Ernie the Entrepreneur has had a rich, successful career. Operating for decades in the same community, he's built a strong reputation as a knowledgeable, trustworthy financial advisor. He has hundreds of clients, a professional and dedicated staff, and a unique office situated in a restored Victorian home. During the recent economic downturn, Ernie protected his clients by keeping them in lower-risk, conservative financial vehicles. As a result, the referrals are starting to mount. Life, for Ernie, is good.
But something keeps nagging at Ernie, like an itch that won't go away. He believes he can build something bigger -- a full-service advisory with several producers. He'd like someone to follow up on those lead sheets he hasn't had the time to call, or talk to those prospects at his workshops with who he hasn't been able to reach. He knows his practice could provide more life insurance solutions to the existing client base, but Ernie hasn't had the time or specialized life knowledge to build up that part of the business. His desire to build his practice is partially driven by an ironic twist: Like many producers who give their all for their clients to provide them with a solid plan for retirement, Ernie doesn't have a clear plan of his own. He's not sure what will become of his practice if he ever leaves it. Indeed, Ernie is his practice -- the clients are his, the relationships are his. Without Ernie, the revenue goes away.
So, Ernie decides to hire another producer or two. To him, the opportunity is clear and extremely lucrative. His business already has an excellent reputation, and he has hundreds of prospects who haven't been called. The infrastructure to support that new person already exists. He can offer the new person a draw against commission, and anyone worth their salt will make money, hand over fist, in short order. Ernie, like many driven, successful salespeople, sees the potential in his book of business. Heck, he evens thinks, "If this were me, I would jump at the chance!"
There's just one problem with Ernie's line of thinking -- it's not him. He wouldn't have jumped at the chance, because he never possessed the "employee mentality." A long time ago, Ernie started his own business because he had enough confidence and discipline to take the risk. Before opening his own practice, he always felt like a tiger in a cage as an employee. He believed he could do better on his own and, indeed he did. Alas, Ernie's pool of potential sub-producers did not.
You may have guessed how this story ends: Ernie was not able to build his business into the full-service advisory he had hoped. Time after time, his new sub-producers didn't perform to his expectations. One simply wasn't happy and decided to leave; another balked at putting in the work.
Like many driven people, Ernie expected others to be as focused and enthusiastic as he was. When hiring a potential sub-producer, it may not work out that way, because the sub-producer suffers from call reluctance. In fact, it's probably why they were available in the first place. Call reluctance is common in any sales-driven business, but when your business reputation is on the line, it becomes crucial to recognize it and stop it in its tracks. Let's review the common call-reluctance warning signs:
1. "I will make some calls as soon as I've been properly trained and understand more about the practice."
The solution? Leverage.
Believe it or not, this may be the most obvious warning sign you get from a new producer. "More training" is rarely, if ever, the solution to a call reluctance issue. One of the most common traits shared by successful advisors is a competitive spirit -- strong salespeople with some basic knowledge will pound the phones right away, because they're motivated to succeed. Indeed, they see the opportunity, and they want to start calling your list of prospects before you change your mind and take them for yourself.
Worse still, when your new producer uses the "I need more training" excuse, it's often a calculated way to shift the responsibility away from them and onto you. Many entrepreneurs fall into this trap, because they are not afraid to take responsibility for their failures, so they respond by sending the new producer to training classes and mentoring visits. When the producer returns, he often appears fresh and motivated for a few days. Don't be fooled. The phone isn't going to dial itself when he gets back. Your prospects need to be called, and all the training in the world isn't going to change that.
2. "I've left lots of messages and sent out lots of e-mails. No luck yet."
Is it tough to get people on the phone nowadays, or to compel them to respond? Sure. Is it as impossible as your new producer is making it seem? Probably not. Their definition of "lots of" calls may be vastly different than yours. This response is common among producers with a self-esteem problem. They don't want to seem pushy or aggressive, and lack the confidence to remain focused on their goal. When they make calls, they are feverishly hoping that voicemail picks up rather than a live person. That way, they can leave a message, check off one more name on their list, and avoid confronting the prospect altogether.
In sales, this personality type is the most prevalent, and it's not impossible to repair. Many salespeople who experienced success early in their careers may find themselves in this position later, because they have to generate a new client base from scratch, and that can be difficult to do even with a list of warm prospects from past workshops and existing client referral events. Close supervision, goal setting and sales contests can help this type of producer.
3. "I'm working on my network of contacts. I've got some big deals in the pipeline."
Watch out for this one. I've made this mistake myself -- hiring someone for their Rolodex -- and lived to regret this decision. If your new producer has an established network of potential clients, why is he working for you? Why was he available when you needed an employee? There may be exceptions, and I'm sure they're out there, but I haven't seen them. A strong, motivated salesperson will work every prospect they can, affluent or otherwise, and get through them relatively quickly.
This producer, however, will continue to seduce you with grandiose promises about one big future deal after another. Because you may have invested money and time in him already, there is a tendency to "hang in there" and hope one of those golden deals comes through and pulls you out of the red on your investment.
The bottom line? The producer should get through his stack of business cards in about a week and tell you, one way or the other, what to expect from his network. After that, it's all about calling, making relationships, and grinding out sales.
It's useful to know and recognize the warning signs; still, what's the solution? Perhaps you shouldn't have been looking for a "sub-producer" at all. Instead, you may have been wise to look for a potential colleague. Adopting that mindset may be frightening to you as an entrepreneur. There are, however, ways to identify that person, all the while maintaining proper leverage and control of your business -- part two of this series will teach you how.
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