Advisors trolling for small business clients are discovering what mate-seeking singles have known for years: cyberspace is the place.
The old methods of small business prospecting, such as hanging around the Chambers of Commerce and Kiwanis clubs, are not entirely irrelevant, but they are hardly a well-kept secret.
“When I went to Chamber of Commerce meetings, I met people from Smith Barney and Merrill Lynch,” says John Kim, financial planner with Sagemark Consulting/Lincoln Financial Services in San Ramon, Calif. “I'd say it was over-fished.”
He is finding that a more fertile place to prospect is LinkedIn.com, an online “social network” for businesspeople that draws about 15 percent of its membership from the San Francisco area. Like face-to-face relationship building, prospecting online can take some time and effort. But LinkedIn and similar sites help advisors solve the greatest problem confronting advisors looking for small business clients: finding a pool of genuine prospects.
PATIENCE PAYS
John Venezia, of Venezia & Associates in Rollo, Mo., says it took him about a year before his membership on Ryze.com began to pay off. A 30-year veteran of the financial industry, he was active in his local Chamber of Commerce when he lived and worked in Illinois, and even volunteered to recruit new chamber members, which was a great way to meet small business owners. Since moving to Missouri two years ago, he has joined the local chamber but does most of his networking online, specifically on Ryze.
Like most of the other sites, Ryze has both free and premium memberships. It also has forums in which people discuss specific topics. “I didn't take it all that seriously at first,” Venezia says. “It was a diversion, a social thing.” But when he began to get results, he became a paying member, which enabled him to look up the profiles of people trying to contact him. Nonpaying members have more difficulty in making contact with other Ryze members, he says.
Venezia now belongs to almost 100 networks on Ryze. “I participate in about 15, while lurking in others,” he says. The networks in which he is most active include ones focusing on insurance and real estate.
“I don't actually promote myself,” he says. “I try to provide useful information by answering a question someone has or posting a link to an article I've seen on the Web.” This builds credibility, he believes, and it has brought him some clients.
FROM FREE TO FEE
“Small business owners are smarter than you'd think,” says Gene Marks, author of Outfoxing the Small Business Owner (Adams Media Corp., 2005). “They want as much as they can get and don't want to pay for it.”
To get the attention of these people, Marks recommends that advisors give away some free advice with an eye towards getting paid further on down the road. “There are fewer financial planners online than out on the street,” Venezia says. This could be an advantage, but it begs the question of why advisors are not flocking to these networking sites.
One reason is time. Some advisors can scan Web forums, quickly compose a few attention-grabbing posts and log off. For many others, though, the Net is a black hole for productivity. They actively avoid spending time there. Another reason advisors eschew online prospecting is trust, or the inability to project your personality to those you communicate with.
“I'm suspicious of the Internet as a good place to start what needs to be a professional relationship,” says Seth Damski, who works with small businesses at Merrill Lynch in Short Hills, N.J. “There's nothing that replicates servicing clients well, gently asking for referrals and building relationships with the accountants and attorneys as the source of referrals.” He adds that email is a great tool, but one that works best once face-to-face trust has been established.
ONLINE IS FINE
Not everyone is so leery of initiating business relationships online.
“Relationships can be developed online,” says Scott Allen, entrepreneur guide at About.com and co-author of The Virtual Handshake: Opening Doors and Closing Deals Online (AMACOM, 2005). He not only met his co-author, David Teten, online, but also made numerous contacts for consulting work and for what turned out to be a multimillion-dollar corporate merger.
“The only thing a face-to-face meeting is essential for is a sense of trust that you get from a look in the eye and a handshake,” but these can be misleading, too, says Allen, noting that con men exist in almost every business. “What's more important is track record, and you can use the online sites for that,” he says.
In addition to the information that online network members post about themselves, there is typically feedback about them from other members on the site. It is this style of self-governance that has helped propel eBay to such great success.
“These endorsements are not anonymous,” notes Allen. “You can click on the person's name and find out more about them.”
Bringing up background information on members also helps in classifying prospects according to industry, title, etc. and in qualifying leads. It's also a way of discovering common interests and possibly friends in common, so you can find a nonbusiness reason for making contact.
WHEN NUMBERS GET SERIOUS
Online networking sites almost always rely on “six degrees of separation,” the theory that everyone on earth is separated from any other individual by a maximum of six other individuals. Thus your ideal client is closer than you think if you make yourself known to as many people as possible.
“There are people for whom it makes sense, and that includes people in any sort of brokering position,” Allen says. “The larger pool you have, the more business you'll get.”
This brand of networking — call it the new cold calling — might prove less useful as advisors become more established, when quality of associations take precedence over sheer numbers.
For instance, Carmen Petote, of Allegiance Financial Advisors in Pittsburgh, spent his first 10 years in the business working long, hard hours — including no small amount of prospecting. But for the past seven or eight years, all of his clients, business owners and high-net-worth individuals alike, have come from referrals, mainly from one accountant and one attorney. “They're the ones I personally use and I refer them because they're good,” he says.
Nonetheless, the online networking sites must be doing something right, because they are large and getting larger. One site has more than 600,000 users.
Ryan Mapes, business manager at Value View Financial, in Columbus, Ohio, is one who believes LinkedIn's size is working against it. He uses the site “to get an idea of where the small business market is going, to see what people are looking for.”
But he has also started his own free networking site, GoBigNetwork.com. It is designed specifically for new businesses and for individuals such as accountants, investors and marketers who have something to offer them. Members sometimes trade equity for services. Not many financial advisors have registered so far, he notes.
Paul Finkelstein, of Lynn Finkelstein & Co. in Boca Raton, Fla., counts himself as a believer in online networking, having managed bulletin boards and Yahoo groups earlier in his career. He uses Ryze to communicate with people in the Boca Raton area about a local networking group he started which meets for mixers on a regular basis. “You can't do it all online,” he says.
Marks seconds the sentiment. “You have to use multiple methods,” he says. “Use direct mail, go to Rotary, mix these with emails and phone calls. There's no silver bullet.”
MASTER OF NETWORKING
Former President Bill Clinton is one of the most accomplished networkers of all time. Even as a student, he'd write down the name, number and a few notes about everyone he met. He'd go over these notes, and years later if he met the person again, would bring up something from that initial meeting. By the time he ran for president, there were about 10,000 Friends of Bill. “Clinton was the master of the soft sell,” writes David Maraniss, in First in His Class (Simon & Schuster, 1995), a biography of Clinton
In 1972, while still a student at Yale Law School, Clinton was co-director of George McGovern's presidential campaign in Texas. Maraniss says, that after McGovern's defeat, Clinton stayed on at the Austin headquarters, burrowing through the correspondence and mailing lists, copying names and numbers to index cards.
NETWORKING SITES
LinkedIn (LinkedIn.com)
Ryze (ryze.com)
ZeroDegrees (zerodegrees.com)
Friendster (friendster.com)
Orkut (orkut.com)
Tribe Networks (tribe.net)
Go Big Network (gobignetwork.com)