The Prospecting Professor

Breakfast at Tiffany's: Networking with Jewelers

Holly Golightly: You know those days when you get the mean reds?

Paul Varjak: The mean reds, you mean like the blues?

Holly Golightly: No. The blues are because you're getting fat and maybe it's been raining too long, you're just sad that's all. The mean reds are horrible. Suddenly you're afraid and you don't know what you're afraid of. Do you ever get that feeling?

Paul Varjak: Sure

Holly Golightly: Well, when I get it the only thing that does any good is to jump in a cab and go to Tiffany's. Calms me down right away.

• Audrey Hepburn as Holly Golightly in Breakfast at Tiffany's

Jeweler Facts:

• U.S. retail sales of diamond jewelry climbed 8.2% in 2004 to $31.4 billion.
• Diamond engagement ring price averages $2,600...an all-time high.
• Within the retail sector, jewelers have been the hottest category over the past 18 months with regard to leasing space...up 70% over the last year.
• At the same time, the number of jewelry retailers has been shrinking for the past decade. There are now 24,765 jewelry retailers, versus 28,497 ten years ago. The larger retailers have been branching out, while the smaller independents have been falling away.
• Jewelers sweet spot: Consumers, aged 50-55.

Slow Summer Months. Typically, most jewelers have two selling seasons...spring and fall. During the summer months, sales can tail off dramatically. However some retailers take advantage of the lull by engaging in off-season activities. For example:

1. Sales staff will be taken off the floor and will 'work the phones', making social calls to existing customers, updating client records, enticing new customers into the store, etc.
2. Develop direct-mail campaigns that give clients a reason to come into the store, e.g. percentage off purchase, an alluring gift, free tank of gas, etc.
3. Upgrade of staff's professional skills with sales/product training.
4. Special Events!!!

Sales Networking Idea. Savvy financial advisors might consider collaborating with a jewelry retailer to take advantage of the off-season down time...and create a special event that generates traffic and publicity for BOTH the retailer and the advisor. Special events that might attract a jewelry retailer would be: a designer trunk show, an invitation-only store party, a themed selling event that targets specific professions or niche groups, a charitable event, etc. (Although I'd love to claim credit for this sales idea, it's not exclusively mine. In fact, it is featured in an article in the May 16 issue of National Jeweler entitled, "Turning your down-time to up-time.")

No-Miss Appointment Getting Script:

• You: Hi...this is (your name) with (name of firm). You don't know me from a sack of potatoes, yet I have an idea for a special event that could help you add some lustre to your sales during these tarnished summer months.
• Jeweler: Those are some REALLY bad puns. I hate bad puns.
• You: Yeah...but I bet you hate slow sales even more. I was reading in National Jeweler that the summer months are a terrific time for jewelers to hold special events that can generate traffic and publicity. One of my target markets are baby-boomers, ages 50-55. I have an idea or two for how we could collaborate on a special event that could help both of us. If you have a minute, I'd love to tell you more.
• Jeweler: Sure...and I take back my crack about the "bad puns."
• You: No problem. How about if I stop by your office tomorrow at 10:00?

If you aren't able to generate a face-to-face meeting with a jeweler using this approach...I'll eat my hat! One last point...for a list of jewelry retailers, you can go to this site, (www.jewelers.org). Plug in your city/state...and you'll get a list of retailers, and their websites.

Hope this helps. Talk to you again soon.

Inside the Prospect's Head

Skip Miller is a sales-training expert who has made a career in understanding a prospect's psyche. In a recent article in American Salesman entitled, "Understanding the Prospect" he discusses the sales process from the buyer's perspective. The piece contains many wise observations...and I wanted to share them with you today.

In motivating clients to buy, typically most salespeople use one of five techniques:

1. Find the pain.
2. Find the hot button.
3. Instill fear, uncertainty and doubt.
4. Appeal to value and/or the return on investment.
5. Identify the real need.

Furthermore, he believes that prospects are either "towards buyers" or "away buyers." Towards buyers are positive. When they identify reasons to buy, they say, "I like the new features," or "I like the way it looks." There is nothing negative about their responses. They are forward moving. Their attitude is summed up with their body language...they are leaning towards the product.

Away buyers are the opposite. When asked why they are purchasing a new television they might say, "The old one isn't working correctly," or "It doesn't have the features that I want." Their spin is predominantly negative.

Miller believes that most buyers are away...he says that 70% fall in this category. However he notes that most sales literature is "towards"...announcing new features, or updated functions about the product or service. However, using a "towards" sales rationale with an "away" buy completely misses the buyer's motivation.

"Away" buyers want to avoid pain...and need to be provided guidance along this direction. Conversely, the "towards" buyer wants to attain pleasure...the opposite end of the motivational spectrum.

Moreover, as the salesperson and the prospect proceed through the sales process together, Miller postulates that the buyer's perspective moves through five distinct phases.

1. Initial Interest.
2. Educate. During this phase, the buyer wants to educate themselves more on what they can do to satisfy their initial need. Here, buyers want more information, and will get this through a variety of sources. If the information received does not sustain the buyer's motivation...the process stops.
3. Transfer of Ownership. At this point the buyer 'get's it', i.e. they understand how he/she would be able to use the product or service being offered, and agrees with the benefits.
4. Rationalization. Here the sales process has reached a critical juncture. The buyer begins to second-guess themselves with questions like, "Is this the right time to make a decision like this?" or "Have I considered all of the options?" At this point, when the buyer begins to experience cold feet, objections are raised.
5. Decide. This is the final step. If the buyer has gone through the buying cycle and is still motivated, a decision will be made. Buyers don't 'close'. They make a decision based upon the buying process. The close of a deal is simply the final step in a natural process.

Miller believes that if the salesperson can think like a buyer, and match the sales process to the buyer's buying process...the salesperson can take the guesswork out of the equation. Salespersons who know where the buyer is going, can suggest the next appropriate steps. Salespersons who 'own the process', own the deal...and make the sale.

That's all for now. Happy Memorial Day!

Networking with Attorneys

"Two roads diverged in a wood, and I -- I took the one less traveled by, and that has made all the difference."...Robert Frost

My experience has been that financial advisors who take the sales/marketing road "less traveled by" have a greater chance of success...in a shorter period of time. The following idea is in this vein.

The natural career arc for attorneys in private practice is...new associate...senior associate...and then considered for partnership in 6-8 years. When networking with attorneys, most financial advisors want to target the senior partners. Given the realities of the situation, i.e. the internal/external demands placed upon high-visibility partners, this may or may not be a realistic objective for the financial advisor. Contrarily, why not travel the less-worn pathway by targeting the newer associate?

During the first few years after law school, new associates learn how to transfer the theory of law school into the practice of law. One of the principal learned skill sets is how to generate new business...a skill that is not necessarily addressed in law school.

However, new associates need to learn how to crawl before they walk. This means learning to deliver exceptional service to their #1 clients...the partners of their firm. As such, here is an example of the career advice that they are encouraged to follow:

• View partners as the primary client.
• Be available to them and willing to pitch in when needed for a big project or case.
• Use the partners to "practice" relationship building skills.
• Take a partner to lunch and learn more about his/her practice.
• Never miss a deadline.
• Focus on your "client" and do all you can to meet their goals and expectations.
• Never let a partner down. 2nd chances aren't likely.

As you might infer, new associates, especially those at the top law firms, are under a lot of pressure. Here is where the opportunities for financial advisors comes into play. However, it entails getting a clear understanding of the needs/concerns of the new associate...and how you (the advisor) can help.

As the new associate serves their #1 natural internal constituency, they will undertake additional activities that create a foundation for the launch of their career. During these years, they will be finding and building their A-level group of  contacts...the people who will grow to become important clients, and referral sources. The networks that the new associate builds will, most likely, be an outgrowth of their developing interests within the practice of law.

For example, technology lawyers will need contacts that can help a small company turn into a big company in a hurry. Their non-lawyer network will be: CPAs, software developers, programmers, venture capitalists, commercial bankers, entrepreneurs, and management consultants.

Associates interested in a family law practice will want to target an affluent demographic.  They might become active in the arts, or join a board of directors for the symphony or theatre. They'll take lessons from a golf pro and join one of the prestigious clubs. They will also cultivate relationships with: psychologists, marriage counselors, clergy, insurance agents, and lawyers/professionals who also serve an upscale clientele.

Actionable Idea! Sit down with an associate and find out where there natural networks are, and how they plan to build them. If there is a commonality of interest, explore how you can work together. More specifically, offer to invite the associate to networking events that you (the financial advisor) have created...that help further their career. Better yet, if you are aware of an event where the associate could invite their partner/mentor, and look good in the partners eyes...that's a WIN for all involved.

The cautionary note about this networking approach is the time horizon. It is unlikely to reap much in the way of AUM overnight. However, the seeds that you sow early in your career...will bear fruit many years into the future.

Networking Within the Design/Building Industry

Do you have prospects who are contractors? Architects? Developers? Engineers? How have you been contacting them? Random cold calls on the phone per chance? Having fun? Would you consider a different sales/marketing approach? Yes?  Please read on...

The Society for Marketing Professional Services is a national association directed towards marketing in the architecture, engineering, interior design, construction, and specialty construction industry. (www.smps.org) Founded in 1973, SMPS has grown to over 5300 members in 50 chapters across the U.S.

Their mission statement is: "To be the premier source for education, information, and resources in marketing professional services for  the built and natural  market."

Membership is $295 annually.

The annual conference, Build Business, www.buildbusiness.org, is the leading business development, marketing, and management conference for the design and building industry...bringing together owners, developers, clients, principals, business developers and marketers. This year the conference will be held in New Orleans at the New Orleans Marriott, August 10-13.

Additionally, most SMPS chapters have periodic meetings. For example, the Twin Cities chapter will next meet June 10th. The luncheon topic will be, "Marketing Planning and Promotional Activity. Follow Your Yellow Brick Road."

My guess is that, given the development pace that is occurring in many regions around the country today, the SMPS chapters have seen some significant networking amongst their members. I would think that a savvy financial advisor could insert themselves into this marketing beehive, and make some valuable connections.

Sure beats the "dial-and-rile" approach, don't you think?

401k Prospecting: A Providers Perspective

Last week I noted that the # of plan providers who are thinking about changing or actively searching for a new plan provider...is at an all-time high.

In a recent report on managing 401k plans, the Institute of Management & Administration highlights "Nine Keys to Selecting a New 401(k) Provider." For financial advisors interested in pursuing the takeover business, this "inside" perspective may be insightful.

1. Prepare for the search before you start drafting an RFP and sending it out. Make sure it is the right timing for your organization.
2. Get control over your plan assets. This is your bargaining power. When you are looking for a new provider, they want to make sure that your plan assets can transfer.
3. Given a written notice to the vendors that might need it: stable value vendors, recordkeepers and trustees.
4. Review the investment policy structure.
5. Assess whether this is a good time to change 401k providers. Is this a priority for your organization.
6. Think about who will be involved in the search.
7. Think about what you want to request in the proposal.
8. Decided if you should hire a search consultant.
9. Assess your internal capabilities.
10. Be realistic about the time you have.
11. If you do hire a search consultant, ascertain that the consultant is not biased, that they are not receiving fees from potential candidates.
12. Don't distribute a large number of  RFPs.
13. When choosing bidders do research. Find out which providers are in the market space that your plan is in.
14. When you issue the RFP, make sure the RFP elicits good quality bids.
15. Make sure your RFP questions all have a purpose.
16. After you send the RFP out, hold a bidders teleconference to answer questions.
17. Once the bids arrive, know how you are going to analyze the proposals, and what kind of scoring method you will use.
18. Choose two to three finalists.
19. Have finalists come to your site and do a presentation, or conduct site visits to their base of operations. The latter is preferable, as it will give you better insight into the provider and its culture fit for your organization.

In the first place, for all you math whizzes out there, you are saying to yourself, 'What's with the title of this report? There are nineteen keys to selecting a 401k provider that are listed here.' Hey...cool it! I didn't make up the title, I'm just reporting on it.

Either way, selecting a new 401k provider is a daunting task...and so is prospecting for  the takeover business. Every little bit helps. Hope this helps you.

Cold Walking: A Storied Tradition

I work with a number of advisors who use 'cold-walking' as an important tool to gain traction as they begin to build their book of business. The art of going door-to-door, business or residence, has a long tradition in financial services, and business in general. Edward D. Jones & Co. has used this model to great effect. Theirs is a straightforward approach...Knock on doors in your community until you have 25 financial conversations in a day. Go home. Eat. Sleep. Repeat.

Actually, 'cold-walking' has a long history in the development of sales systems in this country. In the 1800's, 'peddling' was a popular occupation among young men, as it required little initial investment. Peddlers did not typically represent well-known companies or brand name goods. They filled their trunks with goods; needles, buttons, sewing silk, beads, soap, candles, beeswax, leather, etc...and headed out on their cart or horse to travel the countryside. In the U.S. Census of 1850, 10,669 listed their occupation as 'peddlers.'

Since, in the early 1800's 75% of the American labor force worked on farms, peddlers traveled from farm-to-farm and town-to-town. Most peddlers were not overly concerned with repeat business, as they were likely to meet a prospect only a few times. (What would the peddlers of 150 years ago think of the sales cycle today?) Consequently, they were eager to make a sale on their first encounter, and less concerned about future consequences from dissatisfied buyers. For all farmers, bartering was a way of life, and a necessary life skill...and peddlers became adept at negotiation tactics.

Wit and humor were essential tools of the peddler, as were storytelling and musical talents. Peddlers discovered numerous methods to make their pleas successful, including playing upon a person's rising social expectations or their desire to own decorative goods. The best peddlers had keen powers of observation, and also realized the economic value of entertaining. One peddler traveled with a buffalo as a means to attract attention.

In many ways, peddlers were an early, and critical, part of America's market revolution. They helped transform rural life...bringing manufactured goods, imports and books to the agricultural areas and hinterlands. At the same time, some peddlers took advantage of the transactional nature of their sales encounters. Lightning rod salesmen were notorious. They worked the 'thunderstorm belt', Texas-Kansas-Iowa-Nebraska-etc, in the spring and summer. They often worked in teams...with a nicely-dressed, smooth-talking agent extolling how the lighting rod would safeguard a farmer's family and property...and a husky 'settler' who closely followed the agent, who would collect on the huge bills that would result from the installation of the numerous, and often unnecessary, lightning rods. In one case in Kansas, an agent ran up a bill of $404.25 (NOT in today's dollars) to a farmer who couldn't read.

By the way, if this topic interests you here's a book recommendation that carries The Prospecting Professor's seal of approval. The Birth of a Salesman: A transformation of selling in America by Walter A. Friedman. Great stuff!

A clarification. Earlier this month, I wrote about Cutco Cutlery Corp., a company where the sales force is primarily college students who sell through their network of friends and family. In the article, I mentioned that the salesperson needed to purchase a $150 set of knives to start, and that this was a "source of aggravation." As it turns out, one of the readers of The Prospecting Professor is a Merrill Lynch advisor in Florida, who has a friend who is a past-CEO of the distribution channel for Cutco Cutlery. She has pointed out that the $150 set of knives is fully refundable when the sales agent severs (sorry...really bad pun) their relationship with Cutco. In fact, many agents like the products enough to keep the starter set, and don't redeem. Thanks for the clarification!

Centers of Influence: Rolex Technicians

Don't you think that CPAs and attorneys get tired of always being referred to as 'centers of influence'? I sure do.

It strikes me that there are a number of other professions/trades who could be effective 'centers of influence'...and they certainly wouldn't have the shabby, dog-eared appearance of the usual 'centers of influence' subjects.

How about Rolex technicians and/or qualified watchmakers?

Some background. There is a shortage of qualified watchmakers to service the growing number of fine and complicated watches owned by Americans. This shortage is exacerbated by the impending retirement of up to one-half of the existing watchmakers in this country.

Americans are buying more expensive watches than can be serviced. Imports of high-end mechanical watches are up 145% in the past decade...while imports of high-end quartz analog watches are up 127%. With average retail prices exceeding $1000, this suggests a growing demand for service and repair ahead.

Need for training. A recent survey conducted by the American Watchmakers-Clockmakers Institute shows that only 35% of watchmakers have obtained their training from a formal watchmaking school. Only 35% of this group were certified as master watchmakers. Moreover, there has been a 75% decline in the number of watchmaking schools since 1975...there are now only 11 full-time schools in the U.S. In recent years, the total number of graduates has been well less than 100 per year...and watch industry estimates that it will take four to six times that many graduates each year to replace the watchmakers who retire...or die. The situation is so dire that the Rolex company has pledged $10 million to the St. Paul Technical Institute, in a race to train an upcoming generation of technicians.

An aging workforce. In the next 10-20 years, 50% of the watchmaking workforce are expected to be gone. The average age is now 46 years old, and only 7% are less than 25.

With an estimated 30-35 million high-end mechanical and quartz analog watches in circulation in the U.S...and a watchmaking workforce of 5000, half of whom will be gone in a few years...with fewer than 100 new graduates each year...it isn't hard to envision a significant supply-demand disparity.

Marketing Thoughts.

• Check out the American Watchmakers-Clock makers Institute website, www.awci.com The referral directory will lead you to the watchmakers in your area.
• If you are in the area, come to the AWCI annual meeting in Minneapolis...August 4-7, 2005.

Back to the center of influence thought, a certified master watchmaker may not have the same cachet as say, the top estate planning attorney in your area...but wouldn't you like to have his/her list of everyone who comes in to get their Rolex serviced?

401k Prospecting: Plans in Play...Snatched Away by Birds of Prey

'It was the best of times, it was the worst of times,"...Charles Dickens

For financial advisors who specialize in 401k takeovers, it is the "best of times". In a recently completed survey by 401kExchange Inc., the number of plan providers who are "thinking about changing or actively searching" for a new plan provider...is at an all-time high.

Of course, the flip side of the coin is also true. For advisors with plans currently in place, HEADS UP!. As Satchel Paige said, "Don't look back...they may be gaining on you!"

Year-to-date through April 30th, 13,248 plan sponsors in the under $1 million market said they were thinking or looking about changing providers. That's a 75% increase from just two years ago. Similarly, for plans in the $1-10 million market, there has been a 36% increase in provider activity. Even with mid-size plans of $10-100 million there's a lot of looking...an 88% increase was noted in the survey.

Why is this happening now? It seems that in the years immediately following 9/11, 2002 and 2003, companies were completely preoccupied with making ends meet, avoiding layoffs, etc. Moreover, since all investments appeared to be doing poorly, companies were reluctant to change fund managers in mid-stream. Today, these same companies, most particularly the human resources departments, are again focusing on their retirement plans. The strong market of 2003 has emboldened them to actively survey the landscape. At the same time, the mutual fund scandals and greater government scrutiny has put the spotlight on the retirement plan stage.

There is one more significant trend that appears to be happening...a move to increased 'transparency.' As plan sponsors become more sophisticated, and retirement services becomes more commoditized, the use of an open bidding process becomes much more prevalent. The move to RFPs, away from the cozy, one-on-one approach of making deals on the golf course, is largely due to mounting concerns of plan sponsors about fiduciary responsibility and disclosure. The RFP process creates a 'paper trail', indicating that a sponsor has done the appropriate due diligence with regard to analyses of costs, access to outside funds, participant advice, etc.

"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness,"...Charles Dickens

Neighborhood Networking

Last week, I participated in an open discussion on Horsesmouth, www.horsesmouth.com, on the topic, "How to Land Big Accounts in Small Towns." My inclusion in the discussion as a 'resident expert' was a result of an article that I had written for Horsesmouth earlier this year.

When I originally wrote the article, my definition of a 'small town' was what you might find in the dictionary...a population center larger than a village, yet smaller than a city. Over the years, I have worked with advisors who have had much success in growing their book of business by 'adopting' a town and building their network...person-by-person. It's not a get-rich-quick approach, it seems to take 1-2 years to reap the rewards. However, for those advisors who jump in and commit themselves to a community...the financial and psychic rewards are substantial.

When you look at the networking habits of the business owners, professionals, and movers-shakers in a small town, one thing becomes apparent...they join everything! The Rotary, the CofC, the YMCA, the Lions Club, the school board, the church, the Seniors Center...you name it. To emulate the habits of small town leaders, advisors should mimic these same behaviors...by joining everything too.

I have to confess though, I wasn't raised in a small town myself. I'm a fifth-generation San Franciscan and am more used to the rhythms of city life. I grew up in the southwestern part of the city, where fog was our daily companion. Heck...I think that we invented the layered look. You know how they say the Inuit have 31 words for snow...I think that we had close to that many descriptions for fog; the soft fog that you wake up to in the morning, the high fog, the drippy fog, the windy fog that rushes in like clockwork every afternoon, etc. What did Mark Twain say? I think it was, "The coldest winter I every spent was a summer in San Francisco."

Our neighborhood was decidedly middle class, far-far-removed from the hustle and glitz that most San Francisco tourists are familiar with. Our neighbors were cops, firefighters, small business owners, etc. The closest business district was West Portal...you can get there by catching one of the streetcars that runs along Market St. downtown, the K-Ingleside, the L-Taraval, the M-Ocean View, under Twin Peaks you go...and Bingo!...there you are. A little, middle-class business district in the middle of a much large city.

Sorry...I've somehow turned this into a nostalgic reminiscence of my youth. Where was I, and what was my point anyway?

My point is this...for small town residents, JOINING comes naturally. For residents of neighborhoods of larger cities, less so. However, there are numerous opportunities for those of us who live in the city to become involved and join our neighbors in activities that interest us. Here are a few that come to mind:

• Many cities have neighborhood associations. Minneapolis (where I now reside) has 29.
• Many neighborhoods also have business associations.
• Join your block club, and if you don't have one...start your own.
• Local politics. Tip O'Neill said, "All politics is local." He got that right, this is a great way to get involved.
• Become an election official. One of the realtors in our neighborhood volunteers as a precinct election official. What a great way to meet the neighborhood.
• Your local church, synagogue, or mosque.
• Of course if you have younger children you will have a myriad of activities that are neighborhood-focused.
• How about making  a point of meeting every business owner in your immediate neighborhood, or if it's not too big...your entire zip code? Spend a day a week 'cold-walking', collecting cards, building a network. What if, over a year, you met every business owner in your zip code? That would be fun...and a powerful resource for you too.

Here's an interesting resource to have as you go about meeting your neighbors, the Neighborhood Factfinder from the U.S. Census, (here's the link). If you are curious about the demographic profile of your community, here's where to go. For example, I know that my zip code (55408) has a total population of 30,564, median age 29.1, median family income $34,216, 15,033 total housing units - 75% of them renter occupied, and 40.8% have a bachelor's degree or higher.

Sorry for the rambling monologue this morning. I did think that I got to my main point...eventually. Hope it helped.

My Likeability Deficit

During Sally Fields 1985 acceptance speech for her second Academy Award, she blurted out an oft-mocked line, "...I can't deny the fact that you like me right now, you like me."

For financial advisors, being liked is an overlooked component of the Advisor-Client relationship. Generally, Clients gravitate to Advisors who they like...and vice versa.

In his new book, The Likeability Factor, author Tim Sanders explores four aspects of likeability that one can measure and improve - friendliness, relevance, empathy, and realness. Sanders maintains that our likeability is real and tangible. We all have "L-Factors", from 1-9, that helps measure the positive or negative feelings that one can produce in another.

For your own "L-Factor Self-Assessment", go to his website, www.timsanders.com, and take the test.

Tim Sanders is an author and business executive who currently serves as Yahoo!'s Leadership Coach. From 2001 to 2003, he served as Yahoo!'s Chief Solutions Officer. His bio also states that "he advises business and public sector leaders on next generation strategies." (Will someone please tell me what a Chief Solutions Officer, or a Leadership Coach, actually does? I'm a native San Franciscan, and I can speak a little Californian, yet I don't get this.)

Tim Sanders' first book, Love is the Killer App, was a NY Times bestseller...and showed how people who share generously can achieve professional success. As an outgrowth and extension of the success of this book, Mr. Sanders formed the "Lovecat Leadership Training Program."

For what it's worth, I took my own "L-Factor Self Assessment" last night...and found myself to be a tad deficient in this regard. My total score was 4.8, which in the eyes of Mr. Sanders means I "might have relationship difficulties due to low L-Factor." Oh...great. Just what I need...a low L-Factor.

In my defense, I was a bit preoccupied when I took the self-assessment, so maybe he allows retakes.

On the other hand, I wonder if Grumpy Financial Advisors attract Grumpy Clients? I bet they do. As my mom says, "There's someone for everybody."