“My cardiologist is so good, I can never get in to see him.” People want what they can’t have. One of the reasons clients don’t send referrals is there’s no sense of urgency. They assume you have unlimited capacity in your practice. If they know someone and think there might be a good fit, they don’t think it matters if they tell you next week, next month or next year. You are always open for business. How can you created exclusivity or a sense of scarcity in your book?
Three Steps to Creating Exclusivity
You would never lie to a client. Here’s a three step process I learned from the head of a financial planning firm in Southeastern Pennsylvania.
Step One: Identify several really good clients in your practice. What type of business do they do? What’s their asset size? How much revenue do they generate? How much service do you give them? It’s probably a lot. These are the types of people you would want to replicate.
Step Two: Build the following into your business planning process: Ask yourself how many additional clients, similar to these could you add to your practice without overburdening your service model? But wait! Before you answer, there are three constraints:
- You can’t reassign any smaller accounts to make space. These new clients are in addition to your current clientele;
- You don’t get any extra sales support. Your assistant (or fraction of an assistant) is supporting these new clients along with your existing book.
- Everyone gets the same level of service. You can’t downgrade a few clients to free up service capacity for the new additions.
How many new relationships do you think you could add? Because the three restrictions are so difficult, many experienced advisors come up with a number under 10. Maybe even under 5! Why? Because maintaining the current level of service while adding new relationships requiring the same high level of service puts a strain on your support system. Save that number. For purposes of this example, let’s assume it’s 7.
Step Three: Go back to the list of clients you identified in Step One. Meet with each individually and explain the following:
- I’ve completed a business plan for the next 12 months.
- I’ve determined I will be able to add 7 new relationships similar to yours to my practice over the next few months.
- Before I add them in the traditional way, is there anyone you would like to recommend to be 1 of those 7 new relationships? (Stop talking.)
What Happens Next?
Human nature and psychology play important parts in what happens next:
- Why do your good clients like you? There are many reasons, but a big one is you probably provide them with great service. A light bulb goes off in their head! The reason you can provide such great service is because you aren’t taking on small clients all the time. You are focusing on the relationships you already have.
- You told them you have 7 slots available and offered them 1. When people know there’s more of something scarce out there, it’s human nature to want more. If you’ve ever been involved in a hard to get IPO, you know the story. If you have 7 slots and offer 1, they might want 2. This isn’t a bad thing.
- They know you provide good service. They assume everyone else knows it too. Therefore, they assume those 7 slots will be filled quickly as word gets around. If they talk with a friend, the conversation might go: “If you are really serious, I suggest you jump on this now…”
You Never Deceive, but Circumstances Can Change
Now imagine this strategy works better than you imagined. Various clients refer 10 people in total. You are caught in a moral bind: If you keep taking on clients, word might get out the “7 more clients” number was arbitrary. Your clients who did the referring might feel deceived. On the other hand, good clients are hard to find. You don’t want to turn business away.
Circumstances can change. You might let the original set of good clients know that you have added additional sales support. Maybe some smaller accounts are being reassigned elsewhere. This has created the capacity to add on an additional 3 clients. You can gradually inch the number up as your capacity improves.
You found a way to ethically create exclusivity and scarcity in your book. The strategy is based on two principles: Your best clients know you provide great service and people want what they can’t have.
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