The following two questions identify a unique distinction between clients and financial advisors:
1. What do you first look at when you open your bank statement?
2. Why is that item you look at important?
Think about these two questions and ask others this week to gather their response. We will discuss the differences next week.
After talking with hundreds of advisors following the first half of 2009, several lessons were clear:
1. maintaining households and assets does not maintain revenue, unless you are 100% fee-based.
2. pipeline must include more potential revenue that you can loose through attrition or market loss.
3. introductions only come from advocacy, which is started with a conversation.
Less than 5% of clients give referrals on a consistent basis. Why is this number so low despite our efforts to deliver great service to our clients? I believe it is because of the inherent risk of referrals. When your client endorses you to somebody else, they put themselves at risk to loose two relationships. They have the chance of losing their relationship with their friend whom they have referred and they have a risk of breaking up their relationship with you. Not because of something they have done, but because of something outside their control. Because if the referral doesn’t work out with you, who are they going to blame? And if he loses his best friend, whom is he going to be upset with? You. That’s why people don’t make referrals, there’s too much at risk.
But if you can find a stranger that they don’t know, and have them talk with the stranger about what it is like to work with you. This is a safe way for them to learn the Language of Endorsement™.
As the client answers the strangers questions he is building an endorsement script. So the more they are a reference with you, the more comfortable they becomes talking about you.
This is the simplest way to remove the risk of referrals.
Have you ever wondered why the client is so concerned with understanding what you do? It is as if the client wants to peek behind the curtain, to see what is going on behind the scenes.
The problem stems from the fact that we have spent most of our time in the client relationship focusing on the backstage - the processes, the systems, and the services we provide and no trust is established. It is the front stage that should concern the client the most. The Experience Economy by Pine and Gilmore gives a detailed understanding of why marketing is like theater and the importance of understanding that the message is what goes on in front of the curtain. The front-stage experience the customer is looking for is a better understanding of having their needs understood and met.
Now as we consider this in more detail, keep in mind the difference between backstage and front-stage items. The delivery of your products, your services, the tools you have, the resources, the software, the technology you have; all of these are backstage items that assist you in delivering the performance on the front stage. Without them, the front stage performance could not happen. Likewise, you could have all the backstage in perfect working order, have the best service, have the best technology, have the best of everything behind the stage, but without the clients’ confidence that you know them and understand their situation, they will continue to peek behind the curtain. They will continue to spend a tremendous amount of time trying to better understand what it is you do and whether or not you are doing it well. The more comfortable they are in your understanding of them, the more they will relax and leave what goes on behind the curtain, behind the curtain and enjoy experiencing the relationship and the performance on stage.
This goes back to Peter Drucker’s principle that the two most important functions of a business are marketing, i.e. knowing your clients more fully, and innovation, i.e. creating solutions for their problems and needs. If we knew our clients on a deeper level, we would be better equipped to assuage their fears of our being out of sync with their needs and desires. In many cases, I believe our clients feel insecure that we actually understand what it is that they want, both out of our relationship and out of life in general. For that reason, we entirely miss their main objective.
Developing a deeper understanding of the client easily solves this problem. In a coaching relationship, prior to the first session, a client is asked to fill out an in-depth questionnaire, often called the Client Intake Kit, which goes into extreme detail about his or her personal and family life, life story, business history and experience. This up-front, in-depth analysis of the client allows the coach to begin “right where the client is.” It is much like the relationship with an old friend who has grown up with the client. The old friend knows all the history, knows the traumas, problems and failures that have occurred as well as the successes and achievements. This knowledge of how the coach client handled things in the past is extremely valuable when it comes time to evaluate, consider or assist the person in looking at options that are ahead. Without this knowledge or without this understanding, we are strangers.
It is the same problem we have with our customers and clients. Because we do not know them at that deeper level, they do not have the comfort or assurance that we truly understand their situation and therefore, they try to second-guess us or double check that we have not forgotten something or missed what is most important to them. We have spent too long focusing our marketing efforts and selling our services in regards to our technology, our tools, our resources and all of the backstage items. How well the lighting is done or the sound system works is not of interest to the client or to the audience as long as they can enjoy the performance. We need to stop marketing our services and our technology and instead focus our attention where the clients’ attention is. In other words, focus on them, on their interests, on their goals, their fears, their tolerations, helping to alleviate the obstacles in their life and focus on the opportunities and strengths that they have. Assisting the client in building a better life.
Too often, we have spent too much time trying to solve the problem before we really even understood it. That is the significant flaw both in our strategy and in the solutions that we provide our clients, and, in the end, the clients understand that we have missed it, and we have focused on the wrong thing. We use our reports and our review with our clients in an ongoing way to focus on what we think is important and what we find exciting. In other words, we are focusing the client on the back stage and because of the concentration of our time and effort there, we think the client should be interested also.
Stop directing the client toward the backstage. Focus on the front stage, understand your clients’ real issues and go forward from there in a new exponential relationship.
For years, experts have maintained that, before you can build trust, you need to build rapport. But these days, everyone knows the basics of marketing and selling—a strong handshake and straightforward eye contact, for example. These techniques are now so overused that the stronger the handshake and the longer the eye contact, the more uncomfortable the prospect becomes, feeling they are dealing with a used-car salesman rather than a professional.
Over the last decade, surveys of baby boomers have consistently yielded the same result: investors are chiefly interested, when dealing with financial advisors, in information that can help them make better, more informed decisions. They want an expert, someone who knows what they are talking about and can provide them with better knowledge. Rapport building is not the beginning of the relationship process— expertise is. This is even more important following uncertain economic times.
How should you approach the “head, heart, feet” relationship-building process? First, you’ll need to identify whether a client or prospect is a thinker or a feeler.
Prospects who are feelers tend to process information in their hearts. Typically, a feeler will accept the advice or recommendation of a third party regarding your expertise. When attending a conference or workshop where the speaker has the endorsement of a larger group, for example, the feeler will tend to assume speaker is an expert, then spend the bulk of their time trying to see whether they feel comfortable with them. They will ask themselves, “Do I feel I can trust this person and what their saying?”
A thinker, on the other hand, will spend the bulk of their time trying to figure out whether the speaker knows what they is talking about. They will continually ask themselves, “Is this person an expert?” Once they determines that the speaker is indeed an expert, they will trust them implicitly, then move quickly to the “feet” stage.
Very rarely do prospects have enough information to understand whether you can truly deliver on the promises you make. This is why using references or advocates is a critical step in the marketing process. A solid reference will bolster a prospect’s trust and reassure them about the quality of your performance.
As you review this relationship-building process, take a moment to answer these three distinct questions:
• Do you have advocates up-front to disclose your expertise on the topic at hand?
• During the conversation, do you allow an exchange of dialogue where trust can be built?
• Do you use reference advocates to help the client better understand your ability to follow through on your promises?
Using this approach to building relationships allows you to better understand and meet your prospects’ needs. And by identifying whether a particular prospect is a thinker or a feeler, you’ll be able to focus your time and attention on the area of your presentation that’s most important to your prospective customer.
Winning prospects’ trust doesn’t begin with building rapport—despite years of expert testimony to the contrary. To kick off solid relationships with prospective customers, you’ll need to focus on one thing: positioning yourself as trustworthy.
Suppose a couple, after spending an hour in your office, leaves thinking exactly the same way they did when they arrived. Somewhere in that hour, you’ve fallen short. To win new business and forge solid relationships, you need to change prospects’ perspectives, build trust, and demonstrate that you can deliver on your promises. I call this three-step process “head, heart, and feet.”
Let’s start with “head.” During your meeting with a prospect, you want them to undergo a transformation: to add to their knowledge base and change the way they views things. They may come in thinking one way, but they leave with greater knowledge, more information, and a new perspective that challenges them and demands that they respond.
The next step: “heart.” Prospects are always on the lookout for evidence of whether or not you’re trustworthy. To convey your credibility quickly and effectively, engage each prospect in a dialogue—a give-and-take that demonstrates that you understand them and their particular configuration of needs. Doing so will help you earn their trust and respect.
Finally, “feet”—the stage where the prospect contacts existing clients and learns that you’ve made a difference in their lives, that you do what you say, that you show up on time, and that your team follows through on what you promise. Now their ready to engage their feet and to build a relationship with you.
Clients learn about us by what we do and not what we say. Our actions reflect what is most important to us. If our customer contact time is spent talking about our products, our services, and ourselves, the customer soon understands what is truly important to us and it is not the customer. As Peter Drucker says “the aim of marketing to to make selling superfluous, to so know and understand our clients that the products fit them and sell themselves.” The financial services industry even has the “Know Your Client” Rule and we all agree this is important. The problem arises when we start to work with the customer. Our need to close the business, to generate revenue, and to feed our families, forces us to speed up the process and “get to the close.” These motives reveal themselves in our initial contact, when we do not focus on the client and their needs but rather on our agenda. If this shift from the customer to ourselves is generated by what motivates us, are we realizing what we truly want? Or are we selling ourselves short and settling for something less than the best in our business. In the coming weeks we will look at what we really want as business owners. Before that we need to understand how relationships are built.
Though we would like to build deep relationships, mass marketing methods eliminate this possibility. The nature of mass marketing is pushing a product or service into the marketplace. In mass marketing we try to push ourselves into the life of our client. Resistance is created at the start. We are successful, only because our sales skills are greater than our customer’s ability to resist sales. They leave the encounter feeling they have been sold, rather than feeling they bought something. We have created a customer not a client. Think back to the last time you went out to buy something. If you left the store feeling you were sold, you felt taken advantage of, rather then when you leave feeling you bough something. This very subtle difference is enormous in regard to referrals. No one refers their friends and associates to a situation where they will be sold. Attraction is based on the customer wanting to buy and leaving feeling they have made a great purchase, rather than feeling they were sold.
Another problem with mass marketing is its universal appeal, the market is too large. Mass marketing methods push themselves out to hundreds or thousands, because there is no urgency on the part of the consumer. Persuasion and influence, i.e. sales skills, are used to convince the client of the need they have for the product or service being offered. This begins the resistance discussed above. This lack of urgency will be discussed further in the chapters on creating action.
Using mass marketing your practice is identified with the herd of others using the same methods and marketing. To separate yourself form the herd, you must change your marketing.
Since 2000, the customer has changed and no one has informed Corporate America. Clients do not act as quickly on recommendations and many in the sales professions complained that clients are harder to close. What was once easy was now becoming difficult. Top producers in every industry are finding business complicated and less enjoyable. The problem is not with the client, it goes back further, to the beginning of the relationship. There was no trust established. Businesses do not know what motivates their clients, they know the facts of their client’s lives but not the feelings and motivations behind those facts.
A relationship follows trust and is enhanced as the trust grows over time. We learn early to trust people based on what they do and not what they say. This was overlooked in the go-go years of the last quarter century. Facts superseded feeling. Information was king and who ever had the information was the most sought after person. Client relationships were established on cold calls. Direct solicitation worked and seminars worked even better. But once the roller coaster ride of the 1990’s was over clients began to reexamine whom they worked with and how the relationships were established. Many businesses came up short in the accounting.
Trust is established after a meaningful conversation. We understand this in our own experience if we look back to our dating years. A casual conversation may tweak a person’s interest, but no more. We must move beyond the surface and focus on the other person, not ourselves. This is the heart of the problem. When we examine most business conversations eighty to ninety percent of the conversation is about the interest of the business, it’s products and services, or directly about delivering solutions. Less than ten percent of the conversation is about the client, their life, issues, concerns, needs, or problems.
The old axiom says the one thing a person most wants to talk about is them self. Amazingly, the one thing businesses rarely let clients talk about is themselves. Herein lies the problem. The clients learn more about a business by what it does, rather than what it say. If a company focuses most of their conversations on them self, the clients clearly understand that the companies agenda is more important than theirs.
For the twenty-five year period, beginning in the mid 1970’s and ending in 1999, the financial markets basked in the sunshine of client trust. An entire generation lived constantly in a buy mode, dealing with whoever had the best story or the most exciting advertising. Solicitation was the game of the day. Sale techniques improved an individual’s chances in capturing a slice of the consumer’s spending. A person’s ability to sell was the most important hiring criteria. The industry had products to sell, after deregulation, and customers were willing to be sold. There was little need to know the client, sales were easy and only a few facts were required to open a new account. Because everything was advancing, the relationships looked sound, everyone was happy.
The selling celebration ended in 1999. In the early years of the new millennium the American consumer had several shocks from which they have not yet recovered. First is the breach of faith by several of the large accounting, law firms, brokerage firms, and corporations in failing to disclose the truth of their circumstances. This breech of trust hit at the heart of information. Following the bankruptcies, embezzlements, fraud, and high-tech meltdown in 2000-2002, the four trusted advisor groups: accountants, lawyers, financial advisors, and corporate executives had each lost the trust that had been built over generations. Never in history have consumers lost faith with such a large sector of advice givers. Trust was assumed in the years prior to 2000, clients just wanted information so they could make better decisions. That has changed. I repeat for emphasis, that has changed.
Clients today are not willing to trust carte blanche, a firm or an advisor. The solicitation that worked so well over the last decades now meets resistance. The baby boom generation has read all of the sales books and knows that a fixed gaze and a firm handshake hide a hidden agenda of solicitation. They have come to view sales techniques as manipulative tools to get closer to their money faster, rather than getting to know them better. Peter Drucker continued to declare for over sixty years that we need to stop selling and really get to know our clients. He said, “the aim of marketing is to make selling superfluous; to know and understand the customer so well that the product or service fits [them] and sells itself.”
The business community has avoided for decades, the malpractice risks of the healthcare industry. As we become a more litigious society this escape will not continue. Too many advice givers have for too long, written prescriptions for their clients’ problems without proper examination and diagnosis. The financial service industry in particular, and all business in general, is at risk of being sucked into the vortex of litigation, if they do not immediately change.
We can eliminate malpractice as a concern, buy becoming competent advisors, understanding the difference between telling and listening, realize people learn more by what you do than what you say. We can reverse the impact of all the sales manuals of the last three decades that focus on getting to the close faster and have forgotten about the client along the way. We need to start with a proper focus on the customer and their needs. We can avoid the coming suits and litigation by not trying to force ourselves into their lives with sales techniques, we can build a relationship where they reach out and grab us and pull us into their lives as trusted advisors and confidants.
North American business is at a crucial turning point in history. The heart of marketing is a business’ ability to establish a trusting relationship with the customer. Without some degree of trust the consumer will look elsewhere for the product or service. Business is at risk. It is only a matter of who will be affected. In the coming weeks we will discuss how to make certain it is not you.
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