Business is a losing game

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

When Trevor Chang made his foray into the affluent and ultra-affluent market a few years ago, he had no idea how stressful the change would be. At that point, Trevor has been a financial advisor for ten years. He spent his first few years diligently building a clientele from his network of friends and associates, mostly upper-middle, and high-income people. Trevor reached a six-figure income himself but dreamed of generating a seven-figure revenue stream. He knew he couldn’t do that with his current clientele, so he decided to go after high-net-worth individuals. He sought a senior advisor as a mentor and studied everything he could about entering this market. Three years ago, he landed his first big client, Phil, an uncle of one of his old high-school friends and the owner of a trucking company. The revenue from this one client was equal to ten of his other clients and Trevor was hooked. He leveraged his relationship with Phil and was able to get introductions to a number of affluent people Phil knew. Within six months Trevor had managed to convert four of those prospects into clients. By the end of the year, Trevor had doubled his income.

Trevor’s success in the ultra-affluent market continued throughout the next year, but then his business lost its momentum. Last year, Trevor went five months without closing a big client. He had been working on a number of cases but for various reasons, many fell through or got postponed. The effect was devastating on Trevor’s revenue. For the first time in years, his income was declining.

When Trevor came to The Covenant Group, he told us, “I’m stressed as hell. At the beginning of the year, I had more than a dozen hot prospects. All of them multi-millionaires. I figured I could easily close half of them in the first half of the year, which would have put me on target for my best year yet. I’m not sure what’s happened. I think I’ve lost my touch.”

Trevor knew that our organization trained advisors on how to work in the ultra-affluent market and he asked for our advice on how to reopen and close some of these cases.

Coach: “Trevor,” we explained, “before we go there, we want to ask you what you’ve done with the rest of your clientele?”

Trevor: “Not much, actually,” he replied. “I’ve been so focused on these big cases. I’ve been meaning to address the issue of my other clients.”

Coach: “Trevor, in cases like yours we often reference an article about business being a losing game”

Trevor: “Sure feels like that now,” Trevor said.

Coach: “It is a losing game if you only play to win. But not if you play not to lose.”

Trevor shot a curious look.

Coach: “Let us use a couple of sports analogies because a lot of sports are losing games. In tennis, for example, when faced with having to hit a winning shot, only a handful of players can do that consistently. Most players would hit the ball long or into the net. And we know what happens then.”

Trevor: “You lose the point.”

Coach: “Exactly. So the only way to put yourself in a position to win the point or the game is to keep the ball in the court. This is quite a different strategy from trying to win. Here, you’re trying not to lose.”

Trevor: “But at some point, you have to hit a winning shot, don’t you?”

Coach: “Actually, in tennis, no. Theoretically, you can win the match by never hitting a winning shot. All you have to do is make sure your opponent loses all of theirs.”

Trevor: “But in my business,” Trevor said, “I have to close cases to make any money. I have to win points eventually.”

Coach: “Which takes me to my second sports analogy - baseball. Some people think they can consistently win baseball games by sending out their biggest hitters, the ones who can hit homeruns. But if that’s your sole strategy, you’ll lose more games than you’ll win, because it’s hard, even for the best hitters, to hit homeruns all the time. To win in baseball, you have to learn to hit a lot of singles and doubles, get walks, steal bases, etc. And then, when you do hit the homeruns, you can really capitalize. It’s the strategy used by Billy Beane, general manager of MLB's Oakland A’s that Michael Lewis profiled in Moneyball.

Coach: “In your business, Trevor, you’re only going for homers. And that’s too risky. You’re playing to win, rather than playing not to lose. You’ve neglected the clientele that you built your business on. And these clients, while they won’t give you your homeruns, they will get you your base hits. They’ll keep you in the game… or, to use the tennis analogy, they’ll keep the ball in the court for you.”

Trevor nodded. “That makes sense. But I don’t understand how I could have been doing so well for the first couple of years only to have things tail off so badly.”

Coach:  “Actually, that’s typical. Many advisors hit a few big cases and think they’ve finally graduated to the big leagues. But sustained success in the ultra-affluent market is much more difficult.”

Trevor asked what he should do to regain his past success.

Coach: “Two things are crucial,” we explained. “First, you have to develop a strategy where you’re playing not to lose. In other words, you need to have an activity level that allows for a mix of business opportunities, small and medium-sized cases as well as your homeruns.

“Second, you need a more robust strategy for going after high-net-worth individuals. As far as I can see, you’ve been focusing on networking and gaining introductions to affluent prospects, which is great, but it’s not enough. To really establish yourself in that market, you need at least four distinct strategies.”

Trevor asked for examples.

Coach: “There are many to choose from. You could be running a series of seminars, or concept webinars, or doing community-building activities, joining associations, writing a column, radio appearances. The point is, you need to do more than you are doing now to keep your pipeline full of high-quality prospects so that you can continue to build your identity in the high-net-worth market.”

Trevor: “But my pipeline was full earlier this year,” Trevor said. “My problem was closing those cases.”

Coach: “Well, there is the possibility that you had prospects, but not high-quality prospects, or more specifically, prospects who weren’t actually likely to do business with you. There is also the possibility that you simply went through a dry spell, which happens to the best of us. In which case, maintaining a flow or revenue from your other clients will sustain the business.”

Trevor: “But if I’m building my prestige in the affluent market, isn’t that going to demand even more of my time? How will I be able to service my other clients?”

Coach: “As your business grows, you will need to consider hiring a sub-producer to manage your B, C, and D-level clients, allowing you to concentrate on the big fish. But you can’t do what you’ve been doing, which is not servicing those clients properly. They’ve been your bread and butter and at this point, you can’t afford to lose them.”

Trevor spent the next few months developing a plan for sustainable growth in his business. He mapped out a series of four distinct strategies for penetrating the affluent market, and he developed a service plan for the rest of his clientele. He also planned to hire a sub-producer when he hit a certain revenue level. Today, Trevor’s business is in great shape. His revenue fluctuations are a thing of the past, and his pipeline is full of high-quality, affluent clients. Currently, he’s on target for finishing with his best year-end results ever.

Lessons Learned

• Trevor learned four important lessons about success in business:
• If you focus too much of your energies on winning big cases, you put your business at risk.
• Success in business depends on a strategy of playing not to lose, where you ensure that you always have enough revenue coming in to sustain the business.
• Early success in the high-net worth market is no guarantee of future success. Many advisors get caught up in the thrill of closing their first few big cases and neglect other activities that help keep the business afloat.
• Sustained growth in the affluent and ultra-affluent markets depends on a minimum of four distinct marketing and promotional strategies.

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