In Practice October 19, 2006

Time to Be Looking for Clients Who May be Looking

A study released recently by Fidelity Investments says that 69% of small businesses review their 401(k) plan at least once a year and about a quarter (26%) of small business owners will look for a new 401(k) plan provider within the year.
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A study released recently by Fidelity Investments says that 69% of small businesses review their 401(k) plan at least once a year and about a quarter (26%) of small business owners will look for a new 401(k) plan provider within the year.

“Most employers will review their plans in October, ahead of year-end deadlines,” said Edmund F. Murphy, executive vice of Fidelity Institutional Retirement Services Company, in a company statement. This marks a wonderful time for retirement plan advisers to be prospecting. So, how do you go about this prospecting?

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Most advisers keep some sort of list of prospects they do not currently do business with. Hopefully you have notes on how you have contacted the people on this list. In the best of circumstances, a direct mail campaign isn’t likely to have much impact and might not reach sponsor’s eyes in the time frame you need to make an impact. Although e-mail is more cost-effective, the volume of junk emails, coupled with increasingly sophisticated filters, means that your message may not even make it to the prospect, let alone be read.

One approach that may seem a bit counter-intuitive is to spend some time filtering your database to disqualify really awful prospects rather than always searching for a needle in a haystack. Work to create a short list of questions that can help determine whether or not you should spend more time pursuing prospective clients at this time (just because a prospect is disqualified for the moment, doesn’t necessarily mean it shouldn’t be reevaluated in the future, though).

Once you’ve pared down the list, few approaches are as effective as a personal contact – but you have to avoid the cold-call brush-off. Call with a purpose, a piece of information to share that you think may be of interest to a plan sponsor. For example, have the clients been visited by their adviser recently to prepare for the year-end and open enrollment period? Are they planning communication for the increases in contribution and deferral limits for 2007?

These news items provide you with an entrée for that prospecting call — not to mention a good way to reach out to existing clients. After all, why let your good clients be poached by an enterprising adviser?

In Practice October 19, 2006

Prospecting 101

It is almost never a good idea to waste time pursuing clients who will not be a good fit for your business, even if they do appear to represent incremental revenue. Sooner or later, they are likely to be a distraction at best from providing your best service to your key customer base.
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The old adage is true: you can’t be everything to everybody. This is important to remember when prospecting for new clients. It is almost never a good idea to waste time pursuing clients who will not be a good fit for your business, even if they do appear to represent incremental revenue. Sooner or later, they are likely to be a distraction at best from providing your best service to your key customer base. The key is developing a system that can discern your best prospects from the clutter of sales marketing databases.

First, you need to have a database to draw from. It may be something as basic as a rolodex file, maybe a list of members of the local Chamber of Commerce, or perhaps even a mass-marketing listing of prospects. There are even lists that are focused on the retirement plan industry such as Larkspur, or Judy Diamond.

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Divide and Conquer

Once you have the database in hand, divide it into two lists: those you do business with currently and those you do not. For those you are not working with, how current is the information (some of the ERISA databases are drawn from IRS filings that are as much as 3 years old)? When was the last time you checked the accuracy of the names? Are the companies still in business; do they offer or want to offer a retirement plan?

Examine how you contact the people on this list. Bear in mind that for most, a direct mail campaign isn’t likely to have an impact. Those that use those “successfully” generally push out millions of mailings for a relatively small response. Email? Well, it can certainly be more cost-effective, but the enormous volume of junk emails, coupled with increasingly sophisticated filters, means that your message may have trouble even getting to the right email address, much less being read by the recipient.

Purpose “Full”

While it can be expensive and time-consuming, few approaches are as effective as a personal contact – but you have to avoid the cold-call brush-off. Call with a purpose, a piece of information to share that you think may be of interest to a plan sponsor. For example, ask if they have they heard about the new health savings accounts? What about the new contribution/deferral limits for 2005? These news items provide you with an entrance for that prospecting call (not to mention a good way to reach out to existing clients).

Once they have made contact, encourage your sales team to be honest with the prospect and learn whether or not you and your firms can help them. Some people might not fit your target client model, and some might not want to use your services – and it’s a lot easier to figure that out in a conversation.

Another approach that seems a bit counter-intuitive is to spend some time filtering your database to disqualify really awful prospects rather than always searching for a needle in a haystack. Work with your team to create a short list of questions that can help determine whether or not your company should spend more time pursuing this prospective client at the time (just because a prospect is disqualified for the moment, doesn’t necessarily mean it shouldn’t be reevaluated in the future should things change).

By creating a process to help your prospecting go more smoothly, you can spend less time searching for clients are more time on client service.