Know your Client

Know Your Client

It is important to understand the difference between a client, a prospect, and a suspect. There is also a lot of marketing, math, ratios, and theory that comes behind that understanding.

Even big companies make these simple mistakes when it comes to knowing the client and understanding what type of client they are. Believe us, we have bounced our heads against the wall with plenty of big-name companies over this very subject. They often give you a prospect list that is basically like Data Axle or SalesGenie.

This is probably one of the most important things that any business owner, entrepreneur, or financial advisor can know. You have to understand the difference between these different types of clients and the different levels of prospects that you may be encountering. This is really critical and life-changing/business-changing when you take the time to understand it.

We once read someone say, ‘We are in a business where everyone needs our service.’ In our opinion, that is the worst marketing statement ever in the history of the world. In actuality, you want most of the world to not even care that you exist. You don’t need or want the entire world to be a successful business. You want to figure out who your perfect client is. Some people refer to that as the avatar. You want to go and find out where these people hang out and who they are. At this point, they are not prospects, so to speak, but suspects.

Suspects are people who you think would make a good client, but you don’t actually know who they really are yet. Perhaps a lookalike of your current customer base, for example.

Took many people look to market to the ‘entire world’. Many clients have told us exactly that in meetings. The logic is that if you market to everyone, the ones who need you will come forward. Not only is that expensive, inefficient, and basically impossible, but it is also rather foolish. The same people often make the mistake of seeing their customer base as a five-mile geography around their business. This is one of the worst errors to make in business marketing.

All of the above is actually exactly the opposite of what you should be doing. We understand the idea that if you cast more lines, you will be able to catch more fish. On paper, that seems as though it makes sense. However, what we would say is that you don’t see a salmon fisher fishing in every single part of the ocean, do you? No, they fish in the areas of water where salmon live. They identify their targets, find out where they were, and market, so to speak.

So, imagine your business is the fisherman. Where are the fish? Where are they biting? What lake is best? What are the best spots? What bate is working best? Even when you find yourself a lake, you need to know what kind of fish there are below the water. There are even apps and pieces of sonar equipment that can tell you this information these days. The same can be said of marketing.

A suspect is someone who you have targeted and would like to be able to get interested. Someone you have not yet attracted but are aiming to attract. As the great Ogilvy once said: "You're not marketing to a standing army, you're marketing to a constant parade of humanity." What he meant by that is not that everybody in any geography is moving all the time, but their lives are changing constantly. People are getting married, getting divorced, getting a new job, receiving inheritance. Things are constantly changing. Perhaps six months ago they sensed their own mortality because their brother-in-law died. Every person has points at which they are immune to paying attention and points at which they are really interested. Sometimes you can predict these states. For example, if you sell cars, there is an itch cycle. You start marketing to them two or three years after they bought their last car because that is when most people opt to change. So, if you were a car salesperson, you would have a list of everyone you have ever sold a car to, making sure you sit yourself in front of them after two years. It comes back to the idea of the avatar, the perfect profile of a suspect. It’s important to remember that maybe nine out of ten are going to be immune to paying attention and only 10 percent will be in buying mode. Some of those within that 10 percent may already have someone providing the service that you provide, but that brings no guarantee they are happy or that you can’t convince them you are a better option. For example, 60 percent of people are unhappy with their current financial advisor.

In other cases, there may be an important life event that recently occurred, making them more receptive. Let’s look at an example of a person we once knew. He had been receiving what he considered to be junk mail from salespeople all week trying to sell him furniture. He had a house full of new furniture so was immune to paying attention. Then, one day, he came home to find that his wife had moved out and left him, taking all the furniture with her, leaving only the cat. Suddenly, the same man who paid no attention to furniture marketing the day before is now ready to pay attention. The next person to get in touch about furniture was likely to make a big sale.

As we explained before, sometimes these changes and these trends can be predicted. Sometimes, they simply cannot. Sometimes, as is the case with a client we work with who markets to divorced women, you know when and where to find your customers. For example, he gets mailing lists of recently divorced women and is able to start targeting them. Unfortunately, for a lot of businesses, it is not this easy or predictable. In these cases, you are going to market to your list of contacts, then market again, then keep marketing to them until they eventually wake up and pay attention. If you email them once a month for seven years, you may finally contact them just when they need your services and are willing to pay attention. They can then turn from suspects into prospects and these two types of clients require different types of marketing.

Let’s take a look at a different example, centering around divorce again. We know someone who has multiple law firms in different cities and deals with divorce – he even wrote a book called Confessions of a Divorce Assassin. He markets this book to women who have not divorced yet, but statistics show that some of them within a certain age group are thinking about it. He isn’t waiting until they file for divorce or until the divorce is complete, he is targeting when they are still just in the thinking stage. He does this because he wants them to come to him first. After all, it is better to target them before they drain their bank accounts and start arguing about everything. So, how can he get their attention if they haven’t even filed for divorce yet? He can show them how to get divorced amicably and have money when they get done, rather than giving it to the attorneys. Then, he can work with them on that.

After this, it becomes a matter of follow-ups, education, and development. The thing we find with a lot of businesses is that they do not differentiate between someone who looks as though they should be a client and someone who has actually raised their hand to say they are interested. And once someone does show this interest, they give up on them way too soon. This is where funneling comes into play. Of course, in order to avoid jargon, we all know that a funnel involves having a wide, open space at the top and a narrow neck at the bottom.

Let’s say you have done some marketing and originally have this list of suspects. These people have not done anything with you in the past and do not know you. You have had no interactions with them at all, they just meet your criteria for an ideal client. If we go back to the divorce example, it would be like having your list of people who have filed for divorce but have not actually gotten divorced yet. These would be your suspects. Let’s say one of these suspects responds to something online, or calls you, or comes to an event of yours. Somehow, you now have their information, or they have contacted you. That changes them from a suspect to a prospect. They have moved down the funnel. That is the shift from being an ideal client who does not know you to someone who has responded to you and is aware of you. That shift is huge. As they reach this point of the funnel, they could be ten or one hundred times more responsive to you. You can now spend time and money on these people.

Using a Dan Kennedy example, almost every state in the US sells your driver’s license information. So, we are talking, name, mailing address, gender, height, weight, and a bunch of other details. A weight-loss business can purchase this information, calculate the BMI of a list of people and then target people of a certain height and weight. They then have a ready-made mailing list of suspects who should be good clients on paper. However, this may completely fail. You may be wondering why. After all, the business owner knows their gender, their BMI, their location, and they are in need of the service the company is providing. However, the one thing the business owner does not know is whether they care. Do they have any motivation to lose weight? Are they looking to? Are they willing to pay attention?

What you can do is purchase a response list. This is when people run infomercials and ads on things like exercise equipment and record a list of potential clients who reach out and show interest. Other businesses can then purchase this list of responsive people to target for their own marketing campaigns. Or you could go after people who are buying a rival or similar product and market to them directly. Or you could get both of these lists and combine them in a single overlap list. Then you can isolate the people who are looking for both of those things. Compare this list of actively interested people to a list of suspects who are merely in the right BMI range, the difference is night and day. They may have met the stereotypical characteristics of your average client, but that brings no guarantee they will want to lose weight.

Another example could come in the form of a steakhouse. Say you wanted to open a high-end steakhouse and were looking to target potential clients. You could go to someone like Amex and ask for anyone who has dined at that level of steakhouse or higher over a certain period of time. If they paid using their Amex card, you could essentially compile a list of all your competitors’ customers. This type of marketing and data collection is very common. As a business owner, you should be in favor of this because it can help you to market so much better.

We will go over this in more detail in a future chapter, but it’s about building something that is appealing to your potential clients. That could be a website, an advert, an opt-in page that gets their attention. Perhaps you offer them a free, helpful newsletter on retirement or college planning or something. Or maybe you can ask them to register for an interesting webinar or pre-tend a live event. Unfortunately, most websites fall extremely short when it comes to this and there are plenty of common mistakes to avoid, but we will focus on that in more detail later.

What you are looking to build is a sequence starting from when they raise their hand. Once this happens, you need to keep two ideas in your mind, even though they may be contradictory. One is, they may be ready to buy today. Two is, they may need to be educated for as long as necessary in order to secure the purchase. You need to be prepared for both of those scenarios. Just because they have responded today, does not mean they are ready to buy today. They may not even be ready to move forward and book a meeting or anything. But on the other hand, if they have raised their hand today because they want to buy today, you need to be ready for that.

Plenty of businesses we work with use Facebook lead pages, ask a couple of questions, and then try to set up a time for a meeting. While this is effective for those who are looking to buy immediately or have a meeting straight away, it may not be effective for those who are not ready. No matter how you package it, even if you ask to set up a meeting just to give them some free advice, the client knows you are setting a time to try and sell them something.

At the top of your funnel, there may be a few people who want to meet with you and are ready to do that, but only a small percentage. By all means, market to them and meet with them, but do not expect everyone to be ready to buy today. Other people may be willing to take some free information from you and, because of that, become open to meeting a little later. Others may take the free information and then get some extra follow up information in the near future. Others may leave it a long time, years even, before they are ready to do business. We have seen people come back nine years after the initial contact!

Despite the fact there are these clear three groups of people who will call right away, those who will take information and then call/meet, and those who need more education over a longer period of time, the vast majority of marketing only targets the first group. Businesses make the mistake of putting all their eggs in their ‘here and now’ basket, only concentrating on the people who want to buy today. In actuality, the second two groups are just as important because, if you market in the right way, they will still buy from you in the future. Only marketing to the today customers is a huge mistake.

We look at really sophisticated websites on a daily basis and they have really neat scheduling links, allowing potential clients to set up meetings whenever they want. Yet, the only call to action is ‘contact us’, followed by a number or an email. The assumption here is that the website is going to do some of the educating for you and people are going to browse it for hours on end. In reality, the clients are either jumping to the end to book an appointment, or even if they have a free report, the education follow up just is not good enough. The business misses out on so many potential customers this way.

A customer’s time should be worth a huge amount to you and most people cannot be tempted by a free $20 just to come along for a meeting. Getting certain people on the phone is like pulling teeth, so you have to market accordingly. They will take notice of you when they need your services. It is your job to keep marketing and make sure you pop up just when they actually need you. After all, they will only buy when they are ready to buy.

In order to keep these people on board, your website needs to give them a reason to raise their hand. That falls short of ‘give us a call today’ or ‘book an appointment now’. But it shows they might be interested at some point in the future and allows you to keep in touch with them. You also want different educational material that is not going to teach them how to do it themselves, but it's going to teach them why you're good at what you do, what you do, and how that works. Then, you want to be able to drip on them forever. And we are not talking about just email but sharing information and YouTube videos too, all until they are ready to make that next step and book an appointment with you. When we say ‘forever’, this is not a cumbersome or time-consuming activity for you. It’s all automated. It’s just about keeping your hook and bait in the water until they are eventually ready to bite.

A reminder, these people are your avatar. These are the ones who meet your criteria. They don't know you, but once they do, they start being part of your world. Then you can start spending money and time on them. A client might be worth an initial $5,000, and they might be worth $50,000 over their whole lifetime with you. As such, you could send them $25 worth of direct mail, a box of stuff, a holiday card, or whatever else you think might help to earn their loyalty and trust. It’s the classic spend money to make money argument. If you could buy loyal customers who spend $50,000 with you over a lifetime for just $25, you would do that all day long.

There are all kinds of things you can do, but you can start to spend more money on them once they are in your world, once they go from suspects to prospects. Let’s use the divorced example again, if you were aiming towards divorced women between 45 and 55. You would not have the time or money to spend cash on every single suspect in the world. It simply would not be feasible. If weight loss companies sent direct mail to every woman that was over a 31 BMI, they would go broke, because the response rate would not be very high. But once the suspects responded to some marketing the business put out there, and they knew they were interested, then they could start marketing to them more and sending direct mail pieces. Now they could have outbound telemarketing going to them and all kinds of other stuff. Suddenly, it would be well worth their time and effort and money because the suspect has shown they care, thus becoming a prospect. That’s why it is very important to know the difference between suspects and prospects and what you can do to market to each of them differently.

Let’s say you are advertising on LinkedIn, Facebook, with direct mail, Google AdWords, and you are buying leads from smart assets. You need to know what your cost is per click and what your conversion ratio is from click to prospect. In these cases, the potential client has likely filled out some kind of form. Maybe you got an email address or a phone number, and then a mailing address and some demographic information. You have to decide at what point you have enough information, and the person becomes worthwhile to you. You need to know how much the click costs, how much the prospect costs, which is an easy calculation if you know what your conversion ratio is. You should know what each client and appointment costs you and you cannot know that without a conversion ratio, so that is incredibly important.

You also need to know how much they are going to spend immediately? How much are they going to spend with you in the first year? How much are they going to spend with you over their lifetime? Michael Kitces uses a good example with the figures, $500,000 assets under management, 1% fee, $5,000 a year, a lifetime average of 20 years, and therefore a lifetime total of around $100 000.

If you know their lifetime value is $100,000 and you know the first year is $5,000, then how much are you willing to spend to secure a client? How much are you willing to pay to secure an appointment? How much are you willing to spend to get a prospect? How much are you willing to spend to get a website visitor or a click? If you were going to get $500,000 worth of assets from one client, $5,000 in the first year, would you be willing to spend $500 to get them in the first place? We would take that all day long. Unfortunately, too many businesses look to the short term and tell themselves they cannot afford to spend $25, $50, $100 on a potential client. The truth is, you will get that money back and a whole lot more if you secure just one.

We understand the reluctance to spend that kind of money on a suspect because you don’t even know if they care yet. But once they raise their hand, the dollar amount of what you are willing to spend on them should change because the response rate at this point is much higher. Again, that is why it's really important to know the difference between suspects and prospects.

If nothing else, go and look at getting a SmartAdvisor to take a look over your prospects, because they are very good at asking enough questions to get to an idea of what the potential client is about. They can find out what the prospect is doing behind the scenes, sorting out somebody who is not worth spending the money on, somebody worth spending a little bit of cash on, and somebody worth spending a lot on. Knowing that kind of information is not only invaluable, but it also gives you a little peace of mind. Just remember, there is a big difference in value between somebody who is just in the general public, versus someone who very narrowly fits your target audience, versus someone who actually raised their hand.

With the general population of the United States, each lead is not worth very much at all. However, the more data you get, the more valuable it becomes. If you find out what they like to buy, what income level they are in, how old they are, where they live, what gender they are, etc. All this data allows you to figure out whether they are a suspect. But the real click point is whether they have then raised their hand and said, "Yes, I'm interested in what you have to offer." That is when you really start to market heavily to them for as long as it takes until they want to invest in your services, even if that means years of contact. Keep in contact, educate them and be ready to convert them into a client as soon as they are ready to take that step.

Do not forget to head to AdvisorWealthMaster.com for more information. You can find a helpful package of info that helps to walk you through these steps, as well as a whole lot of extra content you can use in each individual step. Just head to the website, fill out a form and you will get a big package of information that can help you further on this subject. There are a lot of free resources on the website that follow up on the topic of knowing your client and suspects vs prospects.

Remember, a suspect is someone who has not shown whether they are interested or not yet, they just fall into the category of someone who ‘should’ be a potential client. A prospect is someone who has raised their hand to indicate they are interested. Marketing should change as soon as that hand is raised.

About the Author:

Stephen Oliver attended Georgetown University, earning an honor’s degree in international economics, expecting to head on to Harvard or Wharton for an MBA on the wall to Wall Street.  He’d worked his way through college running a Martial Arts School for the most successful organization in that field in North America and training to be a professional Kick-Boxer.

Along the way, best laid plans were derailed and instead of going directly to graduate school he ended up opening 6 Martial Arts Schools in Denver, Colorado. Along the way he did complete an Executive MBA while becoming a National Event Promoter and an internationally recognized Marketing Expert in that field.  He served on the Board of Directors on a Financial company that worked in that field and for a National Sanctioning Organization.  He developed and franchise organization that opened locations throughout the United States, Canada, New Zealand, and Australia.  

He ended up helping business owners ranging from Law Firms, to international consulting organizations, martial arts schools, to Wealth Managers with grass roots marketing, sales, internet marketing and organization management systems.  He’s written 7 books on management and marketing and, co-authored a book with Marketing Guru Dan Kennedy.  As a speaker he’s shared the stage with Dan Kennedy, Brian Tracy, Jay Abraham, Lee Milteer, Tony Robbins, Chuck Norris, former NYC Police Commissioner Bernard Kerik and others ranging from business leaders to retired professional football players and actors.

-----