As I mentioned last month, whether you’re discussing investments, trusts, exit planning strategies or wealth protection (including insurance) with clients, your job is to be a listener first and a facilitator second. What most advisors don’t realize is that clients have a “buying” process just like we have a “selling” process. If we take the time to understand a client’s buying process, then we can match our selling process to their rhythm. But if we ignore their process, we put the relationship at risk.
Advising is about helping clients determine what’s most important to them and finding where they want to improve their lives. It’s also about helping them make decisions they may be avoiding and addressing their stated and unstated fears. Only then are you in a position to do an evaluation about what’s really important to them. Only then can you ultimately recommend a product or service that might benefit them and help relieve their anxiety.
Many professionals consider “sales” a dirty word. What’s ironic about this is that professionals must sell too. But they’re selling services instead of products, so they think they’re exempt from the sales label. Is it really different?
Virtually every financial product should include service. The agent or broker needs to understand the scope of the buyer’s problems and options. It’s our job as advisors to help prospective clients figure out what they really want to accomplish and the best way to do so. Why? Because people do what they want to do, when they want to do it. This is a universal axiom. If we ignore this principle, we run the risk of losing the opportunity to work with the client.
I received lots of positive feedback from last month’s article. I thought it might be worth exploring further what it really means to be a professional advisor in the financial services world. Ultimately, sales is simply the end of the prospective buyer’s buying process. If you sell properly, the prospective client will actually request to buy from you and move forward with your recommendations.\
Problem vs. Solution Question
When I speak to financial advisors and other sales groups, I always ask the audience this question: “What is it that we sell – problems or solutions?” Then I ask for a show of hands to see how many attendees believe they sell solutions. Almost every time, about 95% of the audience will raise their hands, believing they sell solutions. It’s the same outcome almost every time I present, regardless of who’s in the audience.
Let’s examine the nature of the problem vs. solution question. Every sales situation generally starts the same way. I call it “equilibrium.” The buyer believes they have all the solutions they need for all of the problems they have. Think of it this way, if a buyer is truly interested in a solution, they would be actively looking for one. Perhaps that’s why they agreed to meet with you. They may be seeking a solution to a problem they have already identified –“I need help lowering my taxes,” or “I need help planning for retirement” for instance. And perhaps a friend, client, or close relative referred them to you because they know you can help. But don’t be fooled by their response.
If you’re in the business of selling a commodity (annuities, long-term care insurance, disability, even life insurance) instead of a service, cost is usually the factor that determines whether the prospect says yes. Someone who knows what they want is often shopping price. It’s easy to be fooled if you approach the relationship incorrectly. But let’s assume for now, the prospect hasn’t identified any specific need and isn’t price shopping. Perhaps they heard you on a podcast or came across an article you wrote. Something you said or wrote really resonated with them when they weren’t particularly thinking about it. You caught them off guard in a good way before they began looking for a solution.
Avoid the Sales War
Assuming the prospect meets the five basic criteria of a good prospect (is insurable, has money, is accessible, has a need and is willing to talk with you), they’re likely in “equilibrium.” That means they think they have all the solutions they need for all their perceived problems. This is called denial. They’re actually open to hearing what you have to say, assuming you have something interesting to say. But if you move too quickly to solutions, the conversation will stall and quickly move to price. Your client is experiencing heightened anxiety, and the “sales war” has begun. It’s a war because the prospect sees you as an adversary rather than as an ally. When this happens, you are losing the war, and you need to pivot quickly
Every prospect will eventually want to know what your recommendation is going to cost. That’s human nature. The key to being successful is positioning your services and recommendations in a way that doesn’t cause the prospect to be repelled by the price tag. How? “Don’t focus on solutions until the client understands and accepts the problem.”
The question of your fee structure inevitably comes up and perhaps specific questions about how you’re compensated,and whether or not you earn compensation from the sale of products and services you recommend. If you move to the solution too quickly, the buyer will focus on the cost-benefit ratio. The higher the cost the more they will judge the value of the benefit.
If this happens, traditional sales training tells you to go back and reaffirm the buyer’s need and why the benefits you are recommending fit their specific situation. In other words, you begin to enhance the benefits to overcome their cost reluctance. We were trained to load up on the solutions side of the scale with additional reasons why this purchase makes good, logical sense. This is where the adversarial nature of the sales process begins and often ends. Essentially you must argue with your client to convince them you are right. This is NOT partnership selling. At this point, you have lost your independence and the advisory relationship. You have become the proverbial salesman or saleswoman pushing to close a sale. Understand, there is NOTHING wrong with morally or ethically with trying to close. Sales is what makes the world go around. But wouldn’t it be better if the client wanted your solution so much that they asked you if they could buy it and didn’t really care about the cost
Benefits?
I can tell you from experience that adding benefits to your proposed solution may get you the sale, but doing so comes at a price. They may have buyer’s remorse and your relationship is damaged. But if the prospect understands their problem and realized they can’t solve it on their own or with their current advisors, then they become open to your solution and they look forward to hearing how you can solve their problem. That’s the proper time to stress the benefits – when the buyer clearly understands their problem and acknowledges they can’t solve them on their own. For instance, the prospect realizes how much trouble their family would be in financially if they died suddenly. How would the surviving spouse be impacted by long-term care costs and their net spendable income? Wealthy prospects have often never thought through the impact of estate settlement costs or taxes. Their solution is to sell assets and that could be problematic from a tax, estate planning and family dynamics perspective.
The problems are infinite. But if your prospect lives in denial, showing them a solution isn’t going to have much impact. Problems can fall under the Important/ Not Urgent category – until something happens and now, they’re suddenly urgent, but the opportunity to solve them economically has passed.
New Premise: We Sell Problems
Remember how 95% of advisors and salespeople who attend my presentations tell me they sell solutions? Consider the premise that we really “sell problems.” We don’t sell needs or solutions, but problems. The better we are at defining and communicating the real problems to our prospects, the better we will be at helping them implement the proper solutions. Remember, people do what they want to do, WHEN they want to do it. That’s where you come in.
Dr. Guy Baker, CFP, CEPA, MBA is the founder of Wealth Teams Alliance (Irvine, CA). He is a member of the Forbes 250 Top Financial Security Professionals List and author of Maximize the RedZone, a guide for business owners as well as The Great Wealth Erosion, Manage Markets, Not Stocks and Investment Alchemy. He received the 2019 John Newton Russell Memorial Award for lifetime service achievement in the insurance