The Prospecting Professor

Do Not Call Us

Last month, the Do Not Call Registry passed an important milestone. The 100 millionth (Is that a real word?) user signed up. Expressed another way, in two years about 50% of all land line telephone owners have said to telemarketers...Do Not Call Me!

Do we actually need any more evidence that soliciting prospects from cold lists is a Bankrupt and Destructive sales practice? Dialing strangers on the phone is an admission from the salesperson that sounds like this, "I really don't have any other effective marketing approaches. In fact, I have nothing. That's why I have nowhere to go but the telephone."

Cold Calling  Strangers is like strip mining...it destroys customers in the same what that strip mining has destroyed the countryside. There are mountaintops in West Virgina that have been flattened, and the environmental damage will last for decades. The effects of Cold Calling are the same.

I know that many of your branch and sales managers embrace Cold Calling Strangers...especially when sales are down. When they do, they are as much as admitting to you, "I know that I should be helping you find new clients...but I got nuthin' really. You're on your own."

The next time that your sales managers insists that you 'get on the phone more', hand him/her a loincloth and club. That sales prospecting model is pre-historic. It went out with cave-paintings. It is befitting a Neanderthal smile-and-dial culture. It may have been slightly effective 20+ years ago, but it certainly doesn't work today.

In the past 20 years, there has been a revolution in the backstage of most investment advisory firms. Advisors can show their best clients investment processes that were not possible, even a few years ago. Isn't it about time that the sales and marketing client-acquisition practices...the front-stage...caught up?

Free Prize Inside

"Candy-coated Popcorn, Peanuts, and a Prize...that's what you get with CRACKER JACK!"

Growing up when I did, the Cracker Jack jingle was ubiquitous. Even today, as I read the words above...the tune bounces around in my head.

Although I have to admit, Cracker Jack was a rare treat for my brothers and I. My parents forbade us from buying it...they maintained that the popcorn, peanut, and caramel concoction would "rot our teeth out." That didn't prevent us from jumping on our bikes and pedaling off to the corner store, where boxes of Cracker Jacks stood next to the Bazooka Bubble Gums and Three Musketeers.

We all loved the prizes of course...the plastic whistles, watches and other gee-gaws...that beckoned from the bottom of the box.

As a confection, Cracker Jack has been around for a bit. In 1893, Frederick Rueckheim and his brother introduced it at the World's Colombian Exposition, Chicago's first World's Fair. In 1908, "Take Me Out to the Ballgame" is composed by Jack Norworth with the line, "Buy me some peanuts and Cracker Jack." In 1912, the "free" prizes were introduced.

In his book, Free Prize Inside!, Seth Godin talks about soft innovations...the small ideas that anyone can think up...that make YOU stand out. Soft innovations (or free prizes) are not more of what the original product is, they are something extra and unexpected. Godin calls this sort of innovation a free prize because the revenue generated exceeds the cost of implementing it. Here are some examples:

• The ability to print an airline boarding pass at home before leaving for the airport.
• Amazon.com eliminating all TV and magazine ads, and using the marketing budget to offer free shipping.
• The lighted keyboard on the new MacPowerbooks.
• The way it smells inside a bakery.

Soft innovations are the small things that make a big difference. They aren't gimmicks because they offer something of value. "Free prizes" increase client loyalty, improve client retention and garner new clients through word-of-mouth marketing. They are the second reason to hire you...and the first reason to talk about you to others.

As Sailor Jack, and his dog Bingo announce...it's "A Prize in Every Box."

The Presentation Trap

In a recent article in VARbusiness, author Jeff Thull describes how salespersons can get caught in the Presentation Trap, "Ditch the Pitch - How to avoid the presentation trap and win complex sales"

Salespersons who stumble into the Presentation Trap spend an extraordinary amount of time/resources on preparing a presentation with a lot of bells and whistles...and lose sight of the important issues at hand. The irony is that prospects retain very little after many sales presentations, and all of the presentation-building effort is for naught.

Thull's solution to the Presentation Trap is simple...don't present. Ask good questions to uncover problems and expand the prospect's awareness. Once the prospect understand the complete nature of the problem, the salesperson can make recommendations...and a presentation is superfluous.

Thull's other interesting observations:

• A presentation that is too early for complex decisions is a waste of time.
• A typical sales presentation rarely devotes more than 10-20% of its focus on the prospect and his/her current situation. Rather, the great majority is devoted to describing the seller, the solutions that the seller is proposing, and the "rosy future if the customers buy them."
• Your competitors are following the same strategy. Consequently, presentations are heavily skewed toward the seller and the solutions.

Thull's recommendations:

1. Spend less time talking about you, your company, and your solution.
2. Spend more time talking about your prospect's business, problems, and objectives.
3. Identify how well the prospect understands his/her own problems.
4. Make the connection between your solutions...and the prospect's business situation.
5. Guide prospects through this investigative process, and you will establish a level of credibility and find yourself jointly developing optimal solutions.

It's a good article, and worth a read. That's all for now. Ciao!

Persistence

One of the best lesson's on sales persistence comes from Dr. Seuss' "Green Eggs and Ham." The protagonist of the story, Sam-I-am attempts to get his friend to eat a noxious-looking concoction of green eggs and ham. The friend refuses, yet Sam-I-am is relentless. He asks his friend if he will try green eggs and ham under an endless number of scenarios. Finally, the friend succumbs...and discovers that he loves them. Sam-I-am would have made a fortune in sales.

Another instructive source on the power of persistence is the life, and words, of Winston Churchill. One of his most often quoted speeches was given at Harrow School on October 29, 1941. These were among the darker days of the war for England. The Nazis had wreaked havoc on the country with a series of intense bombing raids that had lasted for months. The U.S. had not yet entered the war. As Churchill addressed the students of Harrow, he said:

• "...Never give in, never give in, never, never-in-nothing, great or small, large or petty, never give in except to convictions of honor and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy..."

Granted, sales persistence is not the same as defeating the Nazis in the face of overwhelming odds, yet Churchill's words have been inspiration to many.

Deluxe Recipe: Green Eggs and Ham

Ingredients: 2-4 ounces of ham. 8 eggs. 2 tbs of milk. 1-2 drops green food coloring. 1/4 cup chopped chives. 1/8 cup chopped fresh parsley. Salt and pepper to taste. 1 tbs of butter.

With an adult's help, cut ham into small pieces. Mix all ingredients together until eggs are frothy. Heat butter in a large frying pan, and add egg mixture. Stir until eggs are firm but not too runny. (Yuk!) Transfer to individual plates and garnish with parsley sprigs.

Reach for the Stars

The concept of "stretch goals" have been in the management vocabulary, under various names, for some time. However, in the early 1990s, Jack Welch and General Electric became avid promoters of the concept. By definition, stretch goals are goals that one does not know how to reach. By specifying the "unattainable", people are required to "think outside the box", and able to improve performance by a magnitude they had never thought possible.

The risk of "stretch goals" for financial advisors is that the goal is initially set in a wild burst of enthusiasm, and not reached...causing the advisor to feel like a failure. In fact, I suspect that many salespeople have lived for years with "achievement failure"...constantly setting goals that are not realistic. This failure can become a habit...or acceptable.

For most all of us, reaching a goal is tremendously psychically rewarding and provides important psychological nourishment and reinforcement.

In contrast to "stretch goals", Loren Dunton, the noted sales visionary and strategist, espouses the Ten Percent Secret. The Ten Percent Secret establishes reachable goals and embraces the psychological power of small successes. Mr. Dunton believes that modest goals, set and achieved daily and weekly, are much more energizing than the goals that are set impossibly high.

In other words, each and every day, reach for the moon...first. The 'reach-for-the-star-thing' will take care of itself.

We Might Be the Champions

For those of us in the sales biz, motivational speakers are everywhere. With corporate training budgets well over $66 billion, and the domestic banquet circuit a $500+  million enterprise, it is not hard to understand why motivational speakers are so ubiquitous. And these numbers don't even address the billions spent on "after-action", the books, CDs, workshop tutorials, and other ancillary materials.

As an example, you can hire Tommy Lasorda for your next sales meeting...for $30,000. If your organization is in a selling slump, regardless of whether you are selling stocks or steaks, he will come to pump you up...with adages like:

• "You gotta want it."
• "There are people who make things happen, and there are people who wondered what happened."
• "The thing about losers is, they don't win."

Not to pick on just Mr. Lasorda, the motivational speaking arena is populated with can-do presenters who are brimming with PMA, (Positive Mental Attitude)...e.g. Zig Ziglar, Brian Tracy, Tony Robbins, to name a few.

Of course, many of us in the sales profession can benefit from "pep talks" now and then. Sales success is often a function of self-confidence...and instilling confidence, motivation, and self-reliance is the stock-in-trade of many motivational speakers.

However, self-confidence without the underlying know-how, can be counterproductive. Some of the most dangerous people in the world are the highly enthusiastic incompetents...running at full-tilt in the wrong direction.

"Success is a Choice" is the mantra of Rick Pitino, basketball coach and motivational speaker...who you can hire for $30,000-50,000 a shot. However,  in the real world, the choices that we make are made cumulatively over time.

Real accomplishment in sales is not often that glamorous or sexy...but comes from steady, reliable effort over time, the cultivation of productive habits, and the accumulation of skills and experience by constant effort.

Stair Stepping

One of my fonder memories of my youth was running up stairs. I played varsity basketball for Lowell High School in San Francisco. I didn't have as much natural athletic talent as my peers...and I had to compensate for this deficiency by focusing on my own fitness. My "secret weapon" was running stairs...one of the best ways to improve one's anaerobic fitness. The best stairs to train on in San Francisco surrounded the football stadium at City College of San Francisco (CCSF). The stadium was constructed on the side of a hill, and the stairs were very steep, and seemed to ascend forever. Best of all, I could run up the benches, which were equivalent to running up two stairs at-a-time. The benches also had this natural "springiness" that seemed to propel me up the incline.

In all of my years since, I have never had a workout quite like these stairs.

Fran Pirozzolo PhD, is a sports psychologist with a doctorate in neuropsychology. (Good article about him in yesterday's Journal.) His clients have included: the New York Yankees, the Houston Texans, Evander Holyfield, and Greg Norman.

He has a number of interesting theories and training methods. One of his more interesting theories is that it's the "common people" who are most likely to achieve extraordinary accomplishments. He thinks that many great athletes have overcome a crisis in their childhood...common children who face uncommon circumstances, such as living with an abusive parent, or economic deprivation.

Getting back to my stair analogy,  Dr. Pirozzolo recommends a "stair-step" approach to fixing problems. For example, when he works with a struggling pitcher who, during practice, is only able to get 40% of his pitches in a certain strike zone...Dr. Pirozzolo encourages his client to strive for a 50% goal first, and then move it up gradually. He doesn't set 100% goals, which he believes would set his clients up for failure rather than success.

As we set our own personal goals, it is important that our "inner monologue" be positive and forward-looking...not stuck in the past, magnifying faults and replaying failures. By setting goals that are challenging, yet achievable, we can build upon our small successes until the 100% goal is within our grasp.

Getting What You Want

In his new book, "Persuasion: The Art of Getting What You Want", Dave Lakhani discusses the three main points that one needs to persuade others. 1. Open with a powerful persona. 2. Elicit information. 3. Tell a powerful story to lead them to their own most logical conclusion.

Open with a powerful persona. He maintains that much of a decision that a prospect makes about whether to buy from you, or not, comes within seconds of first meeting you...and before you say a word. Therefore, first take a look at the basics. Shined good shoes goes without saying, as well as pressed clothing. Hair...if your hairstyle is over 3 years old, it is most likely out of date. Weight...if you have gained/lost 10+ pounds recently, you need to have your wardrobe tailored or updated. Are you dressed at the right level? You should always dress at least as well as the audience that you are selling to...better yet, one step better.

Elicit information. In order to craft a more powerful story that will draw people in and resonate with them, you need to ask good questions. The questions you want to ask get to the emotional requirements by which your offer of service/product will be judged. These are the sort of questions that cause a client/prospect to step back and say, "Gee...no one has ever asked me that before."

Tell powerful stories. Stories lead people to draw their most logical conclusion, and are the oldest and most powerful form of communication that we know. Rather than rattling off a long list of features or benefits, stories use metaphor...and the person listening can draw their own conclusion, the one that you want them to.

What clients/prospects want is access to relevant information from knowledgeable professionals who move them. When done correctly, persuasion creates change at a physiological, psychological and biological level in the person you are persuading, whereby they are compelled to say "Yes" with total confidence.

The Demise of the Stockbroker

No one wants to be a "stockbroker" any more. Think of the other various ways that registered representatives care to define themselves these days...financial consultant, investment advisor, etc. Never a "stockbroker." Stockbroker...bad. Wealth Manager...good.

Bill Nicklin, the founder of Horsesmouth, has a good column on this today, entitled, "Stock-Pick Your Way to HNW Clients." He points to the various reasons as to why the industry has moved away from the "stockbroker" terminology...as well as the regimen of picking individual stocks.

• From a legal and compliance standpoint, stock-picking has become difficult and riskier.
• From a firms point of view, the stock-picking skill is difficult to acquire...and it takes too long for rookies to become proficient at it.
• From the perspective of the academics, stock-picking is a fruitless effort on behalf of the investors who believe that they can beat the market.
• From the Financial Supermarkets vantage point, advisor's who focus on individual stocks do not use the other products and services on the shelf.

All of this has created an interesting phenomenon. Ask a financial advisor these days what they think of the stock market these days and, more often than not, they respond by very quickly saying, "Oh...I don't pick stocks." As a matter of fact, the advisor who will accept the "stock-picker" self-identification is the rare exception these days...a tiny island in a sea of asset allocators and financial planners.

By the way, Bill Nicklin's definition of "stock-picker", is NOT the advisor who buys penny stocks on rumor. He is talking about stock-pickers who select companies the old-fashioned fundamental way: based upon their expected earnings environment, business attributes, financial underpinnings, and who have the patience to accumulate this position over many years time.

There is no question that Bill Nicklin is a bit of an anachronism. Yet, he is a throwback with a indisputable track record of personal success. In addition to founding Horsesmouth, Bill is also in personal production...as a "stockbroker." At this point in his career, he has many hundreds of millions of dollars under management...and has generated more than $50 million in commissions over the course of his career. He must be doing something right.

Nicklin's other interesting point is that stock-picking and prospecting go hand-in-hand. He illustrates how his stock-picking prowess has led to strong connections with many, many affluent clients. In fact, he estimates that over 80% of his current book of business was acquired through his focus on stock-picking.

Being a stock-picker is not for everyone. Even in the "good old days", the industry was populated by folks who couldn't pick a stock to save their life. As a rookie trainee at Paine, Webber, Jackson & Curtis, I sat next to a gent who put everyone in his book...regardless of their financial circumstance...into just ONE company. I heard him tell the story of his favorite company countless times over the course of the day. This guy was a compliance nightmare, and he buried more investors than the local mortician.

However, today, September 19, 2005, with the term "stockbroker" being anathema to the industry...a vacuum has been created, and nature abhors a vacuum. If you are a financial advisor who dares to be different, and have the temperament and patience to pick stocks for your clients and prospects...you have a wide-open playing field in front of you.

Counter-factual Happiness

Do you have clients who are, by any objective measure, very affluent and successful...yet who are simply not "happy?"

Some of this may be explained by the fact that academic psychologists and economists have observed that substantial increases in wealth are NOT accompanied by similar rises in well-being, and have explained this paradox by a human tendency to compare themselves asymmetrically. In other words, they focus on not where they've come from...but those who are still doing better than them.

This tendency has also been observed among athletes. Following the Barcelona Olympics, a team of psychologists led by Virginal Medvec of Northwestern University, discovered that bronze medalists appeared "happier" than silver medalists. The psychologists postulated that the silver medalists were plagued by thoughts of, "I almost won the gold," while the bronze medalists were happy that they medalled at all.

The emotional reactions of these athletes were fundamentally driven by comparisons with the most easily imagined outcome, and is referred to by psychologists as "counter-factual" thinking. Moreover, we are all susceptible to this during the course of our daily lives. This mental habit could be the determinant of how content we are with our lives.

Many studies on wealth and income find that is is who we compare ourselves with, rather than what we objectively have that determines our overall perceived financial well-being. It is our choice of reference group that becomes crucial in determining happiness.

There have been some intriguing exceptions to the "counter-factual" thinking hypothesis. In unstable economies, like Russia for example, individuals take the references point of the wealthy, not as a discontented comparison, but as an indicator of their possible future. In certain economies, individual observing richer people around them take this as a sign that their own income may increase.

You may, or may not, want to mention these points the next time that you get a call from one of your wealthy, yet gloomy, clients.

Have a great weekend! Ciao.