The cost of dropping prospects

The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.

After twenty years in the business, Walter Deeks thought he would have reached a point where he could coast a little, but instead he found himself working harder to get business.

“A lot of the guys in my office who are my age aren’t having as much trouble as I am finding business,” Walter said.

When I asked Walter what he thought the difference was between them and him, he said, “They seem to catch their fair share of breaks. One of the guys was having a rough quarter like I was, but then he got a call out of the blue from someone who gave him a lead. That lead turned out to be his biggest account ever. It made his year. I just don’t get those kinds of leads.”

“Walter,” I said, “when advisors get these so-called bluebird accounts or calls out of the blue, it might seem like just good luck, but the reality is we create our luck. You should be having the kind of luck your peers are having. But before we try to find out why you’re not, I need you to tell me more about your business.”

Walter explained he had a client base of over 500, forty-five of which were ‘A’ clients who accounted for three-quarters of his revenue.

I asked Walter how he would rate his client relationships.

“I have strong client loyalty,” he answered. “A lot of my top clients have been with me for ten or fifteen years or more. When I get a client, I treat them like gold. Finding new clients to grow my business is my problem.”

“Which would you say is more of a concern for you right now - finding enough prospects? Or turning prospects into clients?”

“I’d like a few of those easy cases to land on my doorstep, but I would say I’m concerned about some of the big opportunities I’ve lost.”

I asked Walter to give me an example of a lost opportunity and he told me about Bernd Rheinhold, the wealthy owner of a roofing company. Walter had worked hard for over a year to get Bernd’s business, but never managed to close the case.

When I asked Walter what went wrong, he explained that Bernd was one of those nice-guy prospects who could never make a final decision. Something always came up that put him off — year-end, a glut of building contracts, an acquisition — it was always something. Walter got frustrated.

“What did you do?” I asked.

“I stopped bothering him,” Walter said. “Or rather, I stopped wasting my time with him.”

“When was the last time you had contact with Bernd?”

“About eight months ago.”

“And when do you plan to contact him again?”

Walter laughed. “I don’t. I’ve already put too much effort into getting his business. It’s a lost cause. I know when a deal is dead. I’m better off trying to find other opportunities.”

“Walter,” I said, “other than the fact that Bernd hasn’t done business with you is there any other reason why you’ve written him off?”

Walter shook his head.

“In other words, would you say he fits your ideal-client profile?”

“For sure. I love working with small business owners, especially builders. He’s a family man, I got along with him, except that his putting me off drove me crazy.”

“Walter,” I said, “Carol Unger is an advisor I’ve known for over ten years. I consider her to be one of the best relationship builders in the business. Carol makes her living off of prospects like Bernd.”

Walter shot me a curious look. “How? If they never do business with you.”

“Walter, you’re the one who’s written off Bernd. From what I’ve heard, Bernd would still be willing to be your prospect. Is that a fair statement?”

Walter nodded.

“So, how can you say that Bernd will never do business with you?”

“I don’t know that for a fact, but I don’t think it’s likely. And I don’t believe it’s worth my time to keep chasing him.”

“Walter, even if Bernd never did business with you, he could still add incredible value to your business.”

“How?”

“Carol’s biggest account came from a Bernd-type prospect. For years Carol tried to do business with Lawrence Omee, the vice president of a large advertising firm. But the timing was never right. Lawrence’s firm was mired in a never-ending legal battle that totally preoccupied Lawrence. Carol could have dropped Lawrence as a prospect, but she decided to do what she could to help him out. She tapped her network and found a legal expert who helped the resolve the firm’s legal battle, something Lawrence was grateful for.”

“And Lawrence ended up doing business with Carol?”

“Actually, no, or rather not for a few years still. But Carol considered him a valuable contact and worked hard to develop their relationship. One day, Lawrence called her up and told her his father-in-law had terminated his relationship with the firm handling his investments and asked if Carol would mind meeting his father-in-law. Lawrence’s father-in-law happened to be one of the wealthiest miners in the country, and he also happened to hit it off with Carol. Over the next couple of years, the father-in-law transferred the management of his multi-million dollar estate over Carol.”

Walter shook his head. “Wow.”

“Wow is right, Walter.” I said. “But somebody looking from the outside might think Carol got a lucky call from someone she knew — a bluebird as you might call it. But we both know the truth. This wasn’t a matter of luck. This was the result of her building a relationship with someone.

“Walter,” I said, “some advisors talk about building client relationships as a measure of the value in their business. But what they should be focusing on is building a strong network. The value of your network, not just your clients, is a better indicator of your business’s value. You have client relationships, Walter, but you don’t have relationships with future prospects or key influencers.

“Perhaps the saddest thing about dropping Bernd from your network, Walter, is that by doing so you demonstrated you are a purely transactional salesperson. He saw that for you the relationship was over because you didn’t close the deal you were after. But when you’re not able to close, you have a great opportunity to show your prospect that you are interested in a long-term relationship. This is the time when you should think hard about all the ways you can help them. Like Lawrence, Bernd is preoccupied; so you should be looking for ways to help him meet the challenges he’s facing.

“It’s never a good idea to drop someone from your network simply because they won’t do business with you at a particular moment in time. Circumstances change. You don’t know what the future holds for Bernd. In a couple of years, Bernd might be in a position where he really needs your help, and if you’re not on his radar screen, if you’ve not built a relationship with him, you’re not going to get his business. And if Bernd comes across opportunities for you, you’re not going to hear about them. In a way, by dropping him, you’ve just thrown away the time and effort you invested in building the relationship in the first place.

“Of course, you shouldn’t keep people in your network who don’t meet your standards, but that’s not the case with Bernd. I wonder, Walter, how many other Bernds there have been in your career.”
Walter shrugged his shoulders.

“The good news is it’s never too late to start building your network. In fact, I’m sure you can even salvage your relationship with Bernd.”

Over the next few months, Walter refocused his business on building his network, not just his clientele. He went back and redeveloped his relationship with Bernd, and as it happened, Bernd referred Walter to his brother, who owned a dry-wall business, and who eventually became a valuable client. Although Bernd is still not a client, Walter knows it’s just a matter of time. Furthermore, he considers Bernd a key relationship, client or not.

Lessons Learned

Walter learned four important lessons about prospect relationships:

1. If a prospect meets your standards, you should never drop them from your network simply because they don’t do business with you.
2. When you drop a prospect you can’t close, you are sending a clear message that you are a purely transactional salesperson.
3. The strength of your network is a more accurate measure of the value in your business than the strength of your client relationships.  
4. Bluebird accounts come from people in your network, sometimes from prospects you’ve not done business with yet.

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The Covenant Group is referred to by many as the place entrepreneurs go to become Business Builders. They are considered to be thought leaders and have authored the best-selling books, The 8 Best Practices of High-Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.