Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out
Get this document free

Marketing Strategy and Selecting the Prospect

VIEWS: 620 PAGES: 73

									2
Marketing Strategy and Selecting the Prospect
Overview and Learning Objectives
This class introduces the marketing strategy successful advisors use: identifying your natural market and penetrating it using a target marketing strategy. This class also discusses prospecting methods with an emphasis on referred leads. By reading the text, doing the exercises, and attending class sessions, you should be able to 2-1. Describe the four characteristics of a qualified prospect 2-2. Describe the objectives of a marketing strategy 2-3. Define the natural market characteristics of affinity and access 2-4. Explain the techniques for discovering one’s natural markets 2-5. Describe the four characteristics of a target market 2-6. Explain the roles of segmenting, targeting, and market research 2-7. Describe the three sources of prospects and the prospecting methods for tapping these sources 2-8. Describe what to say to get referrals and how to handle objections and concerns 2-9. Identify preapproach activities that build prestige

Chapter Two

2-1

Chapter Outline
Developing a Marketing Strategy 2-3 Marketing 2-3 General Market 2-5 Marketing Strategy 2-6 Your Natural Markets 2-11 What is a Natural Market? 2-11 Identifying Your Natural Markets 2-13 Target Marketing 2-19 Targeting a Market 2-23 Market Research 2-26 Selecting the Prospect 2-33 Prospecting Basics 2-33 Prospecting Methods 2-39 Qualify Your Prospects 2-60 Chapter Two Review 2-67

2-2

Techniques for Exploring Personal Markets

Developing a Marketing Strategy
As discussed in the previous class, your success begins with your skills, knowledge, and ideas. That is what clients really buy—they buy your products, your solutions, your advice, and the knowledge and service you offer. Marketing begins with your knowledge of the products and service you are licensed and able to sell effectively. Now we will pursue the more challenging concept of finding the people who will buy. This section defines marketing and your general market. It concludes with an explanation of the marketing strategy that is discussed in this class and throughout the rest of the course.

Marketing
Marketing Defined
Marketing is the planning and implementation of a process dedicated to identifying specific consumer needs, isolating groups of people who have those needs, and then producing and customizing the products and services that satisfy those needs. It is the art of planning when, where, why, how and to whom to sell. Successful marketing focuses on the needs of the consumer and produces a mutually beneficial relationship between a buyer and seller. Marketing versus Selling—Because marketing involves planning, much of marketing does not involve interaction with a buyer for the purpose of making a sale. Many believe that marketing and selling are the same, but in reality selling is a part of marketing. Selling is the end result of successful marketing. It is the transaction resulting from the encounter between buyer and seller, the exchange of the product or service for the buyer’s cash. Qualified Prospects—Successful marketing focuses on the needs of the consumer, specifically, consumers who have the means and motive to

Chapter Two

2-3

purchase a product. In other words, marketing is about finding qualified prospects—people who: • • • • Need and value your products and services Can afford to pay for it Qualify for it (if applicable to the product) Can be approached by you on a favorable basis

Need and Value—It is not enough for a prospect to need your products and services; they must want them. It is usually the “value” portion of the definition that disqualifies many suspects. Many marketers fail because they confuse need and value. In most cases, the latter is the main reason people buy. For example, why do people buy vacation packages? Do they really need a vacation to Tahiti? No, they want it. They perceive an intrinsic value of enjoyment and that is why they buy. While most people do not want life insurance in the same way they might want a vacation, many do value what it can do for them and that is why they buy it. Afford—By afford, we are talking about two things. First, you should be careful selling a product to someone who will have a difficult time paying the premiums over the long haul. While some affordability problems can be solved with a budget, there will be times when a prospect’s income will make that extremely difficult. Second, the concept of affordability is relative and is based on what the prospect feels they can afford. This ties directly into the relative value prospects place on what the product can do for them. Even if you find the money in the budget, the prospect may not agree with you. They may truly feel that other needs are more important. Qualify—Unfortunately, there are people who need and want the products you provide but cannot qualify for them. An example of the latter is, in the case of insurance, someone who is uninsurable. What do you do? You will need to make a business decision about cultivating a relationship. While at first glance it might seem pointless, you might be able to help them out in other non-insurance ways and they may be a rich source of referrals. This is especially the case if they value your products and services. Remember, though, the relationship should be mutually beneficial. Approachable by You—The last part of the definition is critical. A prospect may have all of the other qualifications, but if you cannot

2-4

Techniques for Exploring Personal Markets

approach him or her favorably, he or she is not a prospect for you. You might have a hard time accepting that but the need for rapport cannot be overemphasized. You could spend precious time convincing someone to work with you. A better usage of that time would be to find people with whom you can establish rapport and trust.

General Market
Where do you find prospects? You find them in places called markets. Right now, you may find yourself marketing without a clearly defined strategy. Many refer to this as a shotgun approach to marketing. The market created by this approach is what we call your general or undifferentiated market.

Boundaries
There are some boundaries in the general market. Specifically, one definite boundary is established by where you and the company or companies you represent are licensed to sell. Beyond that, you should establish some geographical boundaries by deciding the areas in which you are willing to market and sell. Identify your geographical area by town names or communities within a metropolitan area, as well as by counties and zip codes. The reason for using counties and zip codes is to make sure that you have a territory that can be well enough defined to select prospect lists from a list service, should you choose to do so. Lists can be used for direct mail, or you may be able to buy a very defined list of people in a market and use it to call them on the telephone. Geographical Market Additional considerations you might 1. What is the radius, in miles, of my territory? take into account before deciding on 2. How far do I think clients will be willing to drive in order your territory would be the time to get to my office? Or (if you conduct interviews in a required to get from one place to another client’s house) how far am I willing to drive for an between appointments, traffic patterns, appointment and follow-up after a sale? and whether or not the cost of driving 3. What areas in my territory do I most want to work in, there every day is too high. In some and which ones do I want to avoid? There may be cases the cost of parking may also be a economic or safety factors involved in excluding certain consideration. Advisors who sell for a areas. home service company may already 4. What are the corresponding counties and zip codes for have many of these questions answered this territory? for them by the geographic limits of their agencies. Chapter Two 2-5

General Market’s Necessity
Your general market is necessary as long as you have not developed a more focused market that can support your current and future sales goals. What you will find is that marketing and selling only in your general market will require a lot more work and more cold calling—a task few advisors enjoy. That is why it is better to create a plan and approach marketing in a strategic fashion.

Marketing Strategy
Objectives of a Marketing Strategy
We have already defined the goal of the selling/planning process—to create clients. It would make sense, then, that you want to find a market of prospects (since they have not bought your product yet). Any effective marketing strategy you create should accomplish four things: • • • • Create a perpetual qualified prospect machine. Decrease your appointments to sales ratio (efficiency in creating clients). Decrease contacts made to appointments ratio (decrease the amount of time and energy devoted to prospecting). Focus and specialize to create a higher value for your services.

Perpetual Qualified Prospect Machine—By perpetual we mean continuous flow of new prospects with little further intervention, that is, no cold calls. The best way to create such a machine is through referred leads. For example, if each good client gave you two referrals that turned into sales with clients like them (that is good clients), your business would grow exponentially. While this may not be your exact experience, the point is not the number but the concept that one client could result in multiple good clients through referrals and each of them could result in multiple referrals creating a perpetual stream of prospects in a manner requiring less time and resulting in more sales for your efforts. One other assumption made here is that people tend to associate with others who share similar values, characteristics, and needs. If that is true, there is a good chance that the referrals they give you will be people like them.

2-6

Techniques for Exploring Personal Markets

The Power of Exponential Growth

One client could result in a total of 15 clients if each provided two referred leads just like them.

Lower Appointments to Sales Ratio—Your plan or strategy should help you decrease the number of appointments it takes to generate a sale. The fewer appointments it takes to generate a sale, the better you are doing in your sales interview, your prospecting and marketing, or both. If your strategy does not improve your ability to convert prospects into clients, you need to revisit it. Lower Contacts Made to Appointments Ratio—You can also measure a strategy’s effectiveness by whether or not it is resulting in a lower number of contacts (presumably telephone or face-to-face appointment setting) needed to set an appointment. A good strategy will allow you to spend less time prospecting and more time helping your clients. Focus and Specialization—If you had to have heart surgery, who would you like to perform the surgery, a heart surgeon or a general surgeon? In the same way, a prospect will feel more comfortable with your services if they know you have done work with others who are like them, namely their peers and friends. A good marketing strategy will help you focus on a market or a few related markets for which you can become the insurance or financial services expert. By creating a marketing focus, you will be able to create a reputation that will precede you, which will greatly enhance your “referability”. Obviously, you will want to make sure the market you focus on will be profitable (remember, mutually beneficial). This will have a direct impact on your ability to see more qualified prospects and thus create more clients. It will not happen overnight and it certainly will not happen if you do not have a plan or do not implement it!

Chapter Two

2-7

A Marketing Strategy
Successful advisors have used different strategies to attain success. We will look at two of them in detail. While the strategies are presented working together, it is possible to work them as two separate strategies and even combine them with other strategies you are using. The first strategy is selling in your natural market. By natural market, we mean approaching those with whom you have a natural affinity or to whom you have natural access. These individuals are generally familiar to you and usually involve people you knew when you entered the financial services business. Natural markets are a rich source of prospects and referrals because you are working with people who either already trust you or with whom you can easily build rapport. The second strategy is to target groups of prospects that have common needs, common characteristics, and a communication network in which they share information. These groups should be small enough that they are distinguishable but large enough that you will not run out of prospects. We call this approach target marketing. We combine these strategies to help you focus first on those target markets where you already know someone who may act as a center of influence—a person who helps you get your name out in the market you are trying to reach. The steps that will be developed in the next two sections of this chapter and throughout the course are: 1. 2. 3. 4. 5. 6. Define your territory and the people and businesses within it. Identify your natural market—people to whom you have access or common interest and ties. Identify possible target markets within your natural market. Understand the needs of each market answered by your product and services. Identify and approach individuals in each market based on their needs. Obtain referrals.

By obtaining referrals, you implement the strategy that creates the perpetual prospecting machine. The more qualified prospects you obtain through referrals, the less cold-calling you will have to do. In general, your sales ratios will improve—more sales from fewer appointments, and more appointments from fewer calls. A target market, by definition, calls for specialization. Working with people with similar situations allows

2-8

Techniques for Exploring Personal Markets

you to gain confidence and expertise in diagnosing their needs and prescribing appropriate solutions. It will also give you credibility in their eyes, knowing you work with peers and friends with similar needs. Marketing involves planning as well as implementing. Most of us prefer to “learn by experience,” which in some cases is an excuse for not planning. But a plan gives you a background for your experience to be viewed and evaluated. It helps you to not repeat the same mistakes so you will truly learn from your experiences. Remember that a good strategy will help you create more clients from fewer appointments, and to see more appointments with less time prospecting. Ultimately, it will produce a steady stream of prospects and match you to a group of people (a target market) whose needs and temperament match your own temperament, skills, knowledge, and product solutions.
You had Better be Running
"Every morning in Africa a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle⎯when the sun comes up, you had better be running." ⎯unknown

Chapter Two

2-9

Your Natural Markets
Within your geographical area you will find that not everyone is a suitable prospect, even though they may want and need your product and have the means to pay for it. They just may not want to buy it from you. Just as important, you may not enjoy the process as much as you would for others with whom you have better rapport. Consider the definition of a qualified prospect. The last characteristic is someone you can approach on a favorable basis. The following discussion focuses on making the most of your natural markets.

What is a Natural Market?
Definition of a Natural Market
A natural market is the group of people to whom you have a natural affinity or access because of similar values, lifestyles, experiences, attitudes, and so on. Affinity—This describes the part of your natural market formed by your friends, family, and acquaintances. You have a certain comfort level with them because of these commonalities. Make a list of your friends. How many of them are roughly your age, share the same lifestyle and values, enjoy the same hobbies or activities, or are in the same stage of life (for example, parenting young children, and so on)? Your friends tend to mirror you in these key areas. You like and feel comfortable with them. It should not surprise you that the clients who most resemble your friends in terms of attitudes, values, interests, and so on, are the people with whom you found easiest to create a relationship. No doubt you have experienced a situation when you were small-talking with a prospect and felt like there was a common bond because you went to the same school, or knew some of the same people, or shared some of the same values and attitudes toward life. That is the affinity component of your natural market, and its richness tends to be overlooked.

Chapter Two

2-11

Access—The natural market is not limited to people you know. It can also refer to those to whom you have access for reasons other than direct personal knowledge or acquaintance. Access means that you can approach a group and gain entry with greater ease because you have something in common. This translates into a personal understanding of their needs and the way they think. For example, you might have been a teacher prior to joining the insurance profession, so one natural market might include teachers because your personal experience gives you insight into how to contact them, what unique challenges they face, and what financial needs they might have. Take another example: an advisor who has young children. Prospecting could begin with the parents of her children’s friends, or perhaps the teachers at her elementary school. From there the possibilities are endless. She might gain access to the owners of the daycare or the teachers at the elementary school. Why? Because she has access to them. One last example is the advisor who has a property and casualty (P&C) book of business. Your natural market would also include all of your current policyholders who do not have life insurance with you. Because people are required to carry auto and homeowners insurance, you have an advantage in terms of access. They tend to come looking for you—a luxury life-only advisors typically do not have. Once they purchase an auto or homeowners policy, it is only natural that you talk to them about other risks they might need to understand. This does not even take into account the fact you have a rapport established. The natural access is there.

The Benefits of Natural Markets
Think of what the word natural means. It can mean “normal or effortless.” For example, if we say someone is a “natural” salesperson, we are talking about the ease and knack he or she has for helping people to make buying decisions. So a natural market is one where you seem to have that “knack” for helping people plan for their insurance needs. There are many benefits to working with your natural market. You will • • • have a high probability of understanding the market’s needs and attitudes since you are “one of them.” feel more comfortable and have more confidence. avoid marketing mismatches that occur if you do not place the same values on money, family and other critical life values that your prospects have.

2-12

Techniques for Exploring Personal Markets

P&C Advisors: Life Sales = Higher Retention
For property and casualty (P&C) advisors, you can also add the advantage of client retention. Think of a product in a household as a rope. Every cross-sell made in that household (life, disability, long-term care) is another rope. When the “storms” of lower prices on that auto or homeowner’s policy come, the more ropes you have, the better your chances are of retaining the business. Life insurance is an effective insulator because the sale is built on trust. What is that worth to you? A lot—especially for the client who has no or few claims.

• • • • •

experience less rejection and frustration. have greater success creating a client since they already trust you. have to do less cold calling since you will receive referrals (if you ask). deal with more people with similar lifestyle, values, and attitudes as your current clients. enjoy your job more.

In bygone years, advisors identified their natural markets only after years of selling. They just kept selling wherever it led—to anyone who would buy. After a few years, these advisors would eventually find their natural market through pure trial and error and no planning and reflection. This was the lesson of experience. The cost of gaining the experience was expensive. Had they recognized their natural markets earlier, they would have found qualified prospects with less prospecting and created clients with fewer interviews. Each one of those clients may have resulted in referrals of more people like them—people to whom they related easily because of commonalities.

Identifying Your Natural Markets
You can either allow your natural markets to develop or you can take some time to identify them. Identifying them is not time consuming and will result in greater long-term success and satisfaction. There are two important factors in identifying your natural markets, your personal background and your personal production.

Chapter Two

2-13

Personal Background and History
Your personal background and history have a lot to do with defining your natural market. If you know a lot of people in town, you will find that advantageous. If you are particularly young, you may have difficulty getting older prospects to respond well to you. If you do not already own many of the products you market and sell, you may find it difficult to be well received by people who believe in the benefits that those products provide. You will not meet this group’s expectations. If you have very limited business experience, it may initially be difficult to penetrate the business markets that may available to others with strong business backgrounds. It is very important to look at yourself realistically. Perhaps the most telling mismatch occurs if you do not place the same values on money, family and other critical life values that your prospects do. This is often seen in cultural, religious and economic differences between advisors and the markets they are trying to penetrate. To ensure that you have a clear idea of these implications for you, go through the “Natural Markets Checklist” and answer the questions as best you can. Once you have completed your list, go back and see if any items overlap, have members in common, share your time and interests, or are predominant in your current activities or personal background. This will help you establish ideas about places where you may have your best chances to market and sell most productively.

Past Personal Production
Your previous personal production is another major consideration in identifying and selecting markets. It is a clear indicator of where you know you can do well based on firsthand experience. Select from all of your sales records the actual sales you have completed or, if you are just starting out, your prospect lists. If you have made at least 30 sales, you will have a large enough base to examine. If you have sold fewer than thirty cases at this point in your career, use the cases you have along with people you consider your best prospects. List Clients—List the 20 clients you have enjoyed working with the most. Choose them from your most recent cases. Demographics—From your list, gather information about the following: 1. 2. 2-14 Age Approximate income Techniques for Exploring Personal Markets

Natural Markets Checklist
What occupations have I worked well with in the past?

Social organizations/associations where I have been successful:

Types of people whom I enjoy being with and working with:

Businesses I know fairly well, especially how they operate:

Organizations, businesses, and associations where I am recognized by most people:

3.

4.

Occupation or profession. Be as specific as possible. For example, if the client is a doctor, what kind of doctor? A family doctor, a brain surgeon, and so on? Characteristics: • Employer • Neighborhood

Chapter Two

2-15

5.

6.

7.

Family (married, kids, and so on) Attitudes and values (especially toward life insurance and finances in general) • Lifestyle (modest or luxurious, or other specifics) Interests • Community interests • Social organizations, religious group, clubs • Alumni organization, sorority, fraternity • Ethnicity or culture (if there is a market reflecting these) Needs—what emotional reason caused the purchase? (A desire for security, a sense of responsibility, and so on) What financial reason caused the purchase? (Income replacement, education needs, and so on) Referrals—How many other clients did they directly or indirectly (the person they referred gave you a referral, and so on) refer to you? If you didn’t ask for referrals, note that.

• •

Look for Trends—Summarize your findings by asking yourself the following questions. Focus on where the majority of these clients are: • • • • • What is the age range? (Eliminate any extremes.) What is the income range? (Eliminate any extremes.) What common characteristics (include occupation and profession) are shared by more than two persons? What common interests are shared by more than two persons? What common needs are shared by more than two persons?

Comparing the Results
By comparing the results of the “Natural Markets Checklist” and the “Past Personal Production” exercise, you will gain insight into some possible markets where you will have better success due to access and affinity. Ask yourself the following questions: • • • • What markets show up in both exercises? What markets did you identify that you have not tapped? Why have you not tapped them? What would it take to penetrate them?

2-16

Techniques for Exploring Personal Markets

Where the results of each exercise overlap, you will find markets worth testing. This exercise will be particularly interesting if you repeat it every year to see how your natural market is expanding. Some people let things happen to them. Some people make things happen. Your natural markets are defined by affinity and accessibility. If you prospect for people with whom you have a natural bond and penetrate markets in which you have an understanding or an “in,” you will have lower contacts made to appointments ratios, lower appointments to sales ratios, and greater job satisfaction. You can do this by identifying your natural markets. Identify who you are and which markets you enjoy selling your products the most. Analyze your book of business for your best clients and ask, “How and why did they become your best clients?” Together, these two processes will help you define your natural markets so you can discover and shape them rather than let them happen to you.

Chapter Two

2-17

Target Marketing
In class one, you defined as a component of your product the solutions you are equipped to provide your client. In our discussion of natural markets, you learned how to define the types of people with whom you work well and the markets to which you have easiest access (your natural market). Instead of pursuing your opportunities in your natural market in a random fashion, take a more systematic approach. We call this approach target marketing, in which you look for a group of people (a segment) which is large enough so that you will never run out of names and small enough that the members are interrelated to the degree that your reputation will precede you. The group is identifiable and accessible, with members who have common characteristics and needs, and communicate with one another. Target marketing can occur inside or outside of your natural markets. Because of the advantages of selling in your natural markets, it makes sense to begin your target marketing efforts within them. In this section you will learn to target market within your natural markets by • • identifying groups with similar characteristics and needs (also known as market segmentation) finding and targeting groups that meet the target market criteria

The Benefits
It may seem that defining and selling in your natural market should be enough. But you will find that using the target marketing process will also • • • • • increase your efficiency within your natural market by organizing it create a perpetual qualified-prospect machine increase your visibility and prestige provide for systematic expansion of your natural market help you identify new opportunities

Chapter Two

2-19

Using this process, you will be able to set appointments and sell more efficiently, which translates into either more time to see more people or more free time. Keep Selling in Your General Market—Before discussing how to develop a target market to expand your sales activities, it is important that you not give up any sales opportunities or nests of prospects that are not in specific markets. Nests are groups of prospects to whom you have access and/or affinity, and are therefore easier for you to contact and establish rapport. Your general market activities provide your commission income and will need to continue to do so. It is important to establish new opportunities that eventually can improve your sales ratios. If a new target market cannot provide better results than your general market activities, then abandon it and try something else.

Segmenting Your Market
The first step of target marketing is to find possible target markets. We do this by dividing your general and natural markets into small groups based on common characteristics (also known as market segmentation). This simply means that you are going to organize your natural market into groups of potential prospects, who have similar characteristics, needs, and buying behaviors (how and why they buy). Segments can be identified and categorized by occupation, lifestyle, attitude, age, and so forth. They should be large enough to warrant your time but small enough where they have some differentiated characteristics or needs that make them prospects. In fact, if you look at the process for discovering your natural markets, you will see that you have already practiced market segmentation. Here are some of the more common ways of segmenting a market in the insurance and financial services industry.

Examples of Segmentation
By Occupation—Formal charts are included to give you an idea of how segmenting can be done. We have limited the occupation-based segments to include just business people and licensed professionals who plan their financial future with personal dollars. You should add your own ideas. By Lifestyle—Lifestyle market segments center on community activities, ethnic groups, educational institutions, affinity groups and philanthropic activities in which a diverse group of people may participate. Some examples are included in the chart below.

2-20

Techniques for Exploring Personal Markets

Occupation-Based Market Segments
Occupational Market Segments Business Services Health Services Examples Advertising professionals, bank employees, computer service professionals Doctors of medicine or osteopathy, dentists, psychologists, veterinarians, dental or medical laboratories Patent attorneys, trial attorneys Architects, CPAs and accountants, public relations professionals Teachers, administrators, counselors

Legal Services Engineers and Management Services Education

By Generation—Many marketers divide their markets this way. A generation is simply a group of people born during a specific time who have been shaped similarly because of the common experience of influential events. The theory is that significant national or world events play an important role in molding the thoughts and resulting behaviors of those who experienced them. For example, the Great Depression shaped the psychological makeup of those who went through it. People from this generation tend to be thrifty, saving for the proverbial “rainy day.” They also tend to be
Lifestyle-Based Market Segments
Lifestyle Market Segments School Groups Community Service Organizations Sport Association Cultural Organizations Philanthropic Groups “Special Interests” Political Ethnic Examples Parent/teacher organizations, booster clubs, alumni association YMCA, YWCA, Jaycees, Lions Club, Junior League, Chamber of Commerce Soccer team, ski club, softball team, bicycle club, volleyball team Symphony, opera, ballet, arts council Kids with a Wish, Ronald McDonald House, Arthritis Foundation Computer club, travel group, Parents without Partners, gardening club, religious groups League of Women Voters Hispanic Chamber of Commerce, Italian American Club

Chapter Two

2-21

conservative when it comes to finances, having less confidence in banks and the stock market. Names have been given to these generations by demographers. For example, the most identifiable generation is the baby-boomer generation. Baby boomers comprise people who were born between 1946 and 1961. A great deal of advertising is geared toward this generation because of their sheer size (over 25% of the 2001 U.S. population). While many disagree about the usefulness of generation marketing, one cannot dispute the fact that advertisers not only are aware of it but it influences how they create advertisements. By Age and Life Cycle—This segmentation makes the generalization that there is a correlation between life events and awareness of need. It also makes a generalization that certain life events happen during a specific range of ages. Obviously, there are couples in their early 40’s having babies, but the general trend is that the majority who decide to have families start them while in their 20’s and 30’s. We will take an in-depth look at this segmentation later in the book, spending several classes discussing each segment and exploring their insurance needs. Think of age and life cycle segmentation as the basic building blocks for all advisors. No matter where you are in the country, you will be able to segment your book of business by age and life cycle. By Buying Behavior—Ultimately, segmentation will continue to evolve. Companies are creating large databases housing demographic and buying-behavior data on their customers. When customers purchase a product, companies ask them for information via a warranty card or some other survey and get a snapshot of the customers’ characteristics and situation at the time of purchase. The goal is to identify (using complicated computer programs) characteristics that indicate someone’s higher propensity to buy a product. The assumption is that past behavior will enable one to predict future behavior with a relatively high degree of accuracy.

Using Segments in Your Business
Segmenting Your Market—You can see the progression of this class. The steps we have taken so far have enabled you to identify your natural markets through segmentation. Segmentation can be also be applied outside of your natural markets. For example, you may notice several

2-22

Techniques for Exploring Personal Markets

new shopping centers in your area and you may want to segment the storeowners and begin targeting them as prospects. The process is the same. You will look for common needs and common characteristics. While this process can be done within any market, you should consider the value of starting from your strengths. In other words, start by identifying target markets within your natural markets and take advantage of the affinity and accessibility. Target markets will lead you out of your original natural markets at some point but in reality you are just expanding your natural markets, not leaving them. Without a Specific Target Market—Even without targeting a specific market, segmentation, by itself, offers some valuable benefits. By identifying a segment and understanding its needs and buying behaviors, you can use this information to guide your questions in the initial interview. A great example of this is the life cycle segments. You do not have to target any one age to experience the benefits of understanding the potential needs of someone in this age group. If you meet someone who is married and in their early 30’s, you can ask them nonchalantly about what is important to them. If they have children, they will more than likely mention them. You now know of one guaranteed need that most people will want to address. A Means to an End—The real power of segmentation comes when you use it to identify target markets. Once you have divided your book of business or prospecting list into possible segments, you are now ready to begin searching for a few target markets that will enable you to prospect and gain more sales from fewer people. This should direct you to those places where you will have your best chance to market and sell most productively. Thinking about these cross-reference steps may also bring up other ideas for you to consider. This will be fun and creative. Set some time aside when you can do this undisturbed. It will help you to identify potential target markets.

Targeting a Market
Right now you may have found that you have a lot of different segments. That is good, but not all of them will qualify as target markets, nor would you be able to focus on all of them if they did. Advisors who use target marketing successfully find they focus on three to five at any one time. Chapter Two 2-23

The targeting stage is when you start to weed out the diamonds from the coal. You can begin this process by using the definition of a target market and eliminating segments if they do not meet the criteria. Once you have a few good possibilities, you will have to do some research and interviews with members from the suspect target market. Keep in mind that a viable target market will supply you with a perpetual supply of qualified leads you can approach favorably.

Definition of a Target Market
The perfect target market has four basic characteristics. It is 1) a group of people (a segment) which is large enough so that you will never run out of names and small enough so that the members are interrelated to the degree that your reputation will precede you. The group is identifiable and accessible, with members who have 2) common needs and 3) common characteristics, and 4) communicate with one another. Groups of People or Businesses—Target markets are well-defined groups (market segments) of people or businesses whose members may have a need for your products and services. They must be identifiable both in the large scope of who they are and in the smaller focus of names, addresses and telephone numbers of individual prospects. They must also be accessible to you. Examples include the other parents in the PTA at your child’s school, a client’s neighbors, or the photo finishing shops in town. The list goes on and on. Common Needs—Members of the target market must generally have similar reasons to see you and to purchase your products. The efficiencies that this factor alone creates can be seen in your ability to create a standard presentation, illustrations, approaches and other support materials. You will be able to speak one language or express one set of values in addressing similar needs in a group. Call on a plumber, dentist, attorney, department store manager and a dual wage earner family in one day, and you must address five different sets of needs, concerns and issues. Through target marketing you will be able to call on more of any one type of prospect/client you wish to select. You will reduce your need to be many different things to many different people. Most importantly you will increase your chance of success. Common Characteristics—Your target market’s members must have things in common that you can use to support your efforts to understand

2-24

Techniques for Exploring Personal Markets

and help them. For example, you may find that a particular market has a common lifestyle, set of values, approach to investing, appreciation for their homes and neighborhood or some other definable characteristic. Knowing this will enable you to open conversations, create appealing approaches, write better letters and generally build stronger rapport within the group. A Communication (Networking) System—This is what differentiates a segment from a target market. Communication among your target group members is essential. How else are people going to be able to refer you? Your reputation must precede you. Often misunderstood, this is perhaps the most important criterion in the definition of a target market. Without the ability to be referred within the market, you will lose the efficiency of lead generation. Here is an example. Let us say you want to target small businesses. You have not refined your market any further than focusing on shops that you find in a shopping center or mini-mall. If you approach an independent boutique and make the sale, your natural step would be to ask for referrals of others who are in the same line of work. You may get lucky if the shop owner belongs to a business association, but then again you may not, and the referrals you receive are not those with similar needs and characteristics. In contrast, what if you were an amateur floral arranger in Seattle, Washington? You have a good relationship with Jane, the owner of Johnny’s Flowers. In talking to her you find out she is a member of the Puget Sound Professional Florists Association (PSPFA). You do some research on the Internet and find out that in the PSPFA there are 26 other florists, most in the Seattle area. Now a policy sold to Jane may mean referrals to other florists, and, because of the PSPFA, you have the opportunity to gain a reputation as the life insurance advisor who understands the needs of florists. You will find major differences in demographics, depending on the size of your market. For example, in Montgomery, Alabama all doctors might know each other regardless of specialty because Montgomery is a relatively small city. In New York City, however, doctors would not necessarily know each other because of the sheer numbers who work there. To develop a market of doctors in New York City, you would have to focus your approach on specialists such as pediatricians, or find doctors in groups who know each other, such as those who practice in the same hospital or clinic.

Chapter Two

2-25

Each part of the definition of a target market is important to assure that your efforts will get off to the best possible start. Use the definition as a checklist every time you discover a suspect market: • • • • Is the group of people large enough that you will never run out of names? Is it small enough so the members have common characteristics? Do the members of the group have common needs? Is it interrelated enough so your reputation will precede you through a communication network?

If it does not meet the definition, find out why and decide whether the market you have designated is a worthwhile market for your purposes.

Market Research
Identifying, Testing and Selecting Markets
Once you have identified candidates for target markets, the next step is to do some market research. You may be tempted not to do the research, mainly because you have never done it before and have done all right. But conducting the research will help you • • • discover new markets or new approaches to current markets; understand the common needs of the market, which will help you in your approach and sales interviews; understand the common characteristics of the market and give you an idea of what to look for in other markets (if successful); and make informed decisions on which markets to target, resulting in savings of time, energy, and money.

•

Identify Possible Market—Review your worksheets from the previous exercise. Examine the segments you identified and select one of them based on the following criteria: • • your comfort in dealing with people from this segment accessibility—a good test of this is examining your list for possible centers of influence or a lack of a center of influence on the list

2-26

Techniques for Exploring Personal Markets

• • •

potential communication network—if you know the segment has a way of spreading information your belief that the segment as a whole needs your services and products your belief that the segment values your services and products
Internet Sites for Market Research

Free Sites U.S. Census Bureau The Social Statistics Briefing Room State Chamber of Commerce Search Engines (free) Google Hotbot Pay Sites The American Marketing Association American Demographics www.ama.org www.americandemographics.com www.google.com www.hotbot.com www.census.gov www.whitehouse.gov/fsbr/ssbr.html (varies by state)

You can do some quick initial research on the Internet, at a library, or a local chamber of commerce. For example, if you were living in Chester County, Pennsylvania and wanted to consider targeting plumbers, you could use a search engine to look for plumbers associations in the Chester County area. If you found one, you might be able to get an idea of the size of the target market. In this case, the Plumbing-HeatingCooling Contractor Association (PHCC) has 46 members in the Chester County area. There is a good chance this market has a communication network. As a bonus, the PHCC Web site has names, addresses, phone numbers, and Web pages (when available) of contractors to call for a market survey. Make Sure It Is a Target Market—Step two is to check each suspect market against the definition of a target market. Ask yourself all of the following questions for each suspect market: • • Is this market an identifiable and accessible group? Does this market actually have common characteristics?

Chapter Two

2-27

• •

Does this market have specific needs that can be answered by my products and services? Do the members of this market communicate with one another in such a way that I can be referred within the market?

You may already know the answers to many of these questions, or think that you do, but do not assume. It is better to know especially when you can get to the truth without much difficulty. This is where testing your suspect market will be so helpful. Whenever possible, select markets that have something in common with each other. This overlapping of groups will increase your marketing and prospecting ease and success. Test Market—To test a suspect market you must go to the market and ask questions. The simplest way to do this is to perform a survey. It will have a number of benefits. You will be getting firsthand information from the members of the market, not statistics from a library book that may be outdated. Your efforts will be noticed by the members of the market you interview, letting them know that you are trying to help solve their needs. This alone is great personal public relations and the first step to prospecting within the market. It is a great side benefit of researching a market in this way in that you will meet people and have opportunities to build relationships.

Surveying a Market
Know the Goal—A good market survey begins with understanding your purpose (the goal you are trying to achieve). You want to get sufficient usable information about the market so you can decide if it is a viable market for you to penetrate. Seek only that information that will help you make this decision, and avoid entangling yourself in a mountain of statistics that will not have much meaning for your efforts. Prepare Questions—Look at your purpose. The first thing you need to do is to define clearly what usable information you will need to collect. Think in terms of the characteristics of a target market. From there begin preparing questions. Avoid direct questions like “How do you communicate?” These would very likely confuse your marketing prospect. The easiest way to get started is simply to ask your participants how they think they conform to the definition of the market. Most will be flattered that you even think that they belong to a group and will be

2-28

Techniques for Exploring Personal Markets

intrigued by your survey. Make it interesting for them; they will catch your enthusiasm. Some sample questions that have worked well in many market surveys are included here, but do not hesitate to develop your own. You picked the market to survey, so use your intuition to devise the questions. Questions regarding characteristics: • • What attitudes and interests do you share with others in your group? If an outsider went to one of your group’s meetings or conventions, what impressions would he or she get from meeting people in your group? Is there something special or interesting that people in your group have in common? Why is this common to your group? What are your common problems and concerns?

• •

Questions regarding common needs of the group: • • What is your number one financial concern? What do people like yourself do to solve this concern? If you could have a day’s fee paid that would allow you to hire a good financial consultant to solve a problem for members of your group, what would you have that person do? Why? What kind of articles or topics do you read about in your group’s newsletter or magazine? What type of financial articles would you like to see? Why?

• •

Questions regarding how the market communicates within itself: • • • What do people in your group read to keep up with the latest information? What industries, associations or clubs support your group? How often do you get together with your group, and what do you do when that happens?

Prioritize Your Questions—All of these questions can be used to survey a suspect market, but you do not want to overwhelm your participants. This means you will need to prioritize your questions. Think

Chapter Two

2-29

about what information is most important and also examine if there are other ways to get the information without using a survey question. Use only two questions from each category. Create a Survey Sheet—Make up an outline form with blank lines for the answers after each question you plan to ask. This will ensure you ask the same questions to everyone and also give you a place to take good notes. You may need to experiment with your questions and substitute when necessary. For example, in your first interview, you may find that a question is not effective. Make the adjustment to the question during the interview if you can and most certainly change it afterwards. Position Your Survey—Speak with individuals in the market so your information comes directly from the source. Approach these individuals by asking them to participate in a marketing survey, assuring them that your purpose is not to sell them something, but to find out more about them and the market to which they belong. If you ask for permission to ask six or eight questions to complete a marketing survey, most people will give you the time. Be polite, keep your promise not to sell if the issue comes up, and ask everyone the same questions. By the time you have surveyed five to eight people in a market you will have sufficient information to decide if you want to change this suspect market into a market you wish to penetrate. Offer each participant the opportunity to have you come back and share the results of your survey. This will often set up your first interviews in the market, and usually on a good introductory footing. Be a Detective—Take good notes and listen carefully, but do not miss out on the other clues you may find. Yogi Berra once said, “You can observe a whole lot just by watchin’.” Sharpen your observation skills. There are many things you can learn about someone by taking the time to notice what is in their office, or how they interact with you. For example, look at the awards and plaques on the walls. Are they from professional organizations or other associations? Are they meticulous? Do you see some of these characteristics repeated in other interviews? These clues could provide valuable information such as a network and a means to access the market. You may also gain understanding into how the group interacts (are they analytical, socializers, and so on?).

2-30

Techniques for Exploring Personal Markets

What If a Market Proves Unsuccessful?
Once in a while a target market proves unsuccessful for the advisor. For some reason, even though the indicators from the testing process looked positive, the advisor cannot make the expected sales over a reasonable period of time. Before you move on, take some time to reflect and try to understand what did not work. Perhaps it was the market, or your approach. If you find something that you cannot fix, move on to something new. No one should expect every marketing idea to be a winner. Experience is only a good teacher if you take the time to reflect and learn. As you pursue target markets, you will find that you will have more sales resulting from fewer appointments and more appointments resulting from fewer phone calls. You will also find that your prospecting system will churn out a steady supply of qualified prospects with little or no additional prospecting methods like cold calling. Target marketing requires time up front, but consider it an investment and not a cost. Successful advisors have made their living this way.

Chapter Two

2-31

Selecting the Prospect
Your goal is to target markets where you can find prospects with whom you can build client relationships. This section discusses seven methods for finding prospects, with an emphasis on the method preferred by many successful advisors—obtaining referrals. It’s important to note here that what works for one advisor may not work for another. You will have to decide what markets and what prospecting methods work best for you. This is why you should track your activities. While the means might vary, the results should be the same: finding and building clients, not customers (people who just own policies).
Customer versus Clients
Customers buy your product. Customers buy once. Customers shop for price. Customers want temporary relationships. Customers do not typically refer you. Clients buy you. Clients are repeat buyers. Clients shop for value. Clients want long-term relationships. Clients will refer you.

Prospecting Basics
Definition
Prospecting is the continuous activity of finding new people to meet and approach about your business. When you prospect, you are collecting qualified names, addresses, e-mail addresses, and telephone numbers so that you can write, e-mail, or call to ask for an interview. Keep in mind that the primary cause for advisor failure is having too few prospects. Prospecting is the lifeblood of your business and must be an ongoing, everyday activity for you.

Chapter Two

2-33

What It Takes
Prospecting is the essence of the selling/planning process. The more people you see, the greater your chance of finding someone who needs your advice and products. To put this in perspective, as an example, you close two life cases each week, 50 weeks per year. That’s 100 life sales per year. If your contacts are truly qualified prospects, then each sale comes from three interviews, which come from 10 contacts and requests for interviews. For two sales then, you must make 20 contacts (phone calls and face-to-face contacts) per week. Simple arithmetic makes it clear that you must have contact with 1000 prospects each year to make 100 sales. Even if 10 percent are callbacks or calls to a prospect for new reasons to see you, then you still must have at least 900 qualified new prospects to call on each year. Additionally, if your initial contacts are from cold lists and are not qualified in some manner, the number of contacts and interviews must be increased to achieve the same end result of two sales per week. This is the reason successful advisors move away from cold lists to referrals and other warm leadgenerating methods. The “two sales per week” example is used only as a rule of thumb, and would generally apply to an ordinary advisor. Home service advisors, to be successful, need to close more than two sales per week since their average premium per policy is lower. Regardless of what type of advisor you are, your sales per week should be determined by the personal income goals you have set for yourself.

Activity
Continuity is the key to your prospecting activities. When prospecting is a habit, you will have little to worry about in your selling career. Three Sources of Names—The first task is to get names. In general, there are three sources for acquiring names. 1. There are people who already know you favorably. It should not be too difficult to make a list of those people. 2. There are people recommended by those who already know you favorably. These are called referred leads, and are considered to be warm leads because they have the power of a personal introduction. 3. There are strangers. You can convert strangers into prospects by attracting their attention (via direct mail, cold calling, meeting

2-34

Techniques for Exploring Personal Markets

them socially, etcetera) or simply by having a high profile in the community. DO-NOT-CALL⎯Legislation passed by states and the federal government has had a significant impact on who and when you may call prospects. This topic will be covered in detail in the next chapter. Organizing the Information—Continuity in prospecting also will come from your organization of those names in a system that will bring the names and the reasons to call each person to your attention at the right time. This is often called developing an endless chain of prospects. There are several ways to do this. One well-known method is the One Card System© by Al Granum, a system for monitoring all prospecting activities, logging and sorting names and reasons to call, and even tracking progress and effectiveness. For even better results, use a computer. Some software programs have integrated methods like the One Card System©. Some utilize the portability of personal digital assistants (PDA’s) and enable you to carry information on your prospects in the palm of your hand. Many companies offer their own client administration systems to organize and track prospecting and client service activities, or contract with providers to make these systems available to you. The Basic Elements to Track—Manual or electronic, you should track the same basic elements. You will want to develop file records on a computer or record on individual 3x5-inch index cards the following minimal information: • • • • • • • • • • name address e-mail address date of birth occupation employer annual income family status work and home telephone numbers any items of possible interest to the prospect that you can use in your approach and initial conversation

Chapter Two

2-35

If you use a card system, you should indicate at the top of each card the date you want to call that person, and file your cards in chronological order so you will always be able to retrieve the prospects at the moment you should call them. If you have access to a computer, the same records and more can be set up with a number of key fields noted for numerous sorting and retrieving possibilities. It is helpful to keep records of contact dates and summarize the conversation to be able to bring the prospect and yourself back quickly to the progression of your relationship. You Need Quick Access—Your system should allow you quick and accurate access to your prospect information. Don’t use long pieces of paper or little notes that could get lost. Every prospect deserves an individual card or an individual record on a computerized file. If you are not currently using a prospecting system, find out what your company recommends. Whatever you do, do not try to prospect without a system. Organization is the key to your prospecting continuity and success. Keeping Track of Results—Percentages and probabilities play a key role in your prospecting results. This does not let you off the hook for making effective plans and carrying them out carefully on a day-to-day basis. Keeping good prospecting records helps you keep a clear perspective when your prospecting efforts don’t always get the results you hope for, and helps you discover what works and what you need to do to achieve your production goals. For example, why is it that on a given day you may contact 15 people and get 10 appointments, and on another day you contact another 15 people and get one or two or none? What can you do to maintain consistency? We will explore answers to this question in this and other classes. Over time, some answers will become apparent by examining your sales ratios. Therefore, keeping accurate records is essential to evaluate your overall results and current prospecting activities. Prospecting and sales numbers you will want to track weekly include: • • • • phone calls made contacts made appointments made fact finders completed

2-36

Techniques for Exploring Personal Markets

•

•

• •

closing interviews conducted (note: If the closing interview and fact finder take place during the same interview, indicate as both a fact finder completed and a closing interview conducted.) sales completed (note: If you sell two policies in one interview, count that as two sales. Keep track of the type of product sold and its purpose.) referred leads obtained commissions generated

From these numbers, you will be able to calculate your basic sales ratios. Here are some of the more common sales ratios: • Calls to contacts: Divide the number of phone calls made by the number of contacts (when you talk to the prospect). This tells you the number of calls it takes to make one contact. Contacts to appointments: Divide the number of contacts by the number of appointments. This tells the number of contacts you need to obtain one appointment. Appointments to fact finders completed: Divide the number of appointments by the number of fact finders, yielding the number of appointments needed to complete one fact finder. Fact finders completed to closing interviews: Divide the number of fact finders by the number of closing interviews. This produces the number of fact finders needed to generate one closing interview. Closing interviews to sales: Divide the number of closing interviews by the number of total sales made. This number represents the number of closing interviews needed to sell one policy. A high closing interview to sales ratio could indicate ineffective interviewing skills or that you are not dealing with qualified prospects. Commissions to sales: Divide the amount of your commissions by the number of sales. This tells you the amount of commissions generated by one sale. If you take the commission you wish to earn and divide it by this ratio, the result is the number of sales you will need to generate the desired commission.

•

•

•

•

•

Chapter Two

2-37

Activity = Money
By tracking your sales numbers, you can see what each activity is worth and make strategic decisions. Total your first-year commissions for a specific period, then divide by the number of sales calls you made to produce that business. The product is the value of each sales call you made during that period. As one advisor said, “Knowing that every dial is worth $7.00 gives me the motivation to pick up the phone.” It doesn’t matter what they say. Just make the call. The sales ratios will do the work for you.

For all but the last, the lower the ratio, the more efficient and effective you are. You can track your sales ratios on the chart “Weekly Prospecting Activities.” This can be done manually on paper or on a company spreadsheet. In addition to tracking these numbers for the current week, you will also want to track the same results on a monthly and yearly basis. In time you will begin to see the strong and weak points of your prospecting efforts.
Weekly Prospecting Activities phone calls made: fact finders completed: referral leads obtained: Source referred leads target market friends/ acquaintances clients orphans direct mail response personal observation called me other Mon Tues contacts made: closing interviews conducted: commissions generated: Sources of Prospecting Leads Wed Thurs Fri Sat Sun Total appointments made: sales completed:

2-38

Techniques for Exploring Personal Markets

Prospecting Methods
As discussed earlier, there are three sources of names: people who know you favorably, people recommended by those who know you favorably, and people who do not know you at all. Now let us consider the most common prospecting methods used to find people in these three categories. Think of them as a portfolio. You may diversify at first, then gravitate to what works best for you in the markets you choose.
The number one reason agents leave the business is the lack of prospects.

Referrals
Successful advisors have found referrals to be the most efficient and effective means of generating a perpetual supply of prospective clients. For this reason, we will spend a good portion of this class examining the referral process. Definition—Referrals are people to whom you are introduced in one fashion or another by someone who knows and values your work. Think of referrals as borrowed trust. Obviously, trust must be earned. That’s why a relational, client-focused approach to sales is critical in creating a “perpetual prospecting machine.” In their highest form, referrals are unsolicited. This is when the client enthusiastically tells people about you and compels them to call you, much in the same way they tell friends about a must-see movie. While idealistic, this does happen, and the more it happens, the easier selling becomes. But until you can make a business relying on word of mouth, you will need to solicit referrals. The Benefits—Start with the most important group—your clients. When they refer you, your clients are able to help their friends, family, and coworkers. Especially in the case of life insurance, clients who refer you are helping others make it through life’s difficult moments. For you, the advisor, the effectiveness of referrals is unquestioned because a referral from your client is a strong endorsement of your work. Compare that to a cold call, where the person does not know you and has no basis to trust you. People do not like to do business with total strangers. A second advantage is the opportunity you have to “clone” your best clients. While a client’s referrals will not be exactly like them, they probably will be similar in their financial situation, needs, and values. The latter is key: if the client has a positive attitude toward protecting his

Chapter Two

2-39

Why Do Most People Buy Life Insurance?
Answer: Because someone asked them to. The plain, straight, hard fact is that almost all life insurance is placed because someone made an outgoing call. What is the basic way our product is still merchandized? The old-fashioned way: Someone made a telephone call and asked someone else to take action. Will our business change in the future and become more automatic and customer-driven rather than producer-driven? I don’t know. We are in the fastest changing times the world has ever known. But I doubt it. We still have to make the calls to let people know what we do and ask them to take action. In a society that suffers severely from the virus of alienation, it is almost impossible to overestimate the difference that a producer makes when he or she offers a client the opportunity to think about other people. Source: Irwin B. “Burt” Meisel, from “Is This About Insurance?” Life Insurance Selling, August 2004. Reprinted with permission.

or her family, and friends or business associates have the same attitude, you will spend your time with people who are more likely to buy. Referrals are the most powerful source of new names because a third party, usually a client, recommends them. The agent is being given a powerful introduction to the prospect. The referrer thought enough of that agent’s work and professionalism to suggest that another person would benefit from it. Prospects and clients should expect you to ask for referrals. You can pave the way for this by clearly informing the prospect that your business depends upon meeting new people. Introduce this idea early in your work with the client, creating the expectation of receiving qualified names.

How to Ask for Referrals
To obtain referrals smoothly, you must carefully plan how you will ask for new names. Most people will falter at your question because they have not thought about other people buying insurance. They may feel their friends will not welcome your call, or that they may lose a friend if the sale does not work out. These are real concerns and must be dealt with to increase the number and quality of referrals.

2-40

Techniques for Exploring Personal Markets

Your clients must see value in you and what you My Best Referrals do. You want to communicate this idea to them. “I “My best referrals were right after the initial interwould like to pass along the benefit of my services to view, when trust had been established. Although people you value.” You want to become referable, they did not know the outcome of their profile, and selling a product does not make you referable. they did understand the value of the process.” Taking a person through a valuable and memorable process does. Don’t forget that trust is the basis of any professional relationship. You have demonstrated your trustworthiness to the client and developed a relationship based on this trust. You are asking for an introduction to people who share what you consider to be ideal client characteristics. The process of identifying the ideal client will help you to define and target your market, especially based on their compatibility with you. It can help eliminate prospects not qualified to buy and help your referrer by giving them characteristics you seek in referrals. You are also trying to convey that the value you brought to them can be shared with people they value. Try asking questions that will describe the kinds of people you would like to be referred to. Think of the kinds of people you would like to have as clients and phrase your questions to produce those names. • • • • • • • Who in the neighborhood is getting ready to purchase, or has recently purchased, a new home? Who do you know who has recently changed jobs? Who in your company has recently been promoted? Who do you know that you think could become a leader in your profession in the next 10 years? Who is the most successful person you know? Who do you know that is most likely to succeed? Who do you know who − just moved in? − just got married? − just had a baby? − just sent their first child off to grade school? − just remodeled their home? − just had their first grandchild? − is getting ready to retire? − has just sold their home? − just started or expanded a business? − just retired or is retiring soon? − is saving for college?

Chapter Two

2-41

Then wait while the person thinks. Use gentle prodding, if you must, but wait. Have pen and paper ready to record names because when you ask for referrals in a way that allows your prospect to imagine a name that fits your question, they will respond. Here are few tips on getting referrals: • Stay in touch with prospects and clients. Sometimes this takes time to develop. Continue to bring your advice, wisdom, and other resources to the relationship. Provide newsletters, birthday calls, service calls, annual reviews, and friendly notes to build business friendships. Don’t expect opportunities without building value for others. If you don’t add value, you are no longer necessary. Give referrals and you will get referrals. Present yourself as a resource center. Introduce people to each other who may benefit from each other. Most people will invest and commit to a relationship they see as mutual. Enjoy each other. Be a teacher; find a way to help people. Find out what is important to them.

• • •

•

Referral Reluctance—In one survey, 65 percent of insured respondents reported that they had never been asked for a referred lead. Advisors have many reasons for not asking for referrals, the most common being fear of rejection. The whole referral process is based on trust. If you have acted in the best interest of the client and have not pressured them but have helped them understand and plan for their future, go out on a limb. If they bought your product or seemed appreciative of the process even if they did not buy, there is a good chance they trust you. The worst they can say is no, and chances are they will not. But one thing is for sure: the answer is always no if you do not ask.

80-20 Referral Script
“(Prospect’s name), some agents spend 80 percent of their time finding people to speak with about life insurance and only 20 percent of their time actually working with their clients. I do things in just the reverse. It works out much better for all concerned. Will you introduce me to three other people who might be interested in the products and services I have to offer?”

2-42

Techniques for Exploring Personal Markets

Paving the Way—Asking for referrals Remembering to Ask should not come as a surprise to your Write a note to remind yourself to ask for referrals. Some prospect or client. Pave the way as early as agents will put the initials A.F.R. (Ask for Referrals) on a possible in your relationship by telling yellow sticky and attach it to the first page of the blank prospects you would like to help others application. they know tackle the same types of issues. You can do this when you start the factfinding process. Here is an example of how to do this for a non-business prospect: “Jane, as we go through this process and you are satisfied with the work I do for you, you might think of some others like yourself who might benefit from my services. I would love to be able to help them out as well. So if you think of anyone, please let me know.” This statement accomplishes several things. First, it sets the expectation that you will earn her trust by providing a service he or she values. Second, it positions your request in terms of the prospect’s point of view. Who might he or she know that really should sit down and think about their financial future? Who does he or she love or care about? Third, it plants a seed for that prospect to think of names and creates an awareness that will make asking for referrals later an expected and natural result of his or her satisfaction. When to Ask for the Referral—There are many times during the normal course of your sales activities when you have an opportunity to ask for referrals. • After the sales interview is complete. You have demonstrated your service and value. You have established rapport and trust with the client. At policy delivery. You have satisfied your client with your professionalism. When you provide a service to your client. When you conduct an anniversary review.

• • •

Some say you should constantly request referrals. If you receive a warm response and good referrals, continue this approach. However, be careful

Chapter Two

2-43

in creating tension for the client. High pressure can lead clients or prospects to suspect you Whom do you know who recently… will do the same to the referral, which might have a negative impact upon their relationship • moved into the area/neighborhood? with the people they refer. Usually they will • had a baby? • got married? not give you referrals if they feel this way. • bought a home? Regardless of your philosophy, look for • started a new job? signs that the client values your work. The • got a nice raise or promotion? most obvious time is if they agree to buy the product. However, look for other moments in the selling/planning process that point to their perception of you as a trusted advisor, regardless of whether or not they purchase a product. Remember to ask for referrals after you hear them say things like:
Asking For A Referral

• • • •

I should have done this a long time ago. Ben should know about this. I didn’t know that! Thanks for helping me out. I really appreciate you taking the time.

What to Say—If you fail to plan, you plan to fail, so think about what you want to say and put it in writing. This will eliminate the fear of not knowing how to ask. Here are some things to keep in mind as you develop your script: 1. Reflect the value the client has received from the process. Probe for this information by asking, “What about this process have you found helpful?” Explain that you consider the client’s stated value of the process extremely important. Ask if there are people in his life who may need and value the same service. If the prospect stumbles, present some alternatives with a simple, “Do you know someone who…” and fill the blank with a description of what you are looking for in a prospective customer. Use a description of a prospect from your target market or natural market.

2. 3. 4.

2-44

Techniques for Exploring Personal Markets

Getting Referrals
By Bill Cates STEP 1: YOU: Discuss the value recognized. Martha, at this point I’d like to take a few minutes to review our process thus far. Have you found this process to be valuable, and if so, in what way? Absolutely. First, just taking the time to really think through my situation has been helpful. I’m learning so much. Plus, I now feel we’re on the road to some great strategies for my retirement and the education of my children. I guess peace of mind has been a byproduct of all this. Treat the request with importance. I’m glad to know you’re seeing the value in our work. With that in mind, I have an important question to ask you. Okay. Get permission to brainstorm. I’m wondering if we can brainstorm for a few minutes about people you care about who should know about the important process we deliver. Could we do that for a few minutes? Sure, I guess so. Suggest names and categories. Great. We’re just brainstorming here. Let’s begin with something I call the “Who do you know” questions. Quite often, I am able to really help folks who fall into this category. So let me ask you a few questions to trigger your thinking. Okay, shoot. (Then—YOU proceed with various questions describing the type of prospect for which you’re looking): Who do you know… Teaching Point: There are many ways to implement our 4-step Process for Asking for Referrals. The above script is meant to trigger your imagination and help you come up with your own script. Bill Cates is the author of Unlimited Referrals and the president of the Referral Coach International (www.ReferralCoach.com). Copyright © 2001 by Bill Cates. Reprinted with permission.

MARTHA:

STEP 2: YOU:

MARTHA: STEP 3: YOU:

MARTHA: STEP 4: YOU:

MARTHA:

Chapter Two

2-45

5. 6.

After you have a list, ask the client if he will share a little information about each one. Thank him for the referrals and assure him that you will treat them the same way you treated him, with the utmost respect and no pressure.

The List Approach
Provide your client with a list of names (for example, their neighbors) that you have prepared in advance and ask which of them would value the work you do. Follow up by asking the client to tell you about them. Ask specific questions to qualify them. For example, “Do they have school-aged children?” would be appropriate if you are targeting young families. Most people know something about their neighbors and will be happy to help you. You can use cross-referencing directories on the Internet such as www.infospace.com or www.thinkdirectmarketing.com to help you create these lists. Handling Concerns—Not everyone will provide referrals right away. They usually have some concerns. If you meet some resistance, try to find out what their concern is without pressuring them. Perhaps it is a misunderstanding that you can explain to their satisfaction. Here are some steps:
Handling Concern
Mel: Advisor: Mel: Advisor: “I’m not comfortable with that.” “Mel, I can appreciate that. Do you mind me asking why you are not comfortable?” “I don’t know, I guess I’m afraid of offending my friends.” “Others have expressed the same concern. That’s natural. Is there a particular part of the process you see that concerns you?” Mel: Advisor: “No, I guess not.” “Mel, the way I conducted business with you is the way I conduct all my business. I will treat anyone you refer to me the same way. Okay?” Mel: Advisor: “Okay.” “Great, now who do you know…”

2-46

Techniques for Exploring Personal Markets

• • •

Acknowledge the concern. Ask why they feel the way they do. Answer the concern and ask for the referrals again.

Your Script
Here are some key scripts to write for referrals: • • • • • What will you say to pave the way? What will you say to get the referral? What characteristics are you looking for in a prospect? How will you handle the top 3 concerns? What is your exit line?

If the person persists in their reluctance, do not pressure. You could run the risk of damaging your the long-term relationship. Exit gracefully; not everyone will feel comfortable providing referrals. Remember, the client could still represent repeat sales. Also, “no” now does not mean “no” forever. Perhaps as you get to know each other better, the client will change his mind and send you referrals.

Follow-up—Make the referral a priority. Then follow-up with a note to let the referrer know the result. Some advisors have used token thankyou gifts or perhaps a lunch for clients who have referred business to them. There are some in the financial services industry who feel gifts are not appropriate because it cheapens the value of the work they do. Ultimately, you will need to make your own determination of what you do to say thank you. The important thing is to remember to do something.

Exit Gracefully
Mel: Advisor: Mel: Advisor: “I’m not comfortable with that.” “Mel, I can appreciate that. Do you mind me asking why you are not comfortable?” “I don’t know, I guess I’m afraid of offending my friends.” “Others have expressed the same concern. That’s natural. Is there a particular part of the process you see that concerns you?” Mel: Advisor: “No. It’s just that I’m not comfortable with giving out names.” “Mel, I can understand that. If you do run into someone who would value this process, and you feel comfortable, tell him or her to give me a call. Fair enough?” Mel: “Fair enough.”

Chapter Two

2-47

Five Steps to Dealing with Referral Resistances
By Bill Cates STEP 1. Agree and validate their position: Because your client’s perception is their reality, they will resist your attempts to change their view if you’re not careful. After you validate their position with some supporting statement, don’t erase that goodwill by using the word “but,” which negates everything you said just before it. STEP 2. Ask permission to explore: You want to fully understand the nature of their resistance and what the deeper truth might be. You need to be soft here. I’ve found that when I ask permission to explore—have a quick conversation about it—my clients are not threatened and don’t get defensive. STEP 3. Reframe their view of things gently, with their permission. If, in the exploration step, you realize they may be willing to consider other ways to look at things, you want to gently help them do that. If you can accomplish this by educating them further or other quick thinking on your part, move to Step 4. On the other hand, if their resistance is deep rooted, you probably want to move on to Step 5. STEP 4. Gain agreement and move on with the conversation: In this step, you basically ask if they can see and adopt the new “frame” or perspective you’ve shown them. If they can, then you continue exploring who they know who may also benefit from knowing you. STEP 5. If resistance is deep, back off: Because referral selling is a relationship game you don’t want to weaken your relationships. If a prospect is adamant, you’re better off retreating and living to pursue this another day. I’ve known many salespeople who have asked for referrals, encountered some resistance, backed off, and then received many referrals from that same customer later. Bill Cates is the author of Unlimited Referrals and the president of the Referral Coach International (www.ReferralCoach.com). Copyright © 2001 by Bill Cates. Reprinted with permission.

2-48

Techniques for Exploring Personal Markets

Centers of Influence (COI)
A variation of the referral process is the center of influence. By definition, centers of influence are those influential people you know, who know you favorably, and who agree to introduce or refer you to others. Clients may become effective centers for you, just as centers may become clients, but this is not necessary to the relationship you need to establish. In general, you will find that centers of influence • • • • are active in a community or sphere of influence are sought out for advice by the community or within their sphere seek to communicate with others are givers, not takers

Centers of influence know you well enough, and have enough confidence in you, to refer you to prospects. An important aspect of a center is that they have a personal interest in helping you succeed. They may or may not be clients. They may be a friend of the family or someone you have worked with in the past, either in business or in a community activity. Like any other relationship, centers must be cultivated. You must think of this person’s interests and what you can do for them. You will find your center of influence willing to promote your cause if you promote his or her interests in return. Think of this process as a two-way street. It is a cooperative effort in which there is something in it for both parties, not just something for you. It is best if there is something of direct benefit for the referrer. Remember also, that he or she should be pleased with their relationship with you, and that you have earned the right to his or her help. In other words, this type of relationship often takes time to develop. The Benefit—Strangers will see you when referred by a center of influence because the referral carries with it the prestige of the center. For example, let’s say you know an influential attorney in town. Because you know and respect each other, you have the opportunity to ask the attorney for help. You ask to be introduced to people who might benefit from your products and services. When you call on these prospects, you are borrowing the influence and prestige of your center until the stranger personally accepts you for who you are.

Chapter Two

2-49

Introductions to a Referral
Referrals are more effective when there is an introduction. This could be face-to-face, a letter, e-mail, or a phone call. The purpose is for the client or policyowner to introduce you and the service you provide. In your script, include how you would ask for an introduction. It might be as simple as, “Thanks for the names. I always find it most effective if you provide these folks with a heads-up call or e-mail to let them know what I have done for you and that I will be calling. Would that be possible?” Some advisors carry a sample letter that the client or policyowner can copy onto personal stationary or into e-mail.

Developmental Steps—The key to cultivating centers of influence is the same as the key to any other relationship. Always think of the other person. Think about what you can do to serve the interests of a center and you will usually find your center willing to promote your cause. Create a win-win relationship. The center must be satisfied with your work and agree that you have earned the right to his or her support. To begin cultivating centers of influence, use the following approach: • • Define, to the best of your ability, the type of client you want to attract. Go through your lists of clients and identify the ones who meet the criteria for being a center of influence for the client you want to attract. Make out a separate card, then record what you know: age, profession, social circles, associations, hobbies, interests, college, degrees, etc. List as many people as you can whom you believe your center knows or is likely to know. These may be attorneys, doctors, accountants, prestigious business owners or other prominent people in your town. Consider the boards of directors of local companies or organizations.

•

Once you have the names, go to your center and ask if he or she would check the list and point out who is best known to him or her. If your list is good, the center will know most people on it and offer introductions to many. Not everyone on your list will be a good prospect, and your center should be able to help you do some of the qualifying. One caution when working with centers: Do not make them do your work. Ask them only to help qualify the names and make the

2-50

Techniques for Exploring Personal Markets

Center of Influence Prospecting Talk
“Hello Bill! I am here today because I value your judgment and need some suggestions. Will you lend me a hand?” “Bill, my services have been of value to you…right? I would like to provide the same kind of services to others, and to do this I have to see quality people such as those you’re in touch with every day. You might not know anyone who wants to buy life insurance—as a matter of fact, I would be surprised if you did—but you do know people with financial situations similar to your own. These are the people I would like to meet. They may have professions such as doctors, lawyers, engineers, dentists, accountants…or positions as executives with large corporations, or they may be business owners or perhaps store managers. • • • • • • • • • • Who comes to mind when you think of a professional? Whom do you know who has a new job or a recent promotion or a salary increase? How about someone who owns a business? Or is part owner of a business? Or perhaps you know someone who has recently become engaged or married? Possibly someone who has had an addition to the family—or expects one? Who’s buying a new home or building one? Who has a key job in someone else’s business organization—where the business would suffer, maybe fail, if he or she dies? How about people who have recently become grandparents—people who might want to do something special for the grandchild? Someone who is about to retire and might need advice on investments that provide lifetime income? Whom do you know who might need advice concerning plans for eventual distribution of property at death—people of some wealth who would have need for what we call estate planning?” “To keep me from approaching this individual as a stranger, would you object to giving me an introduction now—either with a phone call or a written note?” “Thanks very much, Bill. I’m sure that he/she will benefit from my visit. I will let you know.”

introductions. Your centers of influence will do this with pleasure if you have earned the right through good business practices and thorough upfront legwork.

Chapter Two

2-51

Creating Social Mobility
Your key to letting people know who you are and where to find you is your social mobility. Social mobility means being involved in your community and giving people the opportunity to see you working for common interests. If you think about it, you will recognize that the places where you have social mobility are also the places where you have prospects and centers of influence. Consider the following ideas, and as you consider each one write down the name or names of people who come to mind so you can build a list to contact in the future. Do not waste this opportunity of reading the text without building your prospecting lists. 1. Where you live and your neighborhood. This should include your neighbors, friends of neighbors, people who work in your neighborhood area such as landscapers, and realtors who do business in your neighborhood. Where you do business yourself. Include your bank, the stores and shops you frequent, restaurants, the garage or gasoline station where you service your automobile, your barber and/or hairdresser. Those you pay bills to regularly. Take a tour through your checkbook or close your eyes and think of yourself walking around town. Think about paying for gasoline, or stopping by the grocery store, dry cleaners, bookstore, florist, or anything else you do on a fairly regular basis. Those you pay bills to occasionally. Consider where you buy your prescriptions, jewelry, paint, shoes, clothes, furniture, computer equipment and anything else you can think of. Where you relax, play and enjoy yourself. This includes all the clubs you belong to, lodges, sporting associations and hobby groups. It might even include the manager of a movie theater that you frequent. Where you are best known by others. This includes relatives, close friends, your friends’ relatives, former neighbors and family friends. Your relatives and in-laws should know about you, what you do, and how you can help them. If you are married, list the friends and co-workers of your spouse. List the parents of your children’s friends. Where you participate in the community. What service clubs do you belong to? Do you belong to or associate with members of

2.

3.

4.

5.

6.

7.

2-52

Techniques for Exploring Personal Markets

8.

9.

10.

11.

12.

13.

the Chamber of Commerce? List involvement in other civic activities or charity drives. It can be past or present. Where you used to work. List former employers, co-workers, professional association members and competitors you could be calling on. Where you go for help. List your doctor, dentist, attorney, accountant, the trust officer of your bank or other professional advisor. You should be calling on these people as well, at least to let them know what you are doing. Where you attend religious services. The people who run your religious affiliation, church or temple, and the people who attend services, choir, and other sponsored organizations are people who should know what you do. Where you went to school. Include high school and college. Your classmates, instructors, alumni association members and members of your varsity club, fraternity or sorority are great sources of prospects. Remember, over the years these people have become successful and may need your help. Are they still around town and do you still have regular contact with them? These people often know you and remember you well enough to be willing to sit down and speak with you about the work you do. Where your family is known. This is where a large part of your reputation will also be known. If your family has been active in the community, school affairs, PTA,YMCA/YWCA, Girl and Boy Scouts, Brownie and Cub Scouts, or has made any other type of social contribution to the community, then you should be thinking about the names of people in those categories who should know what you are doing now. Whatever categories you can think of for people you would like to meet. Write down the category and next to it the name of everyone you can think of who belongs to that category.

Personal Observation
As you make small talk and hear someone mention something like, “My son is getting married this weekend,” think of that as an opportunity to create awareness about your services. At the very least, you can give your business card. If the person seems receptive, ask for a referral.

Chapter Two

2-53

The places where you have social mobility are all those places listed above, and any other place that is unique to you. the opportunities that others Make sure that you are building the habit of compiling lists of people that you can identify and approach. You prospect by pass because they were too meeting people. busy talking. Creating social mobility goes hand-in-hand with mastering the art of small talk. The typical salesperson has the gift of gab. They know how to talk to people. But it never hurts to review some of the basics.
Good marketers listen for

•

•

•

•

Initiate. This will enable you to ask the questions giving you a better chance of controlling when the occupation question is asked. Delaying this question further into the conversation will help you learn more about the person and give you an opportunity to position your service in light of their possible needs. Make people feel comfortable. Make them feel important and special. Listen to them. Use active listening skills (the same ones you use when you are conducting a sales interview). By active listening we mean paraphrasing their thoughts and asking clarifying questions to show you understand what they are saying. Ask “normal” questions but then really listen to the answer. By normal we mean questions that people always ask just to make small talk. For example, “Where are you from?” may reveal that they are local and their family is in the area. If a child is with them, ask, “Who is this little one?” If the child is theirs they will probably have both a financial and emotional need for life insurance or for saving for a college education. Ask the “What do you do for a living?” question once you have some information on some of their possible needs and situation. That way you can tailor your response to that question. Your response should be a quick commercial tailored to the person with whom you are speaking.

Here are some tips: • Ask a “positioning” question that is relevant to something they might need. It can be an analogy as we will demonstrate in a minute. The question positions your response to be a solution to a problem or question that they might be asking. Techniques for Exploring Personal Markets

2-54

• •

•

• •

Follow up with your 10-second commercial, stating your value in terms of the results you achieve for your clients. Use some creativity. Make it interesting but make sure you follow company guidelines. You may be restricted in the way you describe your work. Because of today’s compliance issues, exercise caution and make sure you identify the products you sell. Most importantly, don’t call yourself a financial planner until you have earned the credentials. It would be misrepresentation to do so. End with a question that measures their interest. Always have a business card to hand to them.

Here is an example. You have met someone with a young child and discovered that she is married and this is one of her two children. She has asked you the magical question, “What do you do for a living?” EXAMPLE 1: “Are you familiar with social security benefits paid to people who lose an income earner to death or disability?” (Yes or No) “Well, I help young families like yourself create and implement a personal benefits plan through life and disability insurance. These plans ensure that the dreams they have will remain achievable should the unexpected happen. Is that something that might interest you?” Here is a second example using a positioning question that employs an analogy. EXAMPLE 2: “Do you know what the U.S. Mint does?” (They make money) “That’s what I do for young families like yourself at the time when it is most needed. Through life insurance, I help them ensure that their family’s basic needs are met if something should happen to either parent. Is that something you and your husband have thought about?”

Networking
Another method of prospecting that can help you generate leads is networking. Networking is the process of continuous communication and sharing of ideas and prospect names with others whose work does

A Qualified Prospect Is Someone Who • • • • needs protection from loss of life or health can afford to pay the premium is approachable is insurable

Chapter Two

2-55

not compete with yours, but whose clients might also be eligible to become your clients. Conversely, your clients may need their products too. It’s a two-way street. Tips Club—Networking through a Tips Club can be an effective way for you to exchange leads. This is typically a biweekly/monthly meeting in which each participant gives no less than two leads to all other participants. For example, you might know that one of your clients is in the market for a new car and you give that lead to the car salesman who is participating in your Tips Club. In another situation, you may know a client who is considering buying a new home or who wants to explore the possibility of rewriting an old mortgage, exchanging it for a new one with current interest rates. You might give this lead to the realtor or the banker who participates in your Tips Club. As you can see, networking in this manner can generate many names of qualified leads for everyone and the reasons to call them.

Cold Canvassing
Cold canvassing is challenging, time consuming, and rarely as productive as getting referred leads from clients or centers of influence. There are many times, however, when going out and knocking on doors can generate some new and exciting situations that might not otherwise have occurred. Many advisors make successful use of canvassing as a part of their prospecting repertoire. For example, if you wish to test the business market, a good way to start may be to begin calling on business owners between your other sales calls. You might stop off at a pharmacy between calls and introduce yourself to the pharmacist. You might walk through the lobby of a business building you’ve always been interested in and take note of who is listed on the wall directory and where their offices are located.

Canvassing Along the Street “Hi! My Name is ________________ and I work in the neighborhood. I am an insurance advisor with _______________ Company. I though it might be nice if I could be neighborly and introduce myself and perhaps if you’re interested in what I do, make an appointment to sit down together sometime in the future and explore our mutual interests.”

2-56

Techniques for Exploring Personal Markets

The next step would be to go to the office, introduce yourself, and ask for an appointment sometime in the future. This technique can get you appointments without having to interrupt someone’s schedule to see you at that moment. Since your drop-in call could result in an initial interview, you should be prepared to open a discussion. Have your preliminary interview material in your briefcase. Always leave your business card and follow up with a telephone call or a letter after making the initial contact. This will confirm your interest, add to your credibility and illustrate your seriousness about working with your new prospect.

Speaking to Groups
The opportunity that puts the advisor before someone’s club meeting, association luncheon, church circle or neighborhood gathering can be an informal group presentation or a highly structured seminar event. It is a good way to get started in the mass marketing of your products. Seminar selling is an opportunity to gather a group of people together to present several ideas that address problems and concerns that are common to each. At the seminar, the advisor attempts to arouse interest so that individual appointments will follow, leading to sales. A Ready-Made Audience—Provided you have the right personality and knowledge, speaking to groups offers a few distinct benefits. A readymade audience is handed to the advisor without extra effort or personal expense. The group may even have a program topic in mind. All the advisor must do is present information about insurance needs and gently point out personal expertise in helping people meet them. Finally, there is no out-of-pocket cost for renting a hall, providing special equipment, refreshments, creating the mailing list and the telephone follow-up to guarantee the crowd. The sponsor does this and more for you. How do you get started on the program circuit? Program chair people everywhere are looking for new ideas, new speakers and topical information for their groups. Ask your clients or new policyowners if they belong to a professional group that would find the type of information you offer useful. Think back on any conversations about special interests you have had with people. Develop a topic and ask them if the group they belong to needs a speaker. Check the club meeting schedule in the newspaper. Whom do you know who belongs to these groups? After your speech, hand out cards to collect names and phone numbers for your prospecting. Leave a business card in every hand. You

Chapter Two

2-57

will be off and running with a cost-effective means to prospect through mass marketing in person.

Direct Mail
Direct mail will get your name and your company’s name in front of as many people as you wish. Hopefully, it will isolate those who are ready to talk about insurance now. You can get your message in front of people who otherwise might not be there to answer your phone call or your knock on the door. Your company may have in place a program to produce your direct mail campaign. Your job would be to supply the list of people you want to approach, select the particular letter you wish to send, and choose a premium offer if desired. Many company campaigns sponsor small gifts, such as road atlases, to those people who respond to the direct mail letter. To receive the gift a prospect must agree to see an advisor. Many companies also offer market segmentation programs, which allow you to identify specific criteria to find those prospects you desire. The company creates a list based on your criteria. Examples of specific search criteria include marital status, presence of children, age range of prospect, income level, zip code, home ownership, length of residence, phone number available, and so on. Many private list companies also do this type of compiling. With the increased emphasis on company compliance, you must not send out any direct mail piece that has not been approved by your company. Your agency staff can help you work on your direct mail. Besides using caution about what you say in your letter, there are a few basic rules about using direct mail successfully. Keep these points in mind: • A good list of names with accurate up-to-date addresses is critical. It is estimated that the quality of the list accounts for at least 60 percent of the effectiveness of your direct mail campaign. The list should fit the letter to be used. The letter should address specific needs. General letters are less effective. If you can determine the recipients’ ability to pay for what you are planning to sell to the group, so much the better. This is part of qualifying the list. Develop specialty lists. Find a source of names for such things as new home purchases, recent births, recent deaths, new marriages, or whatever group with which you are interested in working.

•

•

2-58

Techniques for Exploring Personal Markets

•

•

•

•

•

Develop target marketing lists. Work from purchased lists, lists you can obtain from your own contacts or centers of influence, or create your own lists from research and personal observation. The target markets available and possible are limitless, depending on your own experience, interests, and skills. Beware of mailing lists purchased from commercial vendors. They are expensive if you do not plan carefully. The better you can pinpoint the group you are after, by zip code or county, the better the list will be. You will need to check to see how recently the data was collected. It is possible to purchase a list that has been fine-tuned to employees in local businesses or to homeowners in a particular area. In other words, you need to plan and you need to ask a lot of questions before you buy any given list. Be sure that when you order a list from a company, that you make sure the list has been “scrubbed.” This means that any “do not call” names and undeliverable names have been eliminated. Additional things you might want to ask are: − When was the list last updated? − What is the undeliverable rate? − What is the source of the leads? − Does the list have current phone numbers? − Do you have any exclusive rights? − Do they have a list of repeat customers? (This indicates higher quality.) − Do they use a 5 or 9 digit zip code? (5 digits are often undeliverable) − Do they delete duplicate entries? (This is called “merge purge.”) − Do they delete incomplete names? If you use a direct mail piece that does not provide a reply card but offers an idea and the opportunity to discuss that idea, use the list many times. Multiple use of a list will give you multiple opportunities to have your name in front of the prospect. Direct mail results show that people will often respond between the third and sixth time they see a letter or an idea. Response rates have been fairly consistent over five mailings. Try the wave mail technique, which involves sending several pieces of mail in rapid succession to the prospect. The topics and mailing pieces should be targeted to the audience receiving your

Chapter Two

2-59

mail. An example may be to send three or four mailing pieces to the prospect over a two or three-week period. The most important thing to remember about direct mail is that it only works if you use it regularly. Inconsistency will not work. It must have ample chance to succeed and you must follow up on each mailing. When used regularly, you will generate leads and interest in your products and services. Direct mail is part of the variety of prospecting tools you can work with regularly.

Qualify Your Prospects
The next step in the selection process is qualifying your prospects, moving them from being “suspects” to “prospects.” To do this you will

Test Yourself: How Well Do I Prospect?
Use this checklist to assess your prospecting skills. Rate each item as: 1 = always; 2 = often; 3 = most of the time; 4 = seldom; 5 = never. _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. I ask for referred leads on every interview. I qualify all suspects (by need, ability to pay, approachability and insurability). I use the telephone daily for prospecting. I use my lunch hour for prospecting. At policy delivery I ask for referrals. I see enough new people to meet my activity goals. I use “dead time” for prospecting. Each of my prospects is listed in my prospect file. I read the newspaper to get new prospect names. I ask my centers of influence for introductions to referred leads. I have questions that ask for leads by characterizing the prospects I would like to have. (“Whom do you know who…”) My family and friends are on my prospect list. My spouse helps me prospect. TOTAL

The lower your total score, the better off you are. If your score is higher than 25, you need to reevaluate your prospecting methods and begin some effective prospecting very soon.

2-60

Techniques for Exploring Personal Markets

have to establish the four characteristics of a qualified prospect that were discussed earlier in this chapter. Needs and Values—It would be rare to find a person that had no need at all for your products or services. However, as we discussed earlier, they may or may not value the service and products you provide. The key, as always, is asking questions and listening. Explore if there were any major financial changes in the prospect’s life over the past year. You might ask if there was a new home purchased, a baby born, a death in the family, a promotion, a raise, or any significant purchase. The answer to these questions and others will indicate if they have needs and want to meet them. The Ability to Buy—On the basis of what you know or can observe personally, you may be able to assess whether a client has sufficient money to pay for your products and services. You might not know the details until you get involved and start gathering information, but your initial observation should start you on the way. Despite someone’s needs and values, remember to limit your contacts to people who can afford to pay the premium. Approachability—It is not always easy to determine the approachability of a prospect. You may discover that people who might be good prospects are simply not approachable by you. This is why we have stressed the importance of identifying and working in and from your natural markets. It will increase your ability to establish rapport through common attitudes and interests, and perhaps other considerations like lifestyle, income, or education. Most advisors work with prospects with whom they share common interests. Insurability—You might not know whether a prospect is insurable until you begin working with that individual. Be sure you know what your company’s guidelines are for standard issue. As you talk to people, keep these qualifications in mind. If you do know about a prospects’ poor health or other reasons they cannot meet underwriting requirements, you will need to make a business decision. While they may not be prospects for life insurance, they may be prospects for annuities or they may be centers of influence or sources of referred leads if they know you favorably and liked what you tried to do for them.

Chapter Two

2-61

Preapproach Activities
The first step toward making a sale is to identify the prospect and how you will contact him or her for an appointment. If you want a prospect to be receptive to your approach, you must stimulate his or her interest. This stimulation of interest is what we refer to as a preapproach activity. Think of your preapproach as a headline in a newspaper. Your objective is to capture your prospect’s attention and interest and create the desire to learn more details. When you hear “preapproach,” you may automatically think “letters and direct mail,” but there are other less direct and broader methods of preconditioning prospects. In fact, the best way to get an appointment on a favorable basis is to become known by the prospect.

Building Prestige
Prestige, or reputation, is your personal public relations campaign. It is your standing or estimation in the eyes of others, and commanding a position or influence in people’s minds. An illustration of this is a prestige introduction in which a client introduces you to the referral personally. Everything you do—every aspect of your life that is visible to the public or to those you want as prospects—contributes to your level of prestige. As you know, you have a better chance of setting appointments with people who already know you than with strangers. Thus, the more favorable the visibility you create for the things you do, the more prestige you will have with your clients and prospects. Industry and Community Involvement—Make sure that your goals include making contributions of time and energy to professional or civic organizations. Choose the ones whose purposes and works you most admire, and to which you genuinely wish to belong. As much as a very prestigious club or organization may appear to be “the right one,” do not join it for business purposes alone. One professional organization you may consider joining initially is your local National Association of Insurance and Financial Advisors (NAIFA). The association provides you with the opportunity to participate in the issues facing life insurance producers and is a source of personal and business support for both the new and experienced advisor. Many advisors participate in association committees and go on to work through the “chairs” of officer leadership. There are also ample opportunities for community involvement available through the association’s

2-62

Techniques for Exploring Personal Markets

Community Service, Public Relations and Political Action Committees. Finally, membership makes you eligible to receive many of the awards associated with exemplary production and quality of business in our field, which you can display in your office or announce in your local newspapers. Examples of civic organizations to look into include the United Way, the United Jewish Appeal, several Christian charities, the League of Women Voters; and service organizations such as Kiwanis, Rotary, Lions, Jaycees, Red Cross, United Service Organizations and the American Cancer Society. Those listed here are only a few of the many you would recognize by name; there are thousands of other national and local service clubs and organizations. When to Join—When deciding if you should be doing anything outside the insurance industry in your first few years, here are a few points to keep in mind. • • • • • Join only if you are serious about supporting the charter and goals of an organization. Join only when you are ready to make the necessary commitment of time, interest and money. Join only when you feel enthusiasm for the cause. Join only if your involvement will not detract from your business activities. Serve sincerely and unselfishly and you will serve yourself as well.

Industry Awards and Designations
NQA – National Quality Award NSAA – National Sales Achievement Award MDRT – Million Dollar Round Table LUTCF – Life Underwriting Training Council Fellow CLU – Chartered Life Underwriter ChFC – Chartered Financial Consultant CFP – Certified Financial Planner CPA – Certified Public Accountant JD – Doctor of Jurisprudence (Law Degree)

Chapter Two

2-63

Gain from Giving—Once you have something to tell others about yourself, let them know. Here is a partial list of items you might consider newsworthy: • • • • • Attending a school or seminar Receiving an industry award (NQA, NSAA, MDRT) Earning a professional designation (LUTCF, CLU, ChFC, CFP, CPCU, CPA, JD) Election to officer status in a local club or organization Special activities with your club or organization (paper drives with Scouts, promoting Girl Scout cookies, selling light bulbs or circus tickets for Kiwanis, etc.)

Working with Your Newspaper—If you are too bashful to stand up and say, “I did this,” let someone else do it for you. Here are some hints for getting personal achievement stories in your local newspaper. If you prepare a brief write-up that can be printed with very little editing, your piece will stand a much better chance of getting published. Type your story double-spaced, answering the questions, “who, what, where, when and why.” Make sure the newspaper gets it prior to its news deadline. • If appropriate, enclose a photo that meets the newspaper’s standards. An action photo taken at the activity may be better than a business portrait. Tape a typewritten descriptive identification to the back. Usually a five-by-seven-inch black and white glossy is best. But, be safe and check. Use a human-interest line to open the piece. An introduction like “Local advisor learns advanced planning techniques in weeklong New York seminar” sounds much better than “Danny Smith attends insurance school at home office.” Don’t be afraid to speak up a little. Call or send a note of thanks to the editor or reporter for putting your piece in the paper. Few people do this. You will make a favorable impression and may have good results in the future. Don’t be disappointed if the paper does not use your news. There is a lot of competition for the news columns. The smaller the paper, the better opportunity you will be printed.

•

•

•

2-64

Techniques for Exploring Personal Markets

The Impression You Make—Although prestige is earned through your accomplishments over time, prospects will often decide whether or not to become your clients based on their first impression. Prospects will judge you by your dress, your posture, your tone of voice and your behavior. As Will Rogers said, “You get only one chance to make a good first impression.” If you disappoint with your dress, behavior, or attitude just one time, that is the impression the prospect will remember. It is very unlikely that you will be able to undo that first impression, no matter how inaccurate it may be. Appearance—Look professional and successful with well-groomed hair, clean hands and nails, clean shoes, and well-kept clothes. Be sensitive to your market. A Rolex wristwatch and a three-piece suit may not be appropriate in a personal market of middle-class families, however it would be highly appropriate for wealthier prospects. Your Car—Your mobile office should be neat, reliable, and clean⎯ inside and out. The forms and manuals you keep in your car should be orderly. One suggestion is to use a plastic tub that stores hanging folders to organize and store your most common forms and applications. Your Manners—The value of treating everyone courteously cannot be underestimated. Simple things you learned as a child, such as saying please and thank you and not saying anything negative about anyone, will build credibility in both business and personal relationships. Confidentiality—The nature of the insurance and financial services business requires confidentiality. Your clients’ personal lives and financial situations must remain strictly confidential by both you and your staff. Watch What You Say—Avoid questionable jokes and remarks that touch on race, creed, sex, national origin, or other topics that may offend others. Avoid saying negative things about anyone or other professions. A reputation as a nice person will add to your professional image.

Chapter Two

2-65

Prospecting with a Fishbowl
All of us have dropped one of our business cards in a fishbowl so our names could be drawn for a prize. Do you ever wonder what happens to all those cards with names and addresses? It’s a great way to prospect. You might start with a restaurant that you like. It should be a spot where you eat on a fairly regular basis so that the hostess or owner recognizes you. Set up the drawing for your winning names so that each contest lasts for a week or a month. Two free lunches would satisfy the customer and make the restaurant happy too. Be sure you pay for them ahead of time. You will keep the waiter happy if you leave an extra tip for the unusual circumstances. You can follow-up by phone or mail to announce these winners. Everyone else qualifies for the second prize. It could be a free financial checkup or something else that will promote your business opportunities. A successful agency in the South uses a variation of this and puts a fishbowl next to the cash register in a busy baby furniture and clothing store. Their monthly winners receive a copy of a book listing names for newborns. Everyone else is eligible for a discussion on juvenile insurance and a planning session on college costs. One former student used this idea in a maternity clothing store. With a $50 gift certificate for first prize, she made five sales from the other names in the fishbowl in less than a month. Pick a targeted prospect group and think about how you can approach them by offering a prize they will enjoy. You can use a garden shop, a cleaners, a school supply store, a sports store, the county fair, a golf show, a mall fair, etcetera. Study the stores and events in your area. Be sure that the customers include those with whom you can work and that the main prize will satisfy the storeowner and passers-by.

In this section we have reviewed how to select a prospect. The key to selling is having enough qualified prospects to approach. Preferably, you want to approach them on a favorable basis. That is why referrals need to be a critical part of your prospecting portfolio. As we said in the beginning, many successful advisors live exclusively on referrals. It may take some time for you to build your practice to the point where referrals will sustain you. That is why you will need to have some other methods to use. Remember that one of the more effective tools is your ability to prospect with small talk. Cultivate your listening skills and you will listen your way to prospects and sales.

2-66

Techniques for Exploring Personal Markets

Chapter Two Review
Key Terms and Concepts are explained in the Glossary. Answers to the Review Questions and Self-Test Questions are found in the back of the book in the Answers to Questions section.

Key Terms and Concepts
marketing versus selling qualified prospect natural market prospecting methods center of influence personal observation cold canvassing center of influence sales ratios target marketing general market segmentation referrals social mobility networking preapproach nests of prospects

Review Questions
2-1. Describe the relationship between marketing and selling. 2-2. List the four characteristics of a qualified prospect. 2-3. What is meant by your “general market?” 2-4. Identify the objectives of an effective marketing strategy. 2-5. Natural markets are defined by affinity or access. Describe them. 2-6. Identify the benefits of the natural market. 2-7. What is target marketing and what are its benefits?

Chapter Two

2-67

2-8. What is market segmentation, how do you do it, and what are its benefits? 2-9. What is prospecting and what are the three sources of acquiring names? 2-10. List the most common prospecting methods.

Self-Test Questions
Instructions: Read chapter 2 first, then answer the following questions to test your knowledge. There are 10 questions; circle the correct answer, then check your answers with the answer key in the back of the book. 2-1. For prospecting purposes, your friends, relatives, and acquaintances are considered (A) (B) (C) (D) natural markets target markets qualified markets prestige markets

2-2. Which of the following statements about the relationship between marketing and selling is true? (A) (B) (C) (D) Selling is the end result of successful marketing. Marketing and selling are one in the same. Marketing is more important than selling. Selling is planning, while marketing is about exchanging the product for money.

2-3. The continuous activity of finding new people to meet and approach about your business is known as (A) (B) (C) (D) marketing prospecting building prestige cold canvassing

2-68

Techniques for Exploring Personal Markets

2-4. Your undifferentiated market, or the one created without any marketing strategy, is known as your (A) (B) (C) (D) target market natural market general market segmented market

2-5. The ability to gain entry to a market with greater ease for reasons other than direct personal knowledge refers to the concept of (A) (B) (C) (D) affinity market analysis past personal production access

2-6. For prospecting purposes, natural markets include (A) (B) (C) (D) only people you already know only people whose names are in the local phone book known and unknown people to whom you have access people you know but to whom you do not have access

2-7. A marketing strategy should achieve the following objective: I. enable you to see as many prospects as possible II. create a perpetual prospect machine (A) (B) (C) (D) I only II only Both I and II Neither I nor II

2-8. All of the following are objectives of a marketing strategy EXCEPT (A) (B) (C) (D) approach more people on a favorable basis decease your appointments-to-sales ratio provide focus and specialization create a perpetual qualified prospect machine

Chapter Two

2-69

2-9. All of the following are characteristics of a target market EXCEPT that the group must (A) (B) (C) (D) have common needs and characteristics be identifiable have a networking or communication system be a part of your natural market

2-10. All of the following are characteristics of a qualified prospect EXCEPT (A) (B) (C) (D) they need and value your products and services they can afford to pay for it they can be approached by you on a favorable basis they must be able to provide you with referrals

2-70

Techniques for Exploring Personal Markets

Answers to Self-Test Questions 1-1. 1-2. 1-3. 1-4. 1-5. 1-6. 1-7. 1-8. 1-9. 1-10. A D B A B C C C B C

Chapter 2
Answers to Review Questions 2-1. Marketing is the planning and implementation of a process to identify specific consumer needs, isolate groups of people who have those needs, and then produce and customize the products and services that satisfy those needs. It is the art of planning when, where, why, how and to whom to sell. Successful marketing focuses on the needs of the consumer and produces a mutually beneficial relationship between a buyer and seller. Because marketing involves planning, much of marketing does not involve interaction with a buyer to make a sale. Many believe that marketing and selling are the same, but in reality selling is a part of marketing. Selling is the end result of successful marketing. It is the transaction resulting from the encounter between buyer and seller, the exchange of the product or service for the buyer’s cash. 2-2. A qualified prospect is someone who needs and values your products and services, can afford to pay for it, can qualify for it (if applicable to the product), and can be approached by you on a favorable basis. 2-3. Your general market is whomever you can market to without a clearly defined strategy. It could almost be anyone, resulting from a “shotgun” approach to marketing. There are some boundaries in the general market such as where you and the company or companies you represent are licensed to sell. Establish some geographical boundaries by deciding the areas in which you are willing to market and sell, the time required to get from one place to another between appointments, traffic patterns, and the cost of driving there. Your general market is necessary if you have not developed a more focused market that can support your sales goals. Marketing and selling only in your general market will require a lot more work and cold calling.

A-4

Techniques for Exploring Personal Markets

2-4. Any effective marketing strategy you create should accomplish four things: create a perpetual qualified-prospect machine, decrease your appointments-to-sales ratio (efficiency in creating clients), decrease your contacts=made=to=appointments ratio (decrease the amount of time and energy devoted to prospecting), and focus and specialize to create a higher value. 2-5. A natural market is the group of people to whom you have a natural affinity or access because of similar values, lifestyles, experiences, attitudes, and so on. Affinity describes the part of your natural market formed by your friends, family, and acquaintances. You have a certain comfort level with them because of these commonalities. The natural market is not limited to people you know, but also to those to whom you have access for reasons other than direct personal knowledge or acquaintance. Access means that you can approach a group and gain entry with greater ease because you have something in common. For example, you might have been a teacher prior to joining the insurance profession, so one natural market might include teachers because your personal experience gives you insight into how to contact them, the unique challenges they face, and their financial needs. Another example is an advisor who has young children; Prospecting could begin with the parents of her children’s friends, or perhaps the teachers at her elementary school. 2-6. The word natural means “normal or effortless.” If someone is a “natural” salesperson, he or she has a knack for helping people to make buying decisions. So a natural market is one where you have that “knack” for helping people plan their insurance needs. The benefits of natural markets are that you will • have a high probability of understanding their needs and attitudes since you are “one of them” • feel more comfortable and have more confidence • avoid marketing mismatches that occur if you do not place the same values on money, family, and other critical life values that your prospects have • experience less rejection and frustration • have greater success creating a client since they already trust you • have to do less cold calling since you will receive referrals (if you ask) • deal with more people with similar lifestyle, values, and attitudes as your current clients • enjoy your job more 2-7. Target Marketing is a systematic approach in which you look for a group of people (a segment) that is large enough so that you will never run out of names and small enough that the members are interrelated to the degree that your reputation will precede you. The group is identifiable and accessible, with members who have common characteristics and needs, and who communicate with one another. The benefits of target marketing include: increasing your efficiency within your natural market by organizing it, creating a perpetual qualified-prospect machine, increasing your visibility and prestige, providing

Answers to Questions

A-5

for systematic expansion of your natural market, and helping you identify new opportunities. 2-8. The first step of target marketing is to find possible target markets, by dividing your general and natural markets into small groups based on common characteristics. This is known as market segmentation. Organize your natural market into groups of potential prospects that have similar characteristics, needs, and buying behaviors. Segments can be by occupation, lifestyle, attitude, age, and so forth. They should be large enough to warrant your time but small enough where they have some differentiated characteristics or needs that make them prospects. By discovering your natural markets, you have already practiced market segmentation. Identifying a segment and understanding its needs and buying behaviors can guide your questions in the initial interview. Prospecting in a few target markets will enable you to gain more sales from fewer people. This is your best chance to market and sell most productively. 2-9. Prospecting is the continuous activity of finding new people to meet and approach about your business. It is the essence of the selling/planning process. When you prospect, you are collecting qualified names, addresses, e-mail addresses, and telephone numbers so that you can write, e-mail, or call to ask for an interview. The more people you see, the greater your chance of finding someone who needs your advice and products. The first task is to get names. In general, there are three sources for acquiring names. First, there are people who already know you favorably. Second, there are people recommended by those who already know you favorably. These are called referred leads, and are considered to be warm leads because they have the power of a personal introduction. Third, there are strangers. You can convert strangers into prospects by attracting their attention (via direct mail, cold calling, meeting them socially,and so on) or simply by having a high profile in the community. 2-10. The most common prospecting methods are referrals, centers of influence, social mobility, personal observation, networking, cold canvassing, and speaking to groups. Answers to Self-Test Questions 2-1. 2-2. 2-3. 2-4. 2-5. 2-6. 2-7. 2-8. 2-9. 2-10. A A B C D C B A D D

A-6

Techniques for Exploring Personal Markets


								
To top