Fidelity’s Future

Then Stephen A. Cone joined Fidelity Investments last February as president of customer marketing in its retail group, his mission was to bring a more personalized marketing style to the financial company. His job was to do at Fidelity what he had done as chief marketing officer at KeyCorp., plunging the bank into database marketing and touchy-feely customer service like coffee bars in branches.

Cone has moved swiftly at Fidelity. Less than a year after joining the Boston-based company he already has in place many initiatives that are shifting its marketing focus from products to customers. And Fidelity has a lot of retained customers to focus on: 6 million.

In April, he put in place a segmentation strategy, divvying up customers by top investors and generation: seniors, boomers and young professionals. “It’s not something that’s all that unique in marketing but Fidelity was doing it in the retail group in one-offs here and there,” he offers. “Now it’s a full-blown strategy.”

Fidelity is also creating products along those segments. For example, in November it debuted-and is marketing primarily to its high-net-worth investors-a tax-advantage stock fund, which Cone says is the first fund that focuses on the potential tax consequences of an equity fund.

Fidelity, which bills itself as the largest mutual fund company in the country, managing over $600 billion in assets, has been going through some wider changes. The money giant’s funds had been underperforming for the past three years. But 1998 has been a turnaround; a September cover story in Money was headlined “Fidelity Is Back.”

According to Money, in 1995 and 1996, only five of Fidelity’s 27 diversified U.S. stock funds beat Standard & Poor’s 500-stock index and in 1997 only one did; as of September 1998 nine were beating the index.

At least part of the woes were attributed to the marketing department, a situation Cone is helping to rectify.

Cone, who before KeyCorp had been president of database giant Epsilon and ran direct marketing at American Express, is using the database to better target Fidelity’s communications-mail, phone and Internet. Cone promises in the first half of this year a number of enhancements, which may include personal pages, to the company’s Web site. “We’re doing more personalized messaging of products and services which we think are the right ones to each individual customer beginning,” he says.

Cone has pushed the mail creative to be, in his own words, “more lively, more responsive, easier to understand, more personal and warm. The message is: We want to be your investment provider for all of your investment needs. We want people to understand that we’re more than just a mutual-funds provider.”

In addition to mutual funds, the retail group’s offerings include discount brokerage, retirement funds, life insurance and discretionary money management services.

But Cone wants to emphasize Fidelity’s services-and develop customer loyalty. In October, the company rolled out free offers for personal investment reviews. Response to the mailings was a very nice 10%, although Cone was surprised that 40% of these customers opted to respond by phone instead of visiting a Fidelity branch. Some of the consultations took two hours.

Fidelity has introduced speech recognition in its customer service operations, which particularly works for the brokerage business: customers can get quotes simply by saying a company’s name. Early this year Fidelity will introduce trading through speech recognition.

It’s also introduced an instant broker service with trading through a pager (and, soon, through phone and Internet), currently targeted at active traders (defined as those who make trades at least 36 times a year).

Some might view these efforts as, strictly speaking, not marketing, but Cone disagrees. “Our job is to create services and products that will give customers more reasons to buy from us,” he says.

Cone also believes in using a personality to promote a company. At Fidelity that personality is Peter Lynch-the celebrated fund manager who ran Fidelity Magellan from 1977 to 1990-who has been appearing in TV ads with Lily Tomlin and other celebrities. The ads feature as a tagline Lynch’s advice to “Know what you own and why you own it.”