KonnexME - connect every part of your practice together
Client share vs. market share: A winnable warArticle added by David Vick on July 15, 2009
David Vick

David Vick

Wheaton, IL

Joined: February 27, 2008

My Company

Dressander BHC

KonnexME - connect every part of your practice together
"Ninety-five percent of salespeople go 95 percent of the way and get only 5 percent of what's available to them. Five percent of salespeople go 100 percent of the way and get 95 percent of what's available to them. You must decide in which group you want to be in." -- Todd Duncan, author High Trust Selling

Prospecting is an ongoing battle in the war of business, and it can be won or lost in the battlefields in which we choose to fight. I, for one, want to win, so I choose a battlefield that others may shy away from. Yet, I know it's the only way to win the prospecting war throughout the long haul. In his book High Trust Selling, Duncan illustrates this point extremely well with a concept called "Market Share vs. Client Share."

Market share

Let me explain what Duncan means. First, what comes into your mind when you read the phrase "market share?" Coke vs. Pepsi? IBM vs. Microsoft? American Idol vs. everybody else? Well, how about American Equity? What's its share of the indexed annuity market? American Equity has been number two in the country in sales for the last three years. So what does that mean? Think of it in these terms: Out of every 100 index annuities sold, how many are sent to American Equity? It's an interesting question, isn't it? Maybe it's in the range of 10-12, I don't really know, but that would give them a 10 percent to 12 percent market share.

Now, let's ask the same question about you: Out of all the advisors selling annuities (or other financial products) to seniors in your area, how many out of every 100 sales made are your sales? Don't think about it for too long, as you'll likely get depressed. The number is something less than one, that's for sure. That's right -- you have a fractional market share in the industry that provides your livelihood. Through your seminars, set appointments, newspaper ads and so on, you are prospecting in a highly competitive battlefield. The odds are stacked against you by the sheer numbers of agents, brokers, and planners doing the same things you're doing in exactly the same way. So, how in the world do you gain any type of edge?

The answer is fairly simple -- change battlefields from market share to client share and you now have a winnable war.

Client share

Client share is definitely a different, and by all accounts, easier battle to win. Here's why: Ask yourself a different question than the market share question. It goes something like this: How many people do each of your clients know who might bring you potential sales? After talking with top advisors, and hearing numbers between five and 250, let's put the number at a very realistic 20 people. My top advisors in SFPA tell me that, out of the 20, a reasonable expectation of sales would be five. Actually that's a real number for one of our agents in Wisconsin. So, let's use the number five and say it a little differently. Out of the potential 20 sales from a client, you can reasonably assume that they could introduce you to 10 and you could close five -- a 25 percent share -- of your client's referrals. Hence, your client share.

Now, do you see that pursuing a 25 percent client share is much more attractive a fight than a fractional interest in market share? In other words, the difference is prospecting for market share or partnering and training for client share. By partnering and training, I simply mean that you ask your clients to partner with you and then train the ones that say "yes." To that end, I've created a highly successful approach called Focus Group Marketing. Gold Rush uses strategies like "focus groups" with top clients that lead these clients to a decision to partner with you. Focus groups also do a fantastic job of training your clients on how best to partner with you.

I hate asking for referrals, and clients hate getting asked. But, surprisingly enough, they enjoy the process of partnering and appreciate the training. The results are clients who "word-of-mouth" market for you, and bring to your door the very people that will make you a success in the battle of the client share.

Let's pursue the client share idea from a different angle, by asking how much a high-trust, life-long relationship with a client is worth. In other words, what's the value of a high-trust client? Here's an example:

What's the value of a high-trust client?
    1. Average sale: $ 75,000
    2. Average commission: $ 5,250
    3. Repeat sale: $ 75,000
    4. Average IP referrals per year: 12
    5. Minimum retention goal of client: 15 years
    6. Client value in one year (2 + (4*2)): $ 68,250
    7. Client value over lifetime (2 + 2 + (4*5*2)): $955,500
 Here's a real sample from my client base:

Premium Commission
1. Couple A:
$115,000
$9,200
a. Repeat Business:
$60,000
$5,400
2. Couple A's Friends, Couple B:
$150,000
$9,000
a. Couple B's Friend, Friend C:
$200,000
$18,000
b. Friend C's Repeat Business:
$100,000
$8,000
c. Friend C's Ex-wife:
$160,000
$12,800
d. Friend C's Daughter:
$40,000
$3,200
e. Friend C's Son:
$150,000
$12,000
3. Couple A's Friends, Couple D:
$110,000
$9,600
a. Couple D's Daughter:
$105,000
$7,350
$1,190,000
$94,550


Please note that Couple A started with me about five years ago. That means that they have accounted for about $200,000 in premium and roughly $19,000 of income each year. I have about 300 clients. If I found just 30 that would follow a similar pattern, I could create $6,000,000 a year of premium and $570,000 a year of income. So, essentially, only 10 percent of my current client base, if done correctly, could produce enough numbers for a very profitable business.

All of this happened because of high-trust, life-long clients who wanted to see my business succeed and were happy to partner with me in order to make it happen. What's crazy about it is that this happened before I started asking people to partner with me. These clients were obviously pleased with the service they received, and were intent on sharing with their friends. Imagine what would happen if you actually marketed in this manner intentionally. These results would repeat themselves over and over again, creating a "word-of-mouth" epidemic. Now, that's an easy way to win a war.

So, in the end, prospecting for market share is a lot less attractive than partnering and training for client share. Not only that, with seminar numbers dwindling by the standard way of marketing, what's next? If you don't answer the "what's next?" question, you'll end up with some huge marketing bills --and not a lot to show for it -- while others in the industry have moved on. It's not to say that seminars are totally out. But what if there was a way to do only three to four sets a year, add your client share partners to the mix, and see your seminars highly attended with more qualified prospects? It would cut your costs to less than half and see your sales sky rocket.

Think it's a dream? Just remember this comparison of market share and client share, and ask yourself which is a better battle to fight and an easier war to win. Then, run out to battle.
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions
Post Article