John’s Secrets to Becoming a Successful Sales Professional
A typical new financial sales associate has no understanding of what it takes to become successful in the financial services industry. Sadly, the companies that hire them don’t either. A fact proven out decade after decade by the dismal survival rate of those they hire. The success rate actually approaches zero for most companies when hiring individuals with no background in the business. Suffice it to say, for the overwhelming majority of new hires its a bloodbath.
A primary reason for this is the pretense that the company hiring the new agent will provide leads. This is nonsense. Rare is the company that actually has any viable leads to share. The truth is companies expect sales associates to find new prospects to sell to. That’s the primary function of a financial sales associate.
The sales associate position is a marketing position first and a sales position second. But since very few people have an interest in trying to find people to meet with telling prospective new hires this won’t result in many new hires. So while rare is the company that shares this with its new hires, it is none the less the truth. The sooner this is understood the more likely it is a newly hired sales associate will understand the position they actually are in.
Think about it.
If a company had qualified leads for new prospective buyers of their products why would they waste them on new hires who have minimal product knowledge and few if any sales skills. If anything, they would give them to the most successful sales associates they have, individuals who clearly would have the highest likelihood of capitalizing on the opportunity at hand.
The only “leads” companies give to new inexperienced hires come from one of two categories. Existing clients in need of service or orphan clients of failed, deceased or retired prior sales associates. Neither of which offer much promise of producing a sale. And neither of which will be continued for long.
The first category of service related requests from existing policy holders is a disaster for them waiting to happen. The new agent has no idea how to help and ends up spending large amounts of time attempting to understand how to address even the most basic service need. Even if they succeed in resolving the issue concerning the existing client they receive no compensation. Actions as simple as an address or beneficiary change are daunting for new hires. And, they are best handled by having the client call the companies 1-800 service number.
The other “lead” category consists of “orphan” clients; meaning those who have no active sales associate servicing their needs. This is the result of the aforementioned failure of prior new hires, or in some cases the result of a successful senior associates retirement or demise.
The sad but true fact is these orphan clients have been given to every new sales associate that’s been hired year after year. Most have come to resent being called again and again by a never ending stream of new agents seeking to find a way to sell them something new.
Relative to those “orphan” clients originating from deceased or retired sales associates, they are typically older folks living on a fixed income. Most are in no position to buy anything new anyway. Even worse, those orphan clients tied to a failed prior new hire often have a very negative view of the company they view as having destroyed the career of someone they know or cared about. Someone likely lied to in the hiring process and abandoned after their hiring and left to fail.
Either way, these promised leads stop soon after a new associates is hired.
The reason being the next new hire has been told the same dismal lies to entice them to join the company. They are fed a few of these leads to make it seem their will be more as time goes on. Only to find that will not be the case shortly after they sign on the bottom line. A cycle that repeats itself endlessly with most financial services companies.
The reality is new hires are left to survive the transition into their new career with no actual plan as to how they will find prospects to meet with and hopefully sell to. The end result for most, as previously mentioned, is predictable and also constantly repeating.
What new hires don’t know is the majority of companies pay field managers to hire new people. They set mandatory hiring minimum requirements that must be met for the field manager to remain employed.
The idea that devoting time to help new hires survive long enough to succeed is something only a rare few field managers can entertain. Instead, most are locked in a struggle for survival. A battle they have virtually no chance of winning. They hire in perpetual desperation as prior hires fail.
The added truth is helping new hires survive is outside the skill set of most hiring managers. This is so because most hiring managers themselves are failed sales associates. They were given the hiring job by companies grabbing at straws in a desperate and futile effort to grow their field sales force. A ridiculous reality to be sure, but painfully true around the financial services industry. These failed sales associates, now hiring other hopeful candidates, are painfully aware of their own limitations.
Making matters even worse is the fact most large financial sales companies are now “publicly held”. The reason this is bad relates to the fact a public company must produce profits that represent a meaningful return on equity or stockholders will revolt and replace senior management.
The fact is hiring 100 sales associates to end up with a small handful who survive is an expensive and losing proposition. As a result, many large companies have abandoned all efforts to hire new agents. Many, like MetLife, have sold their distribution systems and admitted in press releases they have no idea how to bring new hires into the business.
As a result, the norm today finds most financial products being marketed through brokers and independent sales associates with no direct company affiliation. Only those with a long history of success and an existing client base consisting of high net worth or income clients are currently being sought after as new hires by large successful financial service firms.
Which leaves second and third tier far smaller companies fighting to hire the typical young, aspiring inexperienced new hire. Most likely a recent college graduate who has no history of success and no natural market of affluent prospects to sell to. A glaring formula for failure in itself.
Building a Career in Financial Sales
There are a number of realities anyone desiring to become a financial sales associate must accept if they are to have any hope of surviving long enough to prosper in financial sales. As is true with many things the actual steps that must be taken to succeed are the last things most of those seeking to be hired wish to hear. Which finds the majority of sales managers, who must hire sales associates to remain employed, working hare to not tell those they seek to hire the truth.
Moving into a direct and personal mode for a moment, I can tell the reader that most of the people I’ve interviewed as a sales manager (and we are talking thousands) preferred to embrace what I call the “tooth fairy” tale told to them by sales managers from other firms. The promise of endless leads sufficient to pave the way to guaranteed success.
You would think it would occur to a prospective new hire to ask to meet with prior year hires so they can hear first hand their tales of lead generated success. Oddly enough, this thought rarely occurs to them.
This logical request would dispel the myth of endless leads once and for all.
Unfortunately, after years of experience interviewing candidates, it was my conclusion prospective new hires don’t ask because they prefer to embrace the myth of a never ending stream of qualified leads that will generate prospects anxious to buy from them. It is also fair to say the young and optimistic are not expecting to be lied too. Which makes they easy victims for the typical hiring manager in the financial sales industry.
Sad, but true.
So, if not “leads”, then what can a new inexperienced hire to to leverage their odds of success? A topic addressed a few paragraphs down.
Character Traits are Key
Continuing in my first person mode I can share that decades of experience proved to me those who aspire to succeed in financial sales must posses three character traits; a strong work ethic, coachability and a genuine caring for others.
The first two are traits are absolutely essential and can’t be faked. While the third is a real plus. Prospects can sense it. However, the truth is a gifted actor is capable of imparting a caring impression. So while the third trait can be faked and often is. As is also the case with politicians plying the masses for votes.
Assuming the right mix of character traits the “odds of success” for inexperienced new associates can be leveraged into the 60% range (when measured at the end of four years). That’s up from an industry average that hovers between five and ten percent.
Keep in mind, the success rate for recent graduates joining major law or accounting firms is also pretty dismal. Dismal in the sense that most fail to make the cut after several years go by and instead migrate to smaller firms. This is true of a great many careers.
The reason its fair to compare a career in financial sales to that of a top law or accounting firm relates to income potential. Six figure (and more) income levels await those who succeed in financial sales. The added good news being they don’t have to go to Harvard or Yale, or lead their graduating class, to join the financial sales industry. Which is not the case relative to the nations largest law and accounting firms.
To achieve a 60% level of future success with new inexperienced hires in the financial sales industry several realities must be understood by an inexperienced hire from day one. Further, well conceived high probability of success systems and resources must be put in place and taught to the new hire. Who must in turn consistently and persistently execute those systems, using those resources, over an extended period of time.
The “consistent and persistent execution of well conceived strategies over an extended period of time” must be the mantra for those new hires who hope to survive long enough to succeed in financial sales. Nothing short of this, aside from astounding levels of good fortune, will do the trick.
It’s also fair to note some financial sales companies seek to achieve higher levels of new hire success by aligning new hires with existing successful sales associates. Sadly, when it comes to existing successful financial sales associates, they have no financial motivation that would cause them to make the effort to impart this sort of wisdom to new hires. Actually, the opposite tends to more often than not be true.
The norm in this situation is for the typical experienced successful financial sales associate to hire junior associates to do the grunt work they prefer to avoid. The only training imparted is how to do those tasks. Eventually, even the most optimistic junior associate realizes they are being taken advantage of. At that point they begin to object and start asking for help designed to get them in front of prospective buyers so they can make sales.
It is at that point the experienced already successful associate simply hires another and repeats the cycle. The only exception being when a successful sales associate seeks to bring an offspring or close relative into the business to inherit their practice. Which is about the only instance where this approach has been proven to work to a new hires benefit.
Sad but true.
This is all the more unfortunate because most financial services companies no longer elect to pay hopelessly ineffective sales field managers to hire and train new inexperienced associates. The failure rates is simply to high and the success rate to abysmal. The economics don’t work so as noted above most companies have abandoned all efforts to do so.
The bottom line is those who aspire to a financial sales career are unlikely to find, 1) anyone interested in helping them learn either the art of selling and 2) the essential skills involved in finding new prospects to meet with and sell to.
The reality is new financial sales associates are largely, if not completely, on their own. Perhaps this is good because most efforts on the part of the companies that hire them actually will reduce their odds of success. The reason being company sponsored training is usually the brain child of home office higher up, or utterly clueless consultant they’ve hired. Neither of whom has held or succeeded in a financial sales associate position themselves.
It important to understand when it comes to home office management types their success and survival is tied to their ability to blindly embrace whatever corporate “mantra of the moment” happens to be touted at the time. Which is actually easy for them since they have no idea what makes sense anyway. Corporate success is more a function of politics and sucking up and rarely has any relationship to positive results.
The “mantras of the moment” noted above tend to be tied to the shifting sands that make up the senior management team of any given company, at a point in time. Something that changes ever three to five years on the average.
Actually, it is the ability to abandon a prior mantra and pledge allegiance to a new one with no regret or hesitation that defines a successful home office middle manager type. Those who lack this chameleon like skill don’t last long in the hallways of corporate America. Those that embrace it tend to move up the ladder of corporate success. Resulting in a never ending series of “peter principal” driven failures over time.
These folks know they will continue to be paid a salary whether new sales associates succeed or fail. They learn early and often to blame new associate failures on the hiring field manager. There is absolutely no risk to the home office guru’s who are paid to preach to sales associates “how to succeed” from the ivory towers that house them.
Honest, that’s how it works.
On a more positive note, the realities I’m about to share can provide the keys that will allow a new inexperienced hire to achieve long term career success. Of course, as already noted, these are realities no one really wants to hear. Still, those who grasp the simple truth they impart can increase the odds they may survive long enough to achieve success in financial sales. Which will in turn open the door to mid and high level six figure incomes for most and seven figure incomes for some.
The odds of success will be far lower than the 60% noted earlier absent the new hire receiving dedicated mentoring help in the field and training from someone well versed in what works and what doesn’t in the office. Not to mention the need for high probability of success scripting and supporting value added resources. Which will likely not exist.
I know this does not paint a pretty picture. But the odds of failure merit such discouraging commentary. Only the brave and they highly motivated should attempt to make this work.
As for me, the best I can do here is share what works and why. I do so in the hope those who believe what they are about to read can take steps that will increase their odds of surviving long enough to achieve success in financial sales. I’ll provide the “what to do” just not the “how to do it” since the latter would require writing volumes while the former does not.
Life Insurance
I’ve never interviewed any prospective new hires (of the thousands over the decades) who told me they aspired to get into financial sales to sell life insurance. Instead, the typical aspiration is to manage money for the wealthy. What they want is a company willing to promise that.
Again, a tooth fairy aspiration for someone new the business.
After all, what wealthy person (usually someone further along in age and life) would hire an inexperienced recently licensed person with no history of success or referrals attesting to superior service or performance to manage their money. Think about it.
The sad truthful news I shared with those I interviewed was telling them instead; “you need to start where you are, not where you’d like to end up”. It wasn’t what they wanted to hear, but it did sort out the dreamers from the pragmatist. Accepting reality is the key. Embracing a pipe dream is not.
All I could say as they protested accepting reality is “its not my fault” and “I can share with you what does work and how to survive a transition into this business” if you are inclined to listen. This set the tone for subsequent interactions should I decide a candidate had the needed profile for those willing to embrace the truth instead of the lies others told.
The better plan I shared was actually rather simple.
First and foremost it involved the new hire developing a base of clients in an age and income range similar to their own. Which is why my typical new hire had been out in the work world for at least ten years and achieved a meaningful income level.
The promise I made was that this same group of emerging affluent would eventually represent the client base they desired. Over time many would succeed and build wealth. They would be the wealthy of tomorrow that new hires then aspired to do business with.
The fact is, it is the aspiring affluent of today who will become the wealthy of tomorrow. The good news is if they happen to be clients of today, then surely given proper care, service and reasonable results they will continue to be clients tomorrow. Meaning the new hire will have by default ended up where they wanted to be.
The point being if the new hired started where they were today (seeing those they knew) they would eventually end up where they wanted to be. No wishful thinking or day dreaming was involved. This was a plan they could activate. A plan the result of which made sense and which they could control by actions of their own.
All they needed to do was earn an income in the years in between sufficient to allow them to survive until then. Which was the challenge at hand.
The promise I made was that over a few decades time frame the financial sales associate could amass the skills, develop the level of trust, gain the experience and obtain the education, credentials and licensing needed to service the needs of the affluent with credibility. Which is how a affluent client base is actually developed.
It all happened as the sales associate aged along with the client base they built. It happened as each evolved to higher levels of success. A plan that made sense, rang of truth and put the new hire in charge of creating their own success. All they needed was the tools and training that would allow them to achieve it. Which was my role in their life at the time.
I sold the “get rich slow” plan. A plan that proved to be far less attractive to most new hires. It was not the plan most would prefer. But it was a plan that could be made to work. A plan that put the new hire solely in control of making it happen.
My message to them was all they needed to bring to the table was a solid work ethic, a willingness to be coached and a desire to help others. I would proved the well conceived strategies and resources needed to help them along the way early on. They would need to consistently and persistently utilize them day in and day out.
I explained in my interviews the key to making this plan work was to survive in the business long enough to have a chance for it to work. This meant they had to earn and income sufficient to pay their bills for at least three to five years, after which things would become far easier and their survival would be virtually guaranteed.
So early on the key to survival is simple and obvious. It’s earning enough money to pay ones bills. It’s that simple. Those who managed to meet that challenge for three to five years will rarely fail. Those who fail to meet that challenge will always fail.
I will say having a working spouse earning a good living who is able to pay the bills for three or four years is also helpful plus. A spouse with the patients of a saint I might add since the new hire will rarely be home and participating in family time for several years.
A saint like working spouse can dramatically reduce the drama that otherwise abounds as a new financial sales associate struggles to generate the income needed to pay their families bills. Of course, it’s also fair to say that very same drama provides a great deal of incentive to work ones ass off early on. Another key to success.
So having a working spouse can be most helpful relative to mitigating stress, but it can also backfire for those who lack the internal motivation to drive them to put in the long hours needed to succeed. Since it cuts both ways, having a working spouse is not one of the keys to success.
When it comes to making enough money to pay the bills for those not so fortunate what is needed is a focus on selling a product that generates a high level of commission income. The only product in financial sales portfolio that pays a substantial enough up front commission to generate the needed cash flow is life insurance.
Specifically, cash value life insurance. A fact no one wants to hear. But a fact none the less.
Sorry, its not my fault. It’s just the way it is.
Absent developing the skills and product knowledge needed to sell cash value life insurance the odds of surviving long enough to achieve financial solvency and then success are greatly reduced. This needed to be the first product a new hire would sell to those they met with if they were to have any hope of survival.
I explained this to everyone I hired. No one liked to hear it. Those who attempted to survive while focusing on the sale of other types of products overwhelmingly failed. A fact I pointed out relentlessly to everyone I hired. Needless to say, sharing wisdom like this did not make me popular or loved by those I hired.
But popularity was not my goal. Instead, my singular goal was increasing the odds of their success. That was “my job”, not being their buddy.
Accepting this as fact, as unwanted a fact as it may be, is absolutely necessary if success is to be achieved for a new hire in the financial sales world. Once successful (meaning the first three or four years have been survived) its perfectly fine for the sales associate to transition to whatever facet of the business they prefer.
In fact, doing so is essential if they wish to further leverage their future success so they can be of ongoing service to the emerging affluent who are building their wealth. No one championed continued and progressive education, or exemplified it, better than me. Training and knowledge were key. That was always a given in my organizations.
On the plus side, cash value life insurance can deliver some great tax benefits. The further good news is it does so while also protecting ones family from the downside of the premature death of an income earning spouse. When properly structured it can easily be shown the tax savings achieved within the product as the premiums accumulate and grow, money that otherwise would be paid to Uncle Sam in taxes, is instead paying for the life insurance protection.
This is a simple fact most people are clueless about. More to the point most people are happily enlightened and pleased to learn this is so when value added information is shared with them. Which sets the stage for making a value added sale of a product that produces the income level needed for a new hire to survive while also benefiting the family the product is sold to.
Age, Background and Natural Market Focus
One of the major reasons most individuals hired by the nations financial sales companies fail is age. Sadly, government regulations prohibit a company from discriminating based on age in their hiring practices. Which in turn makes the entire subject of age taboo relative to the hiring process.
An over reaction perhaps, but such is the world we live in.
This means financial sales companies (even if they were so inclined, which most are not) can’t actively discourage hiring younger financial sales associates. However, those companies that insist on recruiting on college campuses with an eye on upcoming graduates or active students have no excuse to dignify their behavior. Shame on them.
So financial services companies can’t refuse to hire someone based solely on age. This is true even though an overwhelming preponderance of statistical proof exists proving beyond a doubt the odds of that person surviving in the position they are being hired to fill are at or near nil.
Something my guess is most of those hired would love to know before they decided to take a job destined to end this way. But who am I to tell those that govern us their laws can backfire to the detriment of the very people they are intended to protect.
The reason age is important has nothing to do with age itself, in the sense of maturity, or whatever. Instead, it has to do with the time needed for a person to achieve career progress and start to earn a decent income. This applies both to the person being hired and far more important, it applies to the people they know.
Consider the contrasting realities that pertain to a typical 22 year old just out of college. At best most will be hired into entry level positions at marginal income levels which will grow at a snails pace for several years.
First, most of the people they will know will be in the same age range they are in. Like them, their peer will be at the very beginning of their careers. Add to this, in today’s world more than ever most will have high levels of student debt. Especially true in the financial sales industry since ego bloated, HR driven hiring criteria today demands new hires have a college degree. These individuals will almost universally have little or no savings, will be single and they won’t have families they must worry about feeding and housing. Nor will most have a working high income spouse (saint like or otherwise).
Once one accepts the reality that “leads” are a myth and not the pathway to success it becomes obvious a new hires biggest initial challenge is finding people to meet with. The most likely source, even if its not what they would prefer (and it rarely is), is they must seek to meet with (and attempt to sell to) the people they know.
The above noted fact circumstances indicate the people a recent graduate knows don’t need life insurance. Further, even if they did, they certainly can’t afford to buy cash value life insurance. The typical 22 year old would be challenged to even buy cheap low premium term life. Nor does the typical 22 year old have large savings balances that can repositioned into alternative products like cash value life insurance.
The typical 22 year old prospective client is in no position to create a meaningful income stream for someone hired to sell financial products. In fact, they represent the worse possible prospects to sell to for anyone that needs to generate an income sufficient to pay their bills.
Contrast this to the person who seeks to enter the financial sales career at age 30, or even better at age 35. The realities noted above are 180 degrees the opposite for that age group. They are in fact the perfect target group to solicit for the sale of cash life insurance. The pricing of the product is still relatively low based on their age and typical health circumstances, but it still is substantially above the price of pure term insurance which lacks any cash value elements.
The good news is the peer group of an aspiring 30 or 35 year old new sales associates consists of people who would typically be of similar age. A peer group that would have achieved some level of career progress at that point in their maturing careers. A peer group that would often include married couples earning incomes consistent with middle management level positions.
Most peers in that age group would have families. Their wages would be essential to paying the bills associated with the families needs. They would likely own homes, have a mortgage and very likely have savings in one form or another. They might even be receiving substantial annual bonuses they could use to purchase needed financial products.
A better prospect for doing business could not exist.
This is even more the case since they are still at an age where they are unlikely to have as yet have formed a long term relationship with another financial advisor. Meaning there is one less obstacle to overcome to make them a client.
What this means is a “natural market” made up of 30 and or 35 year old friends and peers would have far more income producing potential for a new or recent hire than one made up of 22 year olds. These emerging affluent individuals should be the target of every firm hiring new financial sales associates.
How odd it is to find its not.
The reality is there are many ideal candidates looking for a new career in this age range. Tens,, if not hundreds of thousands of individuals blessed with wonderful natural markets of similar aged peers. Candidates who are ideal for transitioning into the financial sales role who are actively looking for new and better opportunities.
This age group includes millions who have progressed far enough in life to be disillusioned with their typically dysfunctional corporate employers or who have been downsized by them. It includes others who have stumbled in the building of their own businesses as economic factors beyond their control or unanticipated innovations cause their businesses to fail.
This age group includes a great many people looking for a new career. They typically fit one of three likely profiles.
This includes mid-level corporate executives who are either disillusioned or bored with their initial career choices who have reached a level where future progress is either blocked or limited. It is also not uncommon for young entrepreneurs to find economic factors beyond their control or unanticipated new product innovations have caused their businesses to fail. Also included are already successful sales associates working in other types of businesses. where continued success is restricted by territorial limits or senior management obstructions.
These are the ideal profiles for new inexperience financial sales associates. There “natural market” consists of dozens if not hundreds of individuals like themselves who have progressed in life.
That said, some of financial sales companies have acknowledged the abysmal failure rate driven by a focus on cold calling (there primary marketing strategy) with young new hires. Some have pivoted to a natural market focus.
Sadly, many of these firms still tend to hire entry level 20 year olds who lack a viable natural market and attempt to have them succeed by selling to those they know.
When it comes to those that have shifted their focus to thirty year olds, most of these companies require prospective new hires to complete forms listing a hundred (or sometimes several hundred) names of friends, peers and acquaintances. The idea being they will focus their appointment setting efforts on the listed individuals.
This is a terrible approach for a very logical reason.
No one knows a hundred, or hundreds of people well enough for it to matter. Most candidates when faced with this obstacle simply open the phone book and start writing in names on these “project 100” forms. After which they use their imagination to check boxes pertaining to income, family status, etc. for the names they’ve listed.
The result is a total waste of everyone’s time.
The truth is a dozen or so people willing to meet with a new associate is more than enough to get started in the career. While two or three dozen would be better, the further out one goes in their circle of acquaintances the less viable the potential prospects become.
The good news with ones natural market is close friends and perhaps a few close relatives will go out of their way to help a new hire. The odds of a favorable result decline quickly the further out one goes in their circle of acquaintances.
Still, no matter how many people the candidate can legitimately list, the day will always come when a recently hired associates runs out of names from their natural market list to call. What happens next will dictate the likelihood the recent hire will survive long enough to prosper.
Truth be told, its actually what happens long before this day arrives that serves to determine the longer term outcome. The fact this day would come is known to everyone involved. If this list is the only key to the new hires survival, their failure after a matter of months is per-ordained.
As anyone can imagine, it’s a bad day indeed when the day arrives there is no longer anyone left to call in their natural market. Unless, of course, alternative plans have not been activated long before this day arrives.
We called it “hitting a wall”. One day the recent hire who focused only on their natural market still had people to call to set appointments. The next day they had no one left to call. Which oddly enough always seemed to come as a total shock. No matter how many times they had been told that day would arrive if they had not activated an alternative strategy along the way.
Those who failed to plan for this day tended to solve the problem by going back and calling the people on their list who didn’t buy the first time they had met with them; asking to meet again. The problem being those people typically still didn’t have the funds on hand needed to make a purchase. It was usually about three or four months since they had met with the recent hire. Logically, not much had changed since then.
So this second (and often then third) “go around” produced little or no actual written business. After two or three months (or longer) of beating this dead horse the recently hired associate was flat broke, far behind in paying their bills and literally in many cases facing bankruptcy.
Making matters worse, their repeated and seemingly relentless ongoing phone calls asking to meet wore out the new associates welcome with the people being called just months after having me with the new associate.
After all, the people they were calling had already met with them, heard what the new associate had to say and were not in a position to buy currently. Hearing it all for a second time (and then a third time) quickly became annoying. Any urge the person had to help the new hire with their career transition waned. Instead, it all to often morphed into active annoyance. A further disheartening reality faced by the recent hire.
This scenario needed to be avoided if the recently hired associate was to survive long enough to succeed. The natural market was simply a source for beginning in the business. It was not the solution for persisting.
The fact this often occurred is all the more amazing since this outcome was inevitable and discussed with the recent hire constantly (that the natural market list would one day run out). For reasons no one could explain some new hires resisted developing the alternative skill they were told they must implement. A skill that would allow them to create an ongoing flow of future prospects to meet with once their natural market was exhausted.
The absence of an alternative source of prospects to cultivate explains the abysmal failure rate typical of even those financial services companies that hired sales associates with a natural market focus. It’s only the beginning. It’s not the end game.
Evolution to Referral Based Marketing
As noted above, the fact the natural market will one day be exhausted is obvious to all from day one. You would think the companies and managers who focus on that approach would have noticed this. After all, its been a scenario many of them have been enduring for decades as one new financial sales hire after another fails.
The problem is most companies (if not all companies) have no viable skill they can teach to address the problem. Meaning they have no idea what other marketing approach should be taught to recently hired associates while they are executing the natural market effort.
They also don’t think about what other approach would blend seamlessly with an initial natural market appointment setting focus. A secondary focus that would represent a logical progression if you will. One that relies on similar skills involved in contacting the natural market prospects and one that would utilize the same appointment scripting and resources to achieve desired results.
If anything most turn to cold call training. Which is the diametric opposite of the natural market approach. The two prospect types the sales associates would be meeting with have totally different characteristics. Further, it is far less likely any two cold call originated prospects would have a similar profile allowing for a consistent high probability of success appointment approach to be used.
Even worse, we now live in a time period where “caller ID” and “Do Not Call” lists dramatically hinder any effort to make cold calling produce results.. Frankly, there is no way to make cold calling work. And it never worked well to begin with. The “closing ratio” for this source category of appointments is abysmal. And the average case size is extremely small.
NOTE: Closing ratio refers to the percentage of applications taken compared to the total number of appointments held in any given time frame. With natural market prospects it averages 16% to 18%. Meaning that percent of the time when an appointment is being held with a prospect from that source an application is being taken. Said differently, if the sales associate is holding six appointments per week from that source they will on average be writing one application per week (closing a sale).
With cold calling sourced appointments the average closing ratio is more like 5%. If the person making the calls is “gifted” on the phone it might rise to 10%. That means an application is only being taken on one out of every ten or twenty appointments. Which might involve two or three weeks of appointment activity to achieve.
Even worse is the fact the number of hours needed to set an appointment with cold calling is time intensive to the point its prohibitive. It can take many hours of calling to set just one appointment. As opposed to the minimal amount of time it takes to make a natural market appointment.
Finally, with cold calling the sales associate actually has no idea what the financial profile of the person they will be meeting with is. It could be a 90 year old on a fixed income who is bored and just wants someone to talk to. The odds that its and affluent or emerging affluent person looking to buy a meaningful amount of financial products is slim to nil.
What’s odd when it comes to recent hires, is even if you tell them every day this “wall” awaits them (the day they will have met with their last natural market prospect) few if any will voluntarily take pro-active steps to address the situation ahead of time.
Left to their own devises most ignore this reality until the day arrives when they “hit the wall”. Which is to late. Way to late.
I know this because getting recent hires to address this reality was the single biggest challenge I faced as a sales manager with those I hired. No matter how hard I pressed this message, and I pressed it hard, many new hires could not bring themselves to grow beyond calling their natural market.
This is seemingly because it involved a skill they had already mastered. One they could count on to fill their appointment calendar. So that’s the skill they utilized. Many (far to many) “passively” resisted implementing the next logical marketing strategy approach while meeting with their natural market prospects even while agreeing in coaching session after coaching session they needed to activate it.
Hence the need for new hires to be coachable. Hence the reason for a 40% failure rate over time even when all the high probability of success tools the new financial sales associate needed to survive and succeed were provided to them on a silver spoon (so to speak).
This scenario persisted year after year in my world as a sales manager in spite of the fact I provided every new hire with scripting, training, visual aid resources and definitive statistical proof the subsequent strategy they needed to implement worked. In fact, it worked even better than the natural market focus. It just couldn’t be activated without starting with the natural market approach.
When I say “better” I refer to two results metrics I measured for all my new hires. Results I tracked for them for their first four years in the business. The first metric being the closing ration which ranged from 20% to 25% for the second source focus. The second being the average case size which was almost double that of the natural market source.
The proof I shared was derived from the activity reporting statistics I gathered from those I had hired before them. People who were hired from all walks of life career wise. People who generally had had very similar age and financial profiles. Basically, people just like them.
The results of thousands of previously held appointments using the same high probability of success scripting and value added appointment resources. Results that included eleven different possible sources being tracked. Results that provided closing ratios and average case sizes (commissions that would be paid on cases written) calculated for all eleven sources.
This data was built into training sessions from day one. It was hammered home time and again in every training and one on one coaching session thereafter. A newsletter was published within my agency each month with updated statistics for each of my associates still in their first four years in the business for all to see.
In fact, I used the same data in my hiring interviews conducted before an associate was even hired. It was literally built into the agency culture.
It always amazed me that so many of those I hired resisted learning the needed alternative marketing skills I taught that would allow them to evolve from the natural market to the next logical source needed to continue their career. A resistance that persisted with many of them even when our firms appointment activity statistics proved that skill alone accounted for the success of those hired before them.
Only those who implemented the secondary marketing strategy while still meeting with their natural market prospects were able to avoid “hitting the wall”. Those associates were the ones able to survive the rest of the transition into a successful financial sales career.
The others sadly were not.
The true beauty of the natural market hiring focus, when melded with an age 30 to 40 emerging affluent hiring focus, is the person hired knows other people. Those “other people” represent their natural market. The really good news (for an astute hiring manager) is the people the recent hire knows typically share a very similar profile to the person hired.
They share favorable demographics from a geographic, income and family perspective. Even better is the fact the other people those folks know also share those demographics as well. And so on, and so on and so on. when it comes to people each progressive “next person” knows.
As noted, the key to success involved this secondary marketing strategy (which rapidly became the primary strategy for recent hires) being implemented while the recent hire was meeting with their natural market prospects. Which meant recent hires had to master one more skill.
This “skill” involved positioning their natural market contacts during their appointments to be favorably inclined to refer them to others the natural prospect knew. The intent being to allow this “referral” market to take the place of the natural market prospects long before they ran out. Which involved activating this additional skill from the very first visit with the very first natural market prospect.
The key to making a referral based marketing strategy work involves the recently hired associates “earning the right” to be referred to other people those folks knew. Adding value consisted of sharing information visually that would help the people they met with make better decisions in areas where those individuals indicated they had a concern.
Information the person they were meeting with could easily see would also help their own frends and peers make better decisions as well.
The goal was to give each person the sales associate met with a positive reason to refer the associate to others they knew. A reason that would help that other person they knew and cared about. Not a plea to help the sales associate which history says will typically fall on deaf ears.
All my associates were trained to ask for was a favorable introduction. We avoided asking for referrals. The reason being that word has a connotation the person making the referral knows the person they are referring a sales associate to actually needs something the sales associate is selling. Of course, the person has no idea what the people they know need financially, or what they already may own. So asking for an introduction and mentioning the value the sales associated added by sharing information avoided that obstacle cropping up in the mind of the person being asked.
This approach works especially well when one is marketing within a defined age group where most people in that age group have similar concerns and needs. It’s easy for one person who felt information shared with them helped them make better decisions to see how that information might be helpful for others they know to see. A totally different focus than trying to get that person to feel someone they know needs a product the sales professional is selling.
Once the skill of identifying concerns and adding value in those areas is mastered it unlocks an endless cascade of tiers “of others they know” from everyone the sales associate will ever meet with. Which means subsequent referrals can also be approached from this perspective. When executed to perfection the referral based market value added approach never ends. It’s a source that can’t be exhausted. A source sufficient to build a financial services career on and grow it for decades to come.
Three Keys to Make a Referral Based Focus Work
There are three keys to making a referral based approach work.
First, and most important, is it must be part of the appointment process from day one. It must be built into the first introduction appointment with a new prospect, the second presentation appointment that should subsequently occur if the first appointment was properly executed and if appropriate the third visit to close the sale. The referral based marketing strategy starts on an almost subliminal level early on. It then evolves into a spoken request as the first two appointments with a prospect unfolds.
The appointment statistics I gathered proved that with the referral source two out of every ten appointments held resulted in a sale. The other eight of the ten appointments involved prospects that didn’t have the funds on hand to buy currently. So the trigger to obtain referrals had to be pulled at the end of the second visit no matter what the outcome. The reason being only two of ten ended with an application being taken.
The sales associate needed a ten for ten referral rate if they were going to continue to see the same number of prospects per week. If only two of ten prospects they met with ended up giving referrals they’d be trying to replace every ten appointments they held with only two referral sources; an impossible task.
The good news my statistics verified my associates enjoyed a near 100% invitation to return percentage on their first visits. So there was no risk in waiting until the second appointment to pull the referral trigger and ask for favorable introductions. The statistics I maintained also proved that based on the contact method I trained my associates to use one out of three referred prospects on the average agreed to meet with the sales associate making the request.
This means that as long as my associates pulled the trigger on the second visit, and they obtained at least three “introduction” names with contact information, they would be able to replace each person they met with, with another person they would get to meet with. Something far easier said than done.
This required a well designed, value added, consistently implemented and perfectly executed first and second appointment process. The adding of value is the second key to making a referral based approach work.
This focus also involved using a well conceived method for making the initial contact with the referred new prospect. One that yielded a predictable successful one out of three result rate. That approach to making the critical initial contact with a referral is the third key to making this strategy deliver the required results.
Keep in mind, a sale can only be completed with those prospects who have the money needed to buy what they need currently Most people do not have the funds on hand the day a sales associate first shows up needed to do so. Instead, most prospects must wait until the funds become available to buy the product they have agreed they need. Meaning, with most prospects the associate hasto wait until the funds became available for a sale to be made.
Which might take weeks or months, or which might take years.
The key is having an easy to administer system for keeping in touch with everyone who is “waiting for the time they have the funds” without becoming a pest. It is essential that the sales associate be in touch with the prospect when the time is right to move forward. If not, some other lucky sales associate will benefit from the foundation the initial sales associate laid. Those associates who failed to implement a process for “keeping in touch, without becoming annoying” with those they had met with never succeeded to the extent of those that did. A process which, of course, we also taught as part of our training. Including scripts, letters and related tracking resources essential to achieving the desired result.
The statistics I had gathered (which included almost 100,000 appointments held over almost two decades) indicated at best between two and three out of every ten referral based appointments held would result in an application being taken (meaning a sale was made).
The really good news is these statistics indicated the existing client source tended to average around a 34% closing ratio. Even better it also delivered the highest average sale amount.
This factor accounts for the longevity enjoyed by those who survive the first four to ten yeas in the financial sales business. The longer one is in the business the easier it becomes to earn a solid income.
The successful sales associate in their fifth year or later enjoys a reality where they can hold fewer appointments while generating more sales.
The really good news is as their clients age the income levels earned by their clients tend to increase. The result is their average sale (commissions earned) also tends to increase over time, and increase dramatically over decades of time.
The combined result is the six figure plus income level noted earlier in this discussion enjoyed by successful financial sales associates.
The planning key to success involves a sales associate knowing their statistics. They need to know their current closing ration and average case size. With that information they can calculate the number of appointments they need to hold to generate the income level they desire. The number varies with the source of the typical appointment being held and the average case size typically written by any given associate. All of which varies over time and based on the consistency of the marketing and sales process a given associate utilizes.
As noted above, the key to obtaining referrals (introductions) is adding value. When a sales associate shares information that helps someone make better decisions in an area where that person has expressed a concern its appreciated. When a sales associate adds value in that area the good news is the stage is set for obtaining a favorable introduction to other people that person knows. People who they can easily picture as benefiting from seeing the information being shared. Seeing being the key. Which requires a face to face meeting (be it in person or electronic).
Keep in mind, the associate will not actually ask for a referral from those they meet with and add value for. As noted earlier, if the word “referral” is used the approach is doomed to failure most of the time.
The reason is the word referral unfortunately implies to most people they know what someone else needs; hence the reason for referring you. Of course, they have no idea what other people need, or if they do know, they have no way of knowing if that person already owns whatever that is they need. Thoughts of that nature pop into the typical persons mind when the word “referral” is used and obstruct the process of obtaining the desired favorable introductions.
Fortunately, the word “introduction” has no such connotations. An introduction is just that. No more, no less. The person being asked does not need to know if they person they would refer the sales associate to has a need for any given product. All they need to know is seeing the information that was shared with them would be helpful to others they know.
The concern that can cause someone to hesitate to even give an introduction is a mental picture as to how the other person will react when contacted by the sales associate. This picture is not a pretty one. There is always a fear the referred person might be unhappy that their contact information was provide when they are contacted.
Which is a final obstacle that must be overcome.
So this hesitation must be eliminated if an introduction is to occur. This is accomplished by showing the person being asked a proposed letter, email or text message that would first be sent to the person they are introducing before a contact call is made by the sales associate.
The key to success being what that “pre” call letter, email or text message says. If worded properly, and knowing the person being referred would see that communication first before being called, can eliminate this obstacle in most cases. Not all, but most. Which is enough to allow for success.
Keep in mind, at inception it is a recently hired sales associate making the contact with the person they are being referred to. They don’t have the “credentials” at that point sufficient to impress anyone. All they have to support their request is the value they added for the person they met with. That must be the focus of their “introduction” request.
Here is what the text of their initial contact must say (however it may be transmitted be it snail mail, email or text):
“I recently met with “so and so” who thought you might benefit from seeing the information I shared with “him/her”. I’ll be reaching out to ask if you would be kind enough to allow me twenty minutes or so to share it with you. If you find it to be of interest it will be your option to invite me back for more information. And, who knows, you may know someone who comes to mind who you feel might benefit from seeing it as well.”
This simple text, with few if any minor variations made over the years, has produced tens of thousands of referral based appointments. It has served as the building block on which hundreds of successful financial services careers have been launched and built. Millions upon millions of dollars in income have resulted for those who implemented this system.
I’m proud to also share at least one of of my past hires now earns a seven figure annual income, net of expenses. Needless to say this person had a monster work ethic, a drive for success beyond the norm and a willingness to implement what he was taught to perfection. I’m also aware of a great many examples where my prior hires are enjoying solid five figure and lower six figure incomes.
Trying to put anything more specific in this introduction request dooms the effort to failure. Over the years a great many associates attempted to discuss the value they hoped to add. This did nothing but eliminate the need to meet with the referred prospect. Which put an end to both new sales and new referrals. The point being getting into such details in the introduction correspondence dooms the contact effort to failure.
Please resist the urge to do so. If not, you will be doomed to fail.
Activity Based Revenue Planning
The goal for any new associates is to hold a minimum of eight natural market and referral appointments per week, with at least two of the eight being first appointments. A properly structured “value added” appointment approach will yield a 98% “invited back” scenario and a 20% closing ratio (applications taken per appointments held). The average case size depends on the product being sold. If its cash value life insurance product the average will be in the $600 to $1,000 range for someone with a natural market consisting of people at least 30 years in age.
These results have been achieved by many dozens of associates hired from all walks of life. None of which had any experience in the financial services business. All of which started from scratch on a commission only pay structure with no salary component. If they can do it, anyone can.
What is required to plan the desired income level is a very simple activity (appointment focused) business plan. All you do is divide your income goal by your average case size to see how many sales will be required to achieve the income goal. You then divide the number of sales by the closing ratio. This yields the total number of appointments that mus be held to achieve the desired result.
The next step is to then divide this number by the number of weeks that will be worked in that planning year. This yields the number of appointments that must be held per week worked. This can then be factored by an average cancellation rate (likely to be at least 20%) to determine the number of appointments that must be set each week to net the desired number that must be held per week.
Business planning in the financial services industry is that simple.
If someone starts with their natural market and masters the art of obtaining introductions from those they meet with it creates a path and a plan that will end with success. This plan must be melded with a value added appointment structure to support the reason for referrals to be given which will involve the use of multiple visual value added resources; not just words. Words alone will end in failure.
Remember the phrase; “talk is cheap”. What people see has far more power than what they hear. Remember that. It’s important.
The following simple sentence embodies my philosophy for achieving success in business, which is; “The consistent and persistent execution of well conceived strategies over an extended period of time is the most powerful force in business”. You can substitute the following after the word time; “will always result in success”. Either way, these are words to live by.
Find it (a well conceived strategy) or create it and success will unfold.
