The 10 secrets of prospectingArticle added by Jason Kestler on December 12, 2011
Ranked: #29 (1,405 pts)
There is no such thing as a perfect prospecting system. There is no such thing as an ideal lead. Prospecting is a process not a program.
How much money could you make if you had a steady stream of quality leads and referrals? We've all asked ourselves that same question. The reality is that 20 percent of all agents generate 80 percent of all commissions.
And the top 20 percent of that 20 percent generate 80 percent of the commissions in that group. What separates that top 4 percent from the rest of the field? They spend the vast majority of their time working at their maximum income tasks. For most of us, that's face to face in a selling situation with a client.
Before we explore how you can be in that position, you first must take a long, hard look in the mirror. Ask yourself this question, "Do I have the tools that will allow me to capitalize on that consistent flow of prospects?"
Can you close a sale? It seems like a silly question, but if you're not selling something on at least 75 percent of your appointments, you need help in this area. Too many agents blame poor sales results on poor leads, bad referrals, the weather, the season, the phase of the moon, etc. The reality is that you are either a closer or you're not. The good news is that closing skills can be learned. And the more clients you meet, the more rapidly they are learned.
Do you have the knowledge? Have you taken time to invest in yourself? Have you earned professional designations? Are you securities licensed? Do you attend practice development programs? Our industry is changing so rapidly that not staying current will doom you to failure. In addition, the clients of today are much more educated than they were five years ago. They can easily tell if you don't know what you are talking about.
Are you selling multiple products to your clients or are you a "one trick pony?" By offering multiple products, you not only increase the average income per client, but you also create greater client loyalty and, not surprisingly, more referrals.
I hope you see the point. Putting an advisor in front of a large group of prospects without the proper skills or knowledge is like asking a carpenter to build a house without a hammer or saw. The house may eventually be built but the cost would be so prohibitive, nobody would buy it.
Now that we've gotten that out of the way, let's talk about prospecting.
Secret no. 1
There is no such thing as a perfect prospecting system. There is no such thing as an ideal lead. They just don't exist.
Get it out of your mind, and don't be sucked in by those turn-key programs that prey on ill-informed dreamers. Prospecting is a process not a program. In order to maintain a consistent flow of prospects, you should consider employing up to eight robust, lead-generating programs concurrently. Although we will cover several programs in this report, the choices are limitless.
Secret no. 2
Run your business like a business. Write a marketing plan. Set annual goals, and then break them down to monthly, weekly and daily goals. Budget no less than 20 percent of your projected income for prospecting programs. If you want to earn $200,000 per year, a $40,000 marketing budget is not unreasonable.
Keep track of everything. If you do a mailing program, record how many pieces you sent and to whom. What was your response rate? How many appointments did you set? How many were kept? How many converted to sales? How much did you earn from the campaign?
You should know your average income on each sale, average income per appointment, average income for each lead, etc. Only by tracking absolutely everything, can you truly tell if your efforts are successful. Just like any business owner, you need sound information in order to make educated business decisions.
Secret no. 3
Your best source of income is from your existing client base. Since it costs almost five times as much to prospect for new clients than to sell to an existing client, your profits are higher. Your sales are easier. Establish a consistent, dependable program to drip on these clients at least quarterly if not more frequently.
You can do these programs internally (notice, I didn't say do them yourself) or outsource them to firms that specialize in client retention. Keeping your message in front of existing clients will generate ongoing sales with minimal effort on your part. Drip programs are also excellent tools for prospects that have expressed an interest in your services but are not yet ready to meet with you.
Secret no. 4
Re-position yourself from agent or broker to trusted advisor. This type of relationship can be developed over time. Keep in mind however, "Your clients won't care how much you know until they know how much you care."
Most advisors have trusted advisor relationships with 5 to 20 clients. Studies show however, that we are capable of managing up to 100 intimate relationships. If you increase the number of clients with whom you maintain trusted advisor status from 20 to 100, you can increase your profitability by 500 percent.
Secret no. 5
Use leverage to build your business by employing the time, talents and knowledge of others. This will allow you to continue to work at the highest level of your capability. If you want to make $200,000 a year, your average hourly rate is somewhere between $100 and $150 an hour. Now, examine everything you do on a daily basis and consider whether these activities are worth this hourly rate or whether you should hire someone at $10 to $15 an hour to perform that task.
Secret no. 6
Maintain a top 20 list, and update it monthly. The people on this list should be those who are currently considered your most important relationships. These could be large clients, referral sources, mentors or family members.
Your top 20 will be responsible for generating the vast majority of your business. Spend 80 percent of your time on your top 20 relationships every month. Don't be dragged down by the bottom 80 percent who only generate about 20 percent of your income.
Secret no. 7
Surround yourself with winners, and fire your negative friends. Make it a point to develop relationships with positive people who earn significantly more than you do. Hire only positive thinkers. Invest in quality.
Business coach and author Norm Trainor introduces the concept of Stratum Capability and Time Horizons in his program, The Eight Best Practices of High Performing Advisors. In the table below, he illustrates how your income stratum should relate to your planning time frame. For example, if you are grossing $175,000 per year, you should be planning one to two years out.
Norm also suggests that an individual cannot effectively manage someone more than one stratum below them.
|Stratum ||Time Frame ||Earnings|
|VII ||20 years out ||$2,560,000|
|VI ||10 to 15 years out ||$1,280,000|
|V ||5 years out ||$640,000|
|IV ||2 to 5 years out ||$320,000|
|III ||1 to 2 years out ||$160,000|
|II ||12 months out || $80,000|
|I ||3 months or less ||$25,000|
In his book, "Good to Great," Jim Collins said," "Do you have the right people on the bus and are they sitting in the right seats?"
Too many advisors, in attempt to save money, hire staff who are much less qualified than they need to be. This leads to both a frustrated employee and employer.
Secret no. 8
Use wholesalers with whom you already have relationships. If you sell mutual funds, talk to the wholesaler from your favorite fund. They all have soft dollars they can commit to your business. If you work with an independent marketing organization, find out what they have available. You might be surprised by what you find.
Be realistic, however. If you have never written business for someone, don't expect them to invest heavily in you. If you aren't willing to invest in yourself, why would you expect someone else to?
Secret no. 9
Obtain introductions, not referrals. Do your research. If you have a top 20 client who is an executive with ABC Corp., use the Web to identify other executives with ABC. Next time you are with your client, say, "I know you work at ABC Corp. Do you know ___________?" After he says "Yes" say, "I'd love to meet him. Could you arrange an introduction? How about lunch on Friday?"
Secret no. 10
Patience. Any prospecting program takes time and commitment. Don't give up on a program after one try. Any system will work if you take time to work the system. Test the system. Measure your results. Make minor adjustments and test again.
Prospecting is a process. It's not lead program or a magic system. It must be worked and refined daily. Consistent attention to multiple systems will produce a constant flow of quality sales leads.
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