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How to stop wasting time on frustrating prospects

Posted by May04, 2015 Comments Comments Off

If I stand in front of the ferry terminals at circular quay in Sydney and hand out $50 notes, it is likely that most people will be reluctant to take the notes from me because we all tell ourselves a story. That story might go something like this; “no one would hand out $50 for no reason at all. They probably want something in return and I don’t know what it is. I’m scared. I’m not taking the money. I’m better off without the $50 than taking the risk of getting hassled or stooged or something like that”.

There is very little we can do to change the stories that people tell themselves. For example, I could put up signs saying that the “money is free and without obligation”… but people probably still won’t believe it. Stories are shaped by our upbringing, our personality, our experiences, our belief and value systems and so on.

Would you take a $50 note from a stranger?

People tell themselves stories about investing, property and mortgage brokers too. Things like:

  • I don’t need any help. I am just as smart as they are. I can work it all out myself.
  • Brokers are just in it for themselves. You don’t care about me. You only care about yourself.
  • Property is too expensive. The market is going to crash.

Or

  • I’m hopeless with money and really need help.
  • I’m not an expert and don’t have time – I need to find someone to work with.
  • I have procrastinated for too long – I’m ready to take action.

I had an experience with a new prospect recently. He was a retired Professor with plenty of wealth and wanted to understand if he should borrow to invest in another property. He booked a meeting with me via a staff member in my office. He then called me the day after and asked if he really had to come into the city because it’s a pain and secondly, is it worth meeting or is it going to be a waste of his time? I didn’t promise I could add value (how do I know until I meet him) but said it would be worthwhile and yes, he’s got to come into the city. He emailed through his financial information after the phone discussion. He emailed me at 6pm the night before our meeting to cancel and requested a phone call instead. I told him a face-to-face is better and to contact me after he returns from his 6 week holiday when he has more time. He called me after he received my email response to complain – saying that I was rude and didn’t value his potential business (he told me he used to be the Dean of his university, that he knows everything, that I probably could think of any ways to help but he was open to listening in case I did, etc., etc.).

It was clear to me that this prospect was telling himself a story. His story goes something like:

  • He is smart. He is wealthy. He is a Professor.
  • No advisor is smarter or knows more than he does.
  • His time is more important than mine and it’s not worth traveling into the city.
  • He doesn’t really think anyone can help i.e. he doesn’t really have a “need” – something we can help him with.

There were plenty of signs of the “story” he was telling himself. Little hints, the way he spoke, the words he used, the questions he asked, what he did, the statements he made and so forth. He’s probably been telling himself the same story for many years. It’s almost certain that there was nothing I could do or say to change this story.

The point is, you need to look for the signs or hints that indicate what story a prospect is telling themselves. And you must understand that there is nothing you can to change their story.

Instead, find the prospects that are already telling themselves a story that is congruent with the service and advice you offer and provide a narrative for them to use (and to attract them). For example, a prospect might be telling themselves that “they are hopeless with money, need help and want to find someone they can trust”. Your narrative (marketing story) then should be something like (for example) “X% of Australians are poor at managing their money. You help your clients grow their wealth by doing X, Y and Z. You have literally 100’s of testimonials from happy clients you have worked with for the last 8 years”. This narrative will appeal perfectly to this prospect.

Mortgage brokers waste too much time trying to convert poor quality prospects and get frustrated in the process – the prospects get frustrated too because you are trying to sell something they don’t want to buy. I believe that it is the prospects that you choose NOT to deal with that determine how much profit you make – not the other way around. Not every prospect is going to want to buy what you are selling. Spend most of your time with the prospects that are telling themselves the right story. And help the other prospects to move onto another broker or bank that suits them better.

 

 

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Having your emails ignored is a common frustration. A few months ago I came across this template and I have been using it ever since. It works nearly every time! Clients and prospects now respond to my emails. It is simple. Here it is:

“Dear [name], I hope this email finds you well. Forgive me for emailing you again, but I just wanted to follow up on the email below and see if you might have any thoughts. Consider this no more than a friendly nudge.”

In the subject line I put “Consider this no more than a friendly nudge…”.

I invite you to try it out… you’ll be impressed with how well it works.

This is one of the 14 strategies included in my free report: “14 insights to transform your broker business”. Click here to download the report for free. You are welcome to share this report with any brokers you think might benefit from it.

 

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6 key principles of influence

Posted by Mar30, 2015 Comments Comments Off

Dr Robert Cialdini is the author of Influence: The Psychology of Persuasion. A short explanation of his work is that he says that we need to look for the six principals of persuasion when we work with a client. If one exists (i.e. it needs to exist naturally – it shouldn’t be manufactured), we should communicate it to the client and use it to our advantage. Last week I watched Dr Cialdini present webinar which reminded me of his excellent work. Below I summarise the six principals, some examples of what to look for and how to use them when dealing with clients.

  1. Reciprocity – People tend to return a favour, thus the pervasiveness of free samples in marketing. For example, a fast food restaurant provided visitors a free gift when they walked into the store: they gave people either a key ring or small tub of yogurt. The key ring saw people spend on average 12% more. The Yogurt resulted in a 24% increase in sales… why? Giving people something they want is more powerful. Obviously they were at the fast food restaurant because they were hungry – so a free gift of feed was more relevant/valuable.

Look for ways to add value and solve a client’s problems. Maybe offering a free RP Data report, offer to seek an interest rate discount at their existing bank, give them a book on property investing. Find a way to give first to enact the law of reciprocity.

  1. Commitment and Consistency – If people commit, orally or in writing, to an idea or goal, they are more likely to honour that commitment because of establishing that idea or goal as being congruent with their self-image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honour the agreement. An example is if you ask someone to sign a petition in support of a cause and then a week later you are that person to donate to support that cause, there’s a high likelihood of them donating.

Maybe asking the client upfront if they want to work with someone they trust to help them build wealth – is that something that they are looking for or appeals to them? Then, once you have demonstrated value you can revert back to their previous agreement as if to say “hey, you said you were looking for this… here it is”.

  1. Social Proof – People will do things that they see other people are doing. For example, in a restaurant they marked some items on the menu as “popular dishes”. As a result, sales of these dishes increased 18% to 20%.

Ask satisfied clients to write you a short testimonial and then send these to prospects. Date the testimonial because research shows that the more recent the testimonial is, the more powerful it is. A very successful accountant I know always answers the same way when a client asks him “how’s business”. He says “wonderful, we have never received so many referrals from our clients”. This shows good social proof.

  1. Authority – People will tend to obey authority figures. For example, Bose has some products that weren’t selling very well. They decided to advertise the opinions of some high-profile audio experts about how great these products were. Sales increased by over 60%.

Talk about how many clients you have helped. How many years’ experience you have. Your qualifications. That you are licensed (ACL). Try and establish authority in the early stages of contact with the prospect.

  1. Liking – People are easily persuaded by other people that they like. Cialdini cites the marketing of Tupperware in what might now be called viral marketing. People were more likely to buy if they liked the person selling it to them.

Be likeable, friendly, personal, caring, funny, find common ground, etc.

  1. Scarcity – Perceived scarcity will generate demand. For example, a supermarket advertised that customers were limited to “a quantity of only 3 items per person” resulted in a doubling of sales.

If you get an interest rate discount approved and the approval expiries within a certain time, tell the client. If a bank valuation is only relevant for a certain period of time, tell the client. If you expect fixed rates to change, tell the client.

Remember, the goal in not to manufacture or “invent” these factors to persuade the client to act i.e. if the interest rate discount doesn’t have an expiry – don’t make one up. That would be dishonest. However, the goal is to keep your eye out for these factors that do influence clients and when one exists, use it to your (and ultimately the clients) advantage.

For more, go here.

 

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Have you earned the right for a call back?

Posted by Mar15, 2015 Comments Comments Off

You completed a refinance for your client, Mario 2 years ago with ANZ and he has a 1% interest rate discount. Mario runs into a friend at a BBQ. This friend tells Mario that CBA has given him a 1.20% discount for a smaller loan amount than Mario has. What do you expect Mario to do? What can you do that ensures Mario calls you before taking any action?

This blog isn’t about discounts and being rate-focused – because that’s a race to the bottom and I’m not interested in winning that race. This blog is about how to build strong relationships that are impenetrable by price competition from banks and other brokers.

A farmer starts by sowing seeds to grow his crop. He will spend many months caring for the crop – watering, feeding, etc. to help it grow into a dense and lush crop. Some day he will harvest the crop and enjoy the spoils – but until that day, the entire investment of time and money is in one direction – into the crop.

Client relationships are the same. You need to invest in them. Invest time and energy and sometimes money – even though, or especially when, there’s no immediate payoff. In fact the payoff might be many years away. When was the last time you called some clients just to check in and say hello? Give them a valuable resource or tool. I’m not talking about an annual review call (I.e. When you’re looking for an additional lending or refinance opportunities). I’m talking about a call with zero self-interest. Investing some of your time… your most valuable asset. The best time to do this by the way is 3-6 months post settlement because the client will realise that you can’t expect there to be additional opportunities – they know you’re genuinely calling just to check in, out of care.

So if you have done the disciplined work of previously investing in your relationship with Mario, when he hears about higher discounts at CBA, you will be his first point of call. He’ll be guided by your advice, not necessarily by the lower rate. BUT, if you haven’t invested in the relationship, don’t blame Mario if he refinances to CBA without your involvement or knowledge. Why should Mario call you? You have never bothered to call him!

Our business is all about personal relationships. It always has been and always will be. That’s why Woolworths Money (in the news today… they are hiring lending staff) is no threat to brokers that build relationships with their clients. Nor are online lenders, banks and other brokers.

How much of your time each day is spent sowing the seeds for tomorrow as opposed to harvesting for today? This is the secret to building a super-strong broking business. Not rocket science but it takes a lot of discipline. Many brokers aren’t willing to do this hard work.

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I’d bet that you hate it when a client doesn’t value or appreciate your time, right? Time wasters, people that bleed you for your knowledge and advice, procrastinators – there’s lots of examples of clients that don’t value their broker’s time. But there’s something you can do about it.

A broker told me a really interesting story this week. This broker was doing a loan for his cousin. Once the loan settled, his cousin approached him and asked “what’s your fee? How much do I owe you? I’m really happy with your work and I want to pay you.” Of course the broker said that there’s no fee because he earns a commission. The cousin insisted and so did the broker. No fee was paid. About 6 months later the broker was doing a second transaction for the cousin. This time around the cousin became very demanding and largely un-appreciating of the broker’s time. I wonder if this would have happened if the broker had have charged a fee in the beginning? Probably not.

I believe that fees are a necessity in business if you want your clients to truly value your service. Mortgage broking has evolved into much more than just comparing rates and filling out forms. Without a client having to dip into their pocket, they really just don’t and won’t truly value your time and advice partly because you obviously don’t (otherwise you would charge a fee). So my advice to you is design a valuable service that you can charge a fee for and try and sell it to every client. Maybe your basic service can still be at no charge but if they want the value adding stuff, they need to pay. If you are not confident, set the fee low (but not too low) and then raise it as your confidence grows. The more you charge, the more value the clients will see. And ironically the more referrals you’ll get too.

The clients that take up a fee-based service will almost always be more loyal and more profitable (and less rate sensitive). The clients that don’t take up the service probably won’t be good clients anyway. Introducing a fee will allow clients to essentially “self-select” i.e. do something that then tells you if they will be good, loyal, long-term clients or not. You then know which clients to invest time into.

The additional revenue is good but not really the main reason. The predominant reason for charging a fee in my opinion is to attract clients that truly value your advice and relationship. A great broker can make their clients wealthy and we need to teach our clients to value that (and most importantly, value it ourselves).

Any questions or comments email me: stuart at brokerrevolution dot com dot au.

Comments:

Dave Evans wrote: Then the $64,000 question is – how much should a broker charge? I agree with your article. Since is moved into broking (my own company) from mobile lending from a bank – I visit people who just want info for free and how I should structure my loans and then they just go back to their bank, and I waste $50 in petrol and my time. So how much is acceptable to charge?

Stuart’s response: Hi Dave, thanks for your question – it’s a good one. I think you have a few options. You could charge a commitment fee (say $200-$700) which is payable for you to come and see clients and provide credit advice. Perhaps if they settle a loan within 3-6 months of you seeing them you might offer a full or partial refund of the fee? This will be a good “qualifier” – to ensure they are serious and appreciate your time/advice. In addition to this, you might charge an addition fee for more complex advice (i.e. advice that related to property invest/strategy for example – i.e. the value added stuff that us brokers usually talk to clients about that isn’t directly related to loans but helps the client make smart decisions and build wealth). You might provide some cash projections (from some property software) and RP Data reports, etc. Some brokers charge $300 to $800 for this service. You are then positioning yourself as more than just a mortgage broker. I don’t think the size of the fee matters that much… a few hundred dollars will be enough to force the client to appreciate your time/value. Of course, just make sure you are suitably qualified and/or experienced and have true and honest value to share with clients.

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