'Spreading the Good Word'​, a business lesson from Wall Street

by Ezinne Enyinnaya

Originally published on LinkedIn 

16 January 2019

In the early 20th century, Merrill (co-founder of Merrill Lynch) turned the investment world on its head with the concept of selling stocks and bonds to middle-class retail customers. With Merrill as the advocate, securities became a consumer product that held as important a place in America’s commercial culture as automobiles and insurance policies.

During that same period, when a Forbes survey identified the nation’s fifty outstanding business leaders, most of them ran large manufacturing concerns, like General Motors. Only Charles E. Merrill, a sixty-two-year-old college dropout, made his living on Wall Street.

Taking a deeper look into how Charles Merrill was able to achieve this, the international bestseller ‘’Forbes Greatest Business Stories of All Time’’ highlights the fact that the firm’s strategy was first to educate and second to attract people to the store.  In an uncommon practice for a brokerage house, Merrill created awareness through pamphlets and platforms like the New York Times with articles such as ‘’what everybody ought to know about the stock and bond business’’, giving information on definition of ‘stocks’, ‘bear’ and ‘bull’ markets as well as how to do business with a broker.

A paraphrased excerpt from the book reads:

‘’… These efforts earned Charles Merrill and his company acclaim as the company was said to have brought more respect to the business of marketing securities than any other person. Merrill criticized his peers in the securities industry for having little interest in ‘spreading the good word’. That year, his 106 offices with about 3,300 employees went on to service 104,800 accounts…’’

Charles Merrill’s ‘democratization of stock ownership’ was one of the events that shaped the evolution of Wall Street in the 1940s. It is interesting how a passionate stockbroker believed that if he educated his customers, they would be more willing to invest in securities. This gave rise to a movement of ‘’spreading the good word’’ to potential customers, which in turn multiplied his customer base.

In today’s business world, there is the opportunity to develop the market for many products/services if adequate information is communicated to potential customers about the solution being created. This is why today, blogging is a desired skill because it offers the opportunity to enlighten customers, position a product/service and shape a whole industry. Wall Street’s market development strategy of ‘’educating first’’ and then ‘’attracting customers’’ has been proven to be effective and fortunately, can be easily adopted in most industries.

When faced with a market development problem, answering questions like ‘’How much understanding does my potential customer have about the solutions I offer?’’ can help make the difference between success and failure.

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