The Six Most Costly Words for Your Business

This is the unhappy reality of trying to get through to a busy prospect who doesn’t want to talk to you.

I also recently talked to an advisor who has employed a full-time cold -aller for the past five years to contact entrepreneurs. From those calls, he attracted 15 new clients with $25 million in assets last year. That’s the good news. The bad news is that this cold caller made 50,000 calls to land those 15 clients. Sound hard to believe? Here’s how the math works:

Activity per day

Activity per week

Annual results

                               
These daunting numbers aren’t the true challenge. After all, even if it costs $100,000 to keep his cold-caller motivated, that’s still worthwhile to land $25 million in new assets. The real difficulty is that according to this advisor, the results from these calls have been in steady decline.

An alternative to mass marketing

As the level of investor skepticism has risen, returns from almost every form of mass marketing are in sharp decline. Effort alone in reaching prospective clients is no longer enough – you have to make prospects want to hear your message.

Here’s another example of how the law of large numbers that worked in the past has lost its effectiveness. For the past 15 years, one advisor  has attract clients by hosting dinner seminars at top restaurants in affluent residential areas in his community. Using high-end venues like Ruth’s Chris Steak House, it took 300 to 400 invitations to get to his target of 15 “buying units” in the room, of which he historically converted one into a client. That was 15 years ago. Last year, it took 1,500 invites to get the same 15 singles or couples in the room – and the conversion of attendees slipped to the point that the economics of these dinners became marginal.

The problem for this advisor is that he hasn’t found a new approach to replace these dinner seminars. “I’d love to move in a new direction,” he told me, “if only I saw a new direction that made sense.”

But the news is not all dire. Contrast that advisor’s experience with that of an advisor with a $200 million practice after 13 years in the business, the bulk of it consisting of dentists. In this interview, he outlined how he invites dentists to complimentary dinner seminars, where he gives a short talk on planning issues and brings in an outside speaker to deliver a technical talk eligible for continuing education credits. He targets dentists in the 30- to 45-year age group and sends out 300 invitations, getting 25 to 30 attendees, including some spouses. He   hosts six dinner seminars a year – and typically gets two to three new clients from each dinner session.

There are three reasons that this advisor gets a 10% turnout from a group of busy professionals:

1. The focus on CE-accredited speakers delivers clear value and a strong point of difference – and also communicates that these dinners are targeted specifically to his dentist audience.
2. With his focus on dentists, he’s developed a reputation within his community that gives him credibility and trust.
3. Many of his dinner guests are repeat attendees. With a different CE topic each time, he gives them a reason to return, which advances his position as the  “safe choice” financial advisor for this group.

Looking ahead rather than behind

When you’ve had success with an approach, it’s natural to want to stick to it. And just because you experience short-term setbacks doesn’t mean that you should abandon something that’s been proven to work over time.

At a certain point, however, persistence turns into denial.

We can all name once-successful companies that failed to adapt to a new competitive reality and foundered as a result. Advisors who built their businesses with a mass-prospecting approach need to recognize that the days of relying on numbers alone are behind us. While attracting clients will always be a numbers game to some extent, it’s not the pure numbers game than it was 15, 10 or even five years ago.

More and more, prospects are predisposed before they sit down with an advisor. That’s where reputation is key in getting meetings and in getting a positive predisposition from prospects. As witnessed by the cold caller who made 50,000 calls to get 15 clients, if an advisor doesn’t have a strong reputation and is solely dependent on a marketing machine, it’s incredibly hard to get quality meetings. And tomorrow, it will be harder still.

If something isn’t working, look hard at the reasons why. If there’s been a fundamental shift in the landscape, be open to change, avoiding the temptation to say those lethal words: “We’ve always done it that way.” That’s true not only of attracting new clients but also of communicating with existing clients, structuring, managing and compensating employees and setting an overall strategy for your business.

A willingness to walk away from things that worked in the past and openness to new approaches have always been hallmarks of exceptionally successful businesses. Given the accelerating pace of change, that mindset and willingness to change will be even more important in the future.

Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com or here for his videos.

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