customer experience in most industries, including the investment
Within the Equity Crowdfunding context, social media is
frequently talked about by pundits and thought leaders in regard
to; 1) “wisdom of the crowd” in investment research and diligence,
2) a transparent way to profile the backgrounds of issuers and
their management teams, 3) building public awareness for
new investment opportunities, and 4) “blowing the whistle” on
fraudsters, or so called “bad actors”.
What is rarely mentioned is the important role that social media is
beginning to play in prospecting for new clients, and in client relationship
management. It is inevitable, that in a world of online private offerings that
EMDs and their DRs will need to embrace this new way of marketing,
and communicating with current and prospective issuers and investors.
Evidence of benefits of social marketing
The Aberdeen Group, in a recent study found that sales teams
using social media to find and develop new client relationships
were 36% more likely to achieve their quota, and realized a 12.2%
higher year-over-year increase in total revenue, than teams using
only traditional sales and marketing methods. In a study of over 511
business sales teams, in diverse industries, it was found that 72.6%
of sales people using social media to prospect and connect with
new prospective customers outsold their colleagues that were not.
Finally, financial services firms like Morgan Stanley Smith
Barney, Bank of America Merrill Lynch and Wells Fargo are all
taking steps to enable their investment advisors to leverage the
power of social media in building client relationships. In particular,
following a successful 600 person pilot, Morgan Stanley is now
actively rolling out its social media policy and training program to
its 17,000-member investment advisor team. According to Lauren
Boyman, Executive Director of Digital Strategy, Social Media and
Content for Morgan Stanley, “Of those participating advisors who
used the social media platforms on a daily basis, 40% were able
to attract new clients through their efforts”. While the adherence
to strict regulatory and compliancy rules is paramount, innovative
financial services firms are starting to develop strategies and policies
to harness the potential of this new medium.
Are you ready?
The Equity Crowdfunding Alliance of Canada (ECFA) was
organized, in part, to educate industry participants on the opportunities
in Equity Crowdfunding and to promote best practices in that regard.
The ECFA believes that private offerings, and related due
diligence, marketing, selling, compliancy, as well as follow on
investor relations and communications processes all must, and
inevitably will, move online. More importantly, the ECFA believes
the resulting changes to the private capital markets will be dramatic.
Perhaps some historical lessons can be learned from the
disruption caused in the investment advisory industry, by online
stock trading portals. While the pace of adoption, and the “
endgame” impact of Equity Crowdfunding portals on the private capital
industry are far from clear, EMDs would be well served to start
planning today for a much different future. In closing, EMDs can
prepare for a world where the marketing and distributing of private
offerings over the Internet is a common business practice, by:
1. Developing an “online” or hybrid “online-offline” strategy for
distributing private offerings, including licensing an Internet
portal platform, or subscribing to a hosted portal service.
2. Automating your back office compliance processes to enable
your business to scale, in terms of a rapidly growing number
of new, non-accredited investors.
3. Establishing an interactive corporate web site and a social media
presence for your corporate brand, and your executive team.
4. Training your dealing representatives on how to develop their
individual professional brand, and to leverage social media to
find and develop relationships with new prospective investors
in compliance with applicable securities law.
For more information contact:
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2. Source: www.massolution.com, “2013CF,
Crowdfunding Market: Software & Solutions”
3. Source: www.fundinguniverse.com, “E*Trade
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18. Source: www.slideshare.net, Aberdeen Group,
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