FOR PROFESSIONAL USE ONLY

First, Think Market--then think marketing by John H. Melchinger Metamorphosis Once upon a time, long ago in a land far away, there lived a humble monk. By day he mostly gardened, meditated and observed life around him. One summer day, as he held a fragile, small white object in his hand, a young boy approached and inquired about the tiny bundle the monk held so gently. "What is it?" asked the boy. "This is a cocoon. Inside a caterpillar is becoming a butterfly," the monk explained. "See the tiny movements? It is struggling to be free. In a day or two the butterfly will emerge." "Can I have it?" asked the boy. The monk thought calmly for a moment, then said to the anxious youth, "You may take this home with you on one condition. You must promise, no matter what you see or what you think about it, that you will not help the butterfly escape. Will you promise me that?" "Yes," said the boy, "I promise." He took the cocoon gently from the monk's palm and carried it carefully before him to his home not far away. Two days later he returned to the monk, carrying something gently in his cupped hands. But the boy was not smiling. Rather, he appeared quite sad. "What happened?" asked the monk. "It died," replied the boy, reluctantly opening his hands for the monk to see the dead butterfly. "You tried to help it," said the monk. "You promised you would not." "I loved the little butterfly. It broke my heart to see it struggle so. I only opened the crack it had already made a tiny bit to free it. It unfolded its wings and tried to fly, but it died." "Of course it died," the monk replied with a clear firmness for the boy to hear, yet still with a gentle understanding that the boy would always remember...if the boy would learn this event's life lesson. "It is the struggle to be free that makes the butterfly strong enough to live. Without struggling, the butterfly cannot develop strength enough to fly, so it dies from its weakness." "I don't understand." "You do," explained the monk. "In your heart's breaking you felt the struggle of the butterfly. Wanting it to be free, and also wanting it for your pet, your heart ruled your head. You broke your promise and you helped it escape...to its death. And now you mourn the loss you caused by your impatience and search for an easier way. This butterfly is dead. There will be others. If you truly love them, you will let them each struggle and find their own freedom." Whether that boy really understood or not is to this day unknown. We know only that here have been many more wise monks since the one in this parable; many more such boys; butterflies that died from being helped; and others who have helped themselves to strength and freedom by struggling through their own cocoons in their metamorphosis from caterpillar to butterfly. Brokers or agents, commissioned or otherwise, we are all butterflies. We must help ourselves and struggle out of our own business cocoons to build the strength we need to survive and prosper. The Financial Services Cocoon The amount and intensity of reply mail following a column I wrote a few months back (So Few Salespeople Market...) surprised me. Particular things I appeared to advocate rankled as many people as applauded. And here I thought I was reporting about what is happening in the marketplace, not necessarily advocating anything that is not already going on. Okay, there are still tugs of war over some issues, but I believe that most of the issues are largely settled (the handwriting is clearly on the wall). Many practitioners whose feel their side "lost" an issues remain unsettled about it. They need to keep struggling until they resolve it. An almost total disregard for what is actually occurring in financial marketplaces permeates the old guard retail distributors of North America. Global marketing becomes a necessity for the manufacturers of financial services and products. They must grow and trade beyond their own borders if they are to remain profitable and financially viable. Insurance manufacturers are not exempt. They will grow or be bought out by the growing. North American markets comprise decreasing percentages of an insurance manufacturer's total revenue, while increasing capital and operating expenses raise the costs to retool for acquiring new business and providing quality services. Customer service is rapidly becoming product support services through home office toll free numbers, Internet private account access to your own personal information, and other innovative strategies that bypass the retail salesperson. With after-the-sale services largely taken out of the hands of salespeople, home offices need only to increase attrition in sales cumbersome fixed expense left over from the past. They do this by lowering premiums (in order to remain competitive), which lowers commissions; by shifting expenses that the head office traditionally paid, down to the salesperson; by eliminating expensive conferences by paring the number of qualifiers, etcetera. Very few insurance manufacturers today recruit, select, train and develop new career agents. The number of those that do has dwindled to a small handful. There's no percentage in it. Those which are recruiting new salespeople seem to be recruiting financial planners, not so much insurance agents, and looking among accountants, lawyers and MBAs for professionals who want to shift careers. The ranks of experienced insurance salespeople who will move from their primary companies and broker dealers to others have dwindled. Because heaped commissions make worse product for the customer and for the salesperson in the long term, home offices will levelize commissions as low- and no-load products improve and become more popular. Mutual companies, burdened with severe regulations regarding demutualization, are champing at the bit for mutual holding company regulations to be approved. There will be a massive move towards forming mutual holding companies, raising new capital, and distributing product in ways never imagined just a few years ago. In a nutshell, insurance manufacturers are modernizing, streamlining, diversifying and shifting to new markets, new distribution methods and new venues. They have no choice. World market forces require them to change or die. The Struggle All the hubbub and resistance to changing by traditional salespeople makes me wonder how parochial and entrenched their thinking remains...as the rest of the world's butterflies struggle, strengthen and evolve. Remaining cocooned means certain death. Narrow thinking will quickly squeeze out the unchanging. So here, unblemished and in no way disguised as "reporting", I offer my view of what it means today to market yourself as an in-practice "professional." Initiate. Do not content yourself with waiting for events around you to shape your destiny; shape your own. Accept the struggle to be free as part of your growth and strengthening. See the handwriting on the wall--and read it. Capitalize your own growth and wean yourself from dependent relationships that inhibit and smother you. Control your own destiny. Market. Pick your targets and organize your efforts and systems to profitably satisfy those targets. When you preoccupy yourself with making transactions (exchanging the buyer's cash for your products), you diminish the effects of your counsel and advice, even though you may give it well. The more objectivity you demonstrate, the more people will want to believe your advice to be sound. Accepting commissions for placing product as your sole source of income gives you an axe to grind...and buyers do not want to feel like your Thanksgiving turkey. They want to feel like your clients. Many effective and highly profitable brokers and planners are replacing commissions with fee income, knowing that this is the better way, as commissions increasingly become an irritant to many consumers. Charge and receive fees. Fees for service, such as fees for placing assets under management, makes up part of the fee business that is now beginning to replace commissions. Fees for advice make up the other part. Clients increasingly view paying fees as a way of buying your objectivity, while maintaining their ability to choose whom they deal with and what they are offered to purchase. This is a natural extension of the age-old arguments that promote brokers as being more objective than agents. Build a clientele. A long list of customers who have purchased product creates a long list of buyers who expect product-related service. As home offices take over product servicing, what will bond your customers to you? They can now go almost anywhere for more products. They will, however, come to you for advice--if they view you as an advisor. To remain a salesperson in your customers eyes will render you just another salesperson in those same eyes in the not too distant future...or maybe even now. Buyers are sold. Clients seek advice and make purchases based on that advice. One of my best clients is culling his financial planning clients from those who have merely bought product over the years and do not actively seek his financial planning advice. By paring his client list, he is fine-tuning his clientele. He gets more from less this way. Build a reputation. A reputation for something that sorts you from the pack makes the difference you need to demonstrate in today's marketplace. Identify yourself more as a specialist in certain aspects of the business. The rest of the business you may or may not want will find you anyway. Clients who tap your specialties will grow to trust you and ask, "Could you also take care of this for me?" The choice will be yours. One financial planner I know has evolved into a divorce financial planner and is sought out by divorce lawyers across the country. She has no trouble prospecting. Capitalize your own growth. When you invest in your own growth you are more likely to prosper. You will respect what you earn and what you do to earn it. When you own your business, you will make better decisions. When salespeople do not think of themselves as business owners they suffer. Package yourself for your markets. If you think you do not need a mission statement, resume, target-specific brochure, talk tools for showing people what you do in terms they can understand and will remember, and packaging that shows people who you really are by making full disclosure in compelling terms, then your thinking is flawed. If you think the gift of gab is all you need to make money, then your shortsightedness will help you fail eventually because the evolving consumer and competitors will all pass you by. This is not new thinking. Rather, it is time- proven reality. Need a refresher course? Watch or read Death of a Salesmanand think why Willie Loman withered and died. Master the essentials. Here's what I believe comprise the critical ingredients for success marketing yourself as a broker, advisor, or planner in today's marketplace. Markets--Identify and know your targets. Be specific. Know how you fit your target's needs for specific services and products. Messages--Devise the specific, compelling messages that your markets should hear from you. Media--Select specific, innovative methods for you to deliver those messages; methods that your targets will receive best, and that you can best deliver. Brochure--Make your brochure a compliant yet compelling description of what you really do for your target clients. Believe me, you can. Mission--State whom you serve (your targets) and what you do for them. Creating this simple statement is often the most difficult part of business planning. It belongs in many places, and certainly at the forefront of your brochure. Spread it around. Resume--It is also part of your brochure and also functions as a stand-alone piece. Ideal Client Profile--A written profile you use to tell prospects, clients and centers what kinds of people you work best with. Used primarily to ask for personal introductions, the ideal client profile also can be instrumental in spreading your reputation. Introductions Request Talk--If you do not know precisely how to ask for and obtain personal introductions (not referrals), you are neglecting a critical element in the development of a highly profitable practice. The rest--all the other things you can do such as seminars, workshops, direct mail, telephone solicitation, advertising and the like, are only media, methods for delivering your important messages. Place your emphasis on selecting suitable targets and devising the messages you should be delivering to them, and the media issues should fall into place quite nicely. On the other hand, if you spend a lot of time and effort thinking about and working up zingy ways to communicate, but neglect the critical importance of what you communicate, then you will suffer the myth that the medium is the message. It is not. The message is the message. The medium's job is to deliver the message effectively. Good messages can get through even when delivered poorly. Great delivery without substantial meaning kills reputations--not in an instant, perhaps, but death results all the same. John H. Melchinger coaches financial planning and estate planning professionals who market and sell to high income and high net worth buyers. His consultations on developing their professional practices through effective marketing are highly profitable for his clients. John's career experiences in financial services and products--since 1977--make him exceptionally qualified to have developed innovative, non-traditional marketing and skills development programs in estate planning, financial planning, business planning, ethics and consultative selling. His how-to books, articles, bulletins, workshops and presentations have become classics in the industry, and his clients are among the most profitable and productive in their fields. John is available on the Internet at jhmco@ix.netcom.com, by telephone appointment at (403) 459-1472, by fax at (403) 419-2936, and by mail John Melchinger 3 - 11 Bellerose Drive, Suite 117 St. Albert, AB T8N 5C9 Canada Web Sitehttp://fsc.fsonline.com/fsm/jhmco.html