On the Capital Markets side of the business, and especially within Sales & Trading, the morning note has become almost sacrosanct. It’s essentially a given – you need to be putting our regular content to clients, and ideally in the morning when they are planning how to spend their day. Its purpose is unchallengeable, and its value never questioned.
For what it’s worth, I agree with the concept of a morning note. It’s massively valuable for the sell side, and massively helpful to the buy side – but when did you last take a step back, and ask yourself why it’s so valuable? I have a couple of theories:
Synthesizing information – at the very core of it, anyone in a client facing role has one major objective: take the resources and services being produced by your firm, filter them down to what is relevant to your clients, and deliver as much of a personalized experience as possible, with the goal of getting their business. Furthermore, not only deliver what’s important, but also help save your clients by summarizing and synthesizing, and helping them decide where to allocate their most precious resource: time. Our findings would suggest that ‘system emails’ that come from research have an open rate that is 10-25 times lower than sales readership. Why? Too many single topic emails, with no filtering or personalization. Very few people on the buy side read system emails – they filter them into a folder just in case they want to go back to them in the future, but they are instantly ‘removed’ from their main inbox. On the other hand, people really do read notes that summarize, synthesize, filter, and are personalized.
Sparking a conversation – something in a note might spark a conversation, lead to a follow up, or drive an engagement (such as attending a meeting, talking with an analyst, etc.). The more high quality touch points you have with a client, the more opportunities you have to spark a conversation – the genesis moment of all transactions.
Building a brand – this is perhaps one of the most underappreciated or unrecognized parts of sending out a morning note, and it’s the one I wanted to spend some time focusing on today. We’ve done a lot of research on what drives content consumption, and there seems to be a general consensus that it is two reasons: the content and topics (which you could have guessed), and the sender. The more valuable content you produce, the more likely people are to open your future content – regardless of the topic (that might be why you’re reading this right now!). But building a brand is also a core element to driving higher engagement with your content, and publishing regularly is a major part of building a brand. People are more likely to open information from readers they recognize and have received valuable information from historically.
Building a brand: the venture capital example
Have you ever heard of Fred Wilson? He’s perhaps one of the most successful VC’s today, and he has a blog at avc.com. His fund, USV, is one of the top performing funds in the world. He has prospective LP’s and start-ups fighting to get his attention. He has established a powerful brand – but can you guess one of the ways he really did that, and what he still does every day, and has been doing for years? He blogs. Every. Day.
So, why does he put out a piece of content every day? I can’t claim to read his mind, but if I had to guess I would say there are a few major reasons: to stay relevant, to show his expertise/knowledge, and to build his brand. He wants to make sure that the next Facebook or the next $50M LP knows who he is before they even think of going to market, and that they have a favourable opinion of him. He wants to stay top of mind in the broader community and ecosystem. He’s not alone. Many other prominent VCs, PE funds, and other investors are now turning to daily content production (which is usually delivered via email).
Bringing it back to banking
One of the interesting trends we’re seeing emerge is brand building in banking. Increasingly sector teams are starting to put out regular notes – whether weekly or bi-weekly. They are sending summaries of what has been happening in their sector to corporate clients, whether those updates refer to public news or internal research. They are using that content to drive conversations and inbound, but more importantly, they are using that content to build a brand. If you’re a corporate client, receiving a regular industry update with some unique industry perspective is invaluable. It’s something you’re likely to engage with and respond to. More importantly, as other investors have discovered, it keeps you top of mind with your existing and prospective clients. We’ve already seen growth in distribution lists as these notes get shared and additional corporate clients request to subscribe (in a perfect parallel to what has been happening with desk content for years).
It’s about time
I always find it interesting when something is so obvious in one area of the bank, but for some reason hasn’t made the transition to other parts. It’s so obvious that salespeople need to send out a morning note. It’s a given for everyone on the desk. In banking though, it’s seen as ‘different’ – many banking teams believe they can simply focus on deals. They don’t realize that building a stronger brand, and using content to spark conversations can be the ultimate ‘pre pitch book’ process. Many teams are starting though… and they are getting the first mover advantage.
Some sector teams might respond with “well, we don’t put out content” – and that’s the problem. I’m sure many investors said that when Fred Wilson got started – that they didn’t put out content – but now his lead is so big that no one starting from scratch today will ever catch him. It’s still early though, and I wouldn’t say this tactic is broadly adopted yet (although some teams have been doing it for years, very quietly). That means the ball is still in the air, and anyone can grab it.
I would encourage you to ask your banking teams how they are building their brand with content and thought leadership, or think about it yourself if you happen to sit in that seat – it’s a question that will become increasingly important in the future. Some of the best practices from the capital markets side of the business are coming over to banking – and it’s just getting started.
Good luck on your journey, and as always, we’re here to help!