Treat your prospects as clients

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

After struggling for the last two years to gain new clients, Ed wondered if he was cut out to be an investment advisor. I first met Ed when, after I gave a speech at a conference last spring, he offered to buy me a coffee. In the café downstairs Ed explained that though he was regularly meeting prospects he was finding it nearly impossible to turn them into clients.

When I asked for a recent example he told me about Barbara, a dentist and cousin of a client of his.

Barbara had always handled her own investments and had lost a lot of money during the collapse. She was eager to talk to Ed to find out how an investment advisor could help someone like her weather the bad times.

Ed explained to Barbara that because he studies the markets, the vast array of products and services available, and various investment strategies, he is able to provide expert advice and to develop solutions that clients would not be able to develop on their own. Barbara seemed to like what Ed was saying but pressed him for specifics.

Ed answered that he would need to sit down with her and explore more fully her current situation.

Barbara sketched out her situation for Ed — a young professional single mother, a profile he had lots of experience with. He knew exactly how to help her, but felt uncomfortable about giving her advice.

I asked Ed why.

“I guess I’m tired of giving out free advice,” Ed said. “I get asked for investment advice all the time. When the markets were booming, lots of people like Barbara felt they could do it all on their own. Now, after the collapse, they all want free advice. So, I told Barbara that if she wanted to see what I could do for her she should book an interview with me. I explained what I normally charged for developing a financial plan… She said she’d think about it.”

“I’m guessing you never managed to get that interview with her.”

“She wasn’t willing to pay for professional advice,” Ed answered.

I told Ed I didn’t agree. “I think Barbara would be happy to pay for professional advice,” I said.

Ed still shook his head.

“Ed,” I said, “a few years ago my wife and I wanted to do a renovation of our house. We called on a few architects to interview for the job. Jerry was one of the architects who came round to see us. Jerry had a great reputation for the kind of work we wanted and before seeing him both my wife and I figured we would probably end up going with him. Unfortunately for Jerry, our interview with him changed our minds. After showing Jerry around our house and explaining what we wanted, we asked what he thought — what ideas he had. He told us he’d be able to do an amazing job and promised us that the end result would blow us away. We were excited, but when we asked him to show us what he was thinking, he said he didn’t want to give away his ideas. He explained that in the past he’d had too many of his ideas taken and used by other vendors. He needed to protect his ideas and hoped we would understand. We did understand, but we still had no concept of what his vision for our house was.

“The next architect we interviewed, Evelyn, took a completely different approach. From the moment she saw our place, she was throwing out ideas left and right. She stayed over two hours and mapped out all the possibilities she saw for our place. We were pumped when she left and even more excited when a week later she came by to show us drawings of how she envisioned the end result.

“I don’t think I have to tell you who we picked.”

Ed shook his head.

“But do you know exactly why we chose Evelyn over Jerry?”

“Because you liked Evelyn’s ideas.”

“Yes,” I said, “that’s part of it. If we didn’t like Evelyn’s ideas, we wouldn’t have chosen her. But how did we know that Jerry didn’t have better ideas.”

Ed shrugged his shoulders.

“The truth is we didn’t. Maybe if we’d gone with Jerry he’d have blown us away even more than Evelyn. But we weren’t prepared to take the chance. Jerry did nothing in the interview to give us any reason to believe he had great ideas for our place. He said he did, but he never showed us he did. Jerry was asking us to take a leap of faith with him. I don’t really understand how he could have expected us to engage him as our architect when we had no idea what he would do for us. With Evelyn, we knew exactly what we were getting, and we liked it.

“Another way to look at the difference between Jerry and Evelyn’s approach is this — Jerry treated us like prospects. Evelyn treated us like clients. Jerry drew a clear line between prospect and client; or, in other words, between what you get from Jerry for free and what you get when you pay. But because he wasn’t willing to show us what we’d get until we paid, his paid service remained a black box to us. What if we didn’t like what we saw after paying for his service? Because Evelyn didn’t draw the same line that Jerry did, the move from prospect to client was easy, almost invisible to us.
“You want your prospect to think — ‘Wow, if this is the kind of advice I’m getting for free, what do I get when I pay for it?’

“Jerry’s fear was misguided. I’m sure he did have times when a prospect took his ideas to another vendor. But it’s wrong to think that the prospect has ripped you off. Giving away your ideas is a necessary part of developing client relationships. It’s an investment you have to make. There will be times when that investment doesn’t pay off, but more often than not it will. And those ideas are only a fraction of what you hope to share with your client anyway. You’re developing relationships you want to last for years.

“For example, we ended up using Evelyn for all of our many home renovations over the years. And furthermore, we referred her to numerous other people who have since become clients. Was it worth it for her to risk sharing her ideas with us ‘for free’?

“Another major difference between Jerry and Evelyn is that Evelyn’s approach showed immense confidence — ‘I’m willing to show you my ideas because I know you’ll love them.’ Whereas Jerry’s holding back indicates doubt on his part.

“Ed, the main problem in your interaction with Barbara, was that you failed to answer her question. She wanted you to show her how you could help her, and you never did that; so, unfortunately, she never made the decision to have you as her advisor.”

Ed nodded. I could see now that he understood that he’d taken Jerry’s approach with Barbara rather than Evelyn’s.

At the end of our coffee, Ed thanked me for my time and said he wouldn’t leave the business just yet — not until he’d given Evelyn’s approach a shot. I told him to give me a ring and keep me posted on his progress.

Months went by without hearing from Ed and I wondered how he was doing; then last month I received a call from him. He sounded great. I could hear the energy in his voice. The new approach worked for him. He said it was like finding the key to unlocking his business. He had more clients than he knew what to do with and he was considering hiring a junior advisor to help him with the service work.

Lessons Learned

Ed learned four important lessons about changing prospects into clients:

• Show, don’t tell. From the moment you first meet your prospect, show them exactly how you can help them.
• Don’t draw a line between what you do for free and what you do when you get paid.
• When you share ideas with your prospects ‘for free’ you are making an investment in a long-term client relationship. Most of the time the investment will pay off.
• Treat your prospect as if they are already a client.

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