how asset managers and banks need to better communicate with their investors but what about those companies which offer goods and services to the financial industry?

For some, such as financial consultants and analysts, the current crisis could present an opportunity, particularly around cost reduction, outsourcing or post-merger integration (PMI) programs. Others, such as the data and infrastructure providers, may be so operationally integral within financial institutions that they find themselves sheltered, at least from any short term panic response. No-one, however, will be immune to the inevitable shrinking of the financial universe (Morgan may be the next shoe to drop this week) and all will need to find new ways to become more valuable to this diminishing customer base. There is too little time at this point to dramatically change the nature of their solutions. Firms now need to focus on communicating their purpose with renewed clarity, selling their value, and convincing clients of their indispensability. Below are four recommendations to this effect:

1) Stop Panicking - Most decisions made around 9:15 on Friday were the wrong decisions. An effective response strategy needn't take a long time to put together but similarly it can't be a formulated with one eye permanently glued to the Bloomberg terminal.

2) Get Closer to your Clients - Whether personally, through their sales teams or with marketing initiatives, business heads now need to get as close to their clients as possible. While undoubtedly a brave move given the market volatility, a number of Cognito's clients have held successful and well attended user-group meetings this week and will be stronger for it in the coming months. Firms that shut down proprietary events, marketing efforts, and trade show attendance will not only project instability but will lose invaluable communication channels to their customers.

3) Have a Story - This is not the market to be without a clear story and a strong message yet it surprises me just how many firms still have neither. In an environment of fear and uncertainty, clients look for stable partners whose value is demonstrative. An interesting point several of our clients have made recently is that their direct contacts within the FIs are also looking for a clear message to sell internally - so when they are asked why the firm should keep solution x, they can clearly explain its value to the whole organization. We can't begin to equip our clients with these messages if we have not formulated them for ourselves. In addition, having this story articulated and validated by third parties such as the media and analyst communities is obviously an excellent way to enforce your message.

4) Sell Value - Value is relative and your messages may need to change to reflect this. 12 months ago a car dealer whose models were 10% more fuel efficient and 5% faster than his competitor's may still have led his pitch with a message about speed. Today there is no question which message would take priority. So it is with solutions for the financial industry. Some industry providers are lucky enough to have been talking about risk and cost reduction for some time now but others are not so lucky. Listen to what your clients are telling you they need today and be prepared to redraft your value proposition to meet this short term need. For some firms this effort will prove just too difficult but for those nimble and well equipped enough to redraft and successfully pitch this new value message there is opportunity to be found in even the direst of circumstances.