I’ll never forget the first time I attended an investment club. A friend of mine invited me to attend a meeting to see if I wanted to join. Two guys got up and explained the investment strategy – dividends. They bought a bunch of stock in one energy company that paid the highest dividends they could find. The company stock price had dropped, but they weren’t concerned. And that was the end of the meeting – everyone dug into the beer and chips.
I went back a second time. This time, they found another company with a high dividend. They switched the money to that company, which had also gone down in the last month. The focus in both meetings was on the performance of the investments rather than actual learning. I decided not to join the club.
Compare this to my experience with a women’s investment club. Everyone had homework and presented a short piece about what they learned. (Learning was the main focus of the club) They had a long-term strategy. Once they decided to buy a stock, they tended to hold onto it. They focused on companies they had either thoroughly researched, or knew well from their personal dealings with the company. One of the stocks they chose was Lululemon – women’s athletic clothing. Many of the members wore Lululemon clothing and raved about the company.
I wish I had joined that club. This year Lululemon started around 35 and as of the writing of this post, is just above 75.
What male vs. female investment styles can tell you about marketing
Men and women approach investment decision making in similar ways to how they approach any buying decision.
For the guys, it was about having one focused strategy – dividends. It was about finding the highest paying dividend. When marketing to men, it’s important to differentiate yourself and show how you are superior. How does your product help them perform better.
For the women, it was about doing a lot of research and approaching investing from several different angles. It was about doing your research and buying what you know, aka what you and trusted friends have direct experience with. When marketing to women, provide details on your product and a website where she can gather more information. Feature product reviews and testimonials prominently so she can see what experience other shoppers like her have had with your product.
Why women’s investment clubs do better than men’s investment clubs
Not all investment clubs are the same as the ones I described above. But I think the overall comparison is an interesting one. Many reports show women investment clubs outperforming male investment clubs.
- Men tend to trade more often than women. They want performance, and they want performance now. I think especially in a group setting, there is pressure to come up with big short-term winners. In the women’s groups, it was such a group decision, and there was so much research, that there wasn’t as much ego involved.
- Women want a lot of information about what they are buying. I hear this from financial advisors everywhere – women always ask more questions. Again, look at the shopping process. Men will find something that meets their main criteria and buy it. (I need black pants. These are pants, they’re black, they fit, here’s my credit card). Women want a lot more information (I need black pants. What is the brand, what’s the material, does it wrinkle, is this a straight leg or does it flare, does it make my butt look big?, will it go on sale any time soon, let me try on a few more just to make sure).
- Men have a strategy, women have a comprehensive plan. Like my friends who were focused on dividends, men can sometimes follow a strategy – be it sector rotation, a technical chart that alerts them to when it’s time to buy or sell, or options trading. (the vast majority of day-traders are men). Women want a comprehensive plan that includes insurance, protection against market downturns, and diversity of investments. Women are more risk aware. They are more willing to trade of big upsides to avoid big downsides.
As one advisor told me, men want to hit home runs, but they strike out a lot. Women are content to hit singles and just keep methodically advancing around the bases til they eventually score.
I don’t want to stereotype here. Many men are terrific investors and many women are not. But how they approach financial decision making can give us some insight into how they approach other buying decisions.
Now, off to buy some Lululemon stock.
Holly Buchanan is the co-author of The Soccer Mom Myth – Today’s Female Consumer: Who She Really Is, Why She Really Buys. You can read more at her blog Marketing to Women Online