Why do sales managers and so many sales trainers devote so much time and effort to teaching mortgage professionals cold calling skills?
Sure, there are those "old school" individuals who believe all newbies have to "learn the ropes" and "pay their dues" by demonstrating their toughness and wherewithal by "beating the streets" and proving their mettle by cold-calling. However, in my opinion, cold-calling is plain stupid!
Why cold calling is stupid
Smart business is about efficiently utilizing the limited resources available to an individual or entity at any given moment in time. Since time is our most precious resource, doesn't it make sense we avoid practices that don't make efficient use of our time. Simply stated, if we utilize our most precious resource of time in an effort to meet people for the first time over and over again, we will be running on a treadmill for the rest of our professional sales career. Incidentally, it is my sincere belief, the practice of cold calling may be the major underlying factor driving the high rate of failure and turnover in the mortgage and real estate industry.
Yet, why is cold calling dumb? Here are a few of my observations:
- It annoys people/prospects (think about it)
- Cold calling destroys your status as a professional, expert and trusted business adviser
You don't look successful and appear to have nothing else better to do
When cold calling, you don't bring a perceived value to the prospect - you are telling a prospect you need a sale
It's inefficient and wastes time
While it's easy to say cold calling doesn't work, what's the alternative?
Leverage Your Sphere of Influence
Contact the people you know!
Before you are tempted to make a cold call, ask yourself;
- Have you contacted every one in your sphere of influence
- Informed them you are in the mortgage or real estate business
- Provided them with your contact, website and blog information
- Would like the opportunity to earn their business and referrals.
If you are new to sales or have never targeted your sphere of influence, this group will most likely be the source that will provide you the greatest Return-On-Investment (ROI). That's why it's so important you size your sphere.
Family and friends are commonly the first individuals that come to mind. Yet, most spheres are typically much larger and include everyone whose lives you have touched in the most major or minor ways. In fact, industry studies estimate most people have at least 300 personal contacts within their sphere within following groups:
- Personal-friends, relatives, neighbors
- Associations-religious organizations, civic associations, the PTA
- Previous customers-from this job or a previous place of employment
- Previous prospects-contacts you were not able to sell in the past
- Coworkers-from this job or a previous place of employment
- Professionals-doctors, CPA's, attorneys
- Vendors-those who call on your industry and/or your targets
You need to gather these names to prospect for business, because you won't get any loan applications if no one knows you are in the mortgage or real estate business. You have to:
- Pick up the phone
- Compose e-mails or
- Fill out postcards
And let people know what you do for a living, how they can reach you or find your blog/website.
Then, you have to remind everyone in your sphere month after month that you are available and eager to do business.
Now, let's step back and work out the mechanics.
At this point, you need to sit down with a pad of paper or at your computer and compile a personal contact list of everyone in your sphere.
Everyone? Yes, I mean everyone.
While it can be overwhelming, it's mission critical you organize your sphere into manageable lists with the appropriate names, contact information, and personal data. Every contact should have a full name, address, day and evening phone, cell phone (if available), work address, business and personal e-mail addresses (marked with which is preferred), immediate family member names, birthdays, and personal facts. You should have a record of dates on which you contact these people. If you have a contact management program for your computer, you should input this information as soon as possible, so you can start sending e-mail listing alerts, newsletters, market conditions reports, e-cards or whatever follow-up tools you have chosen to stay in front of your contacts.
Upon completing this exercise, most people will have well in excess of the 300 contacts noted above. If you do not already have a working database, you will now have one started . If you do, your database will now be much stronger.
The question remains: if you have 300 to 600 personal contacts, why in God's green earth would you call someone you do not know in order to sell? One common response to this question is that you do not want to sell to those you know. This response represents a type of call reluctance and needs to be dealt with at a different time.
Many assume their personal contacts will automatically refer them business when it is available. This is a very false assumption. Your contacts do not sit around and think about who does what and act accordingly. They usually act under the "path of least resistance theory." This means that the person who contacted them professionally and most recently from the time a need occurred is most likely to be the conduit for new business. The way to interfere with this process is to develop really close relationships. Yes, the world of sales really is about relationships!
Top producers in every field of sales obtain the majority of their business from referrals. Their greatest source of referrals are those in which they have developed a close relationship, especially previous customers. If you have not kept in touch with those you have served in the past, you are likely to have to start the sales process from scratch every time you have to make another sale. Talk about a treadmill!
Let's start the process by analyzing these categories one-by-one.
Personal Contacts
Everyone has relatives, friends and neighbors within their sphere of influence. Yet, many times individual sales people are apprehensive about contacting those they are closest with. Perhaps they feel they will appear not to be "doing well" in front of those who care about them the most. This phenomenon represents a common form of call reluctance. It should be noted that those who are doing "the best" are most likely to call upon their personal network as an important portion of their source of referrals.
Most successful originators believe personal contacts should be a major part of their marketing plan. For example, those who are interested in advertising for refinances or home equity loans may target their neighborhood with flyer's. Why direct mail into "cold call" areas when your name recognition will be highest closest to home?
Now, suppose you are invited to dinner at a neighbor's house. When you arrive, there is a new for sale sign and they have already been pre-approved for their new loan. And they did not apply with you. As a matter of fact, it is a perfect stranger who does not live in the neighborhood and works for your competition. How do you feel? Did you expect your neighbor to think of you when you did not spend any time asking them for their business or referrals? Never assume they will think of you on their own.
Associations
This category covers a wide range of organized groups-personal, religious, civic and business. Today, it is not unusual for someone to be involved in their church or temple, a professional association and their children's PTA or school sports.
Every member of these associations represents a possible marketing target or referral source. Your actions could include simply blogging, advertising in the association newsletter or e-mailing to close members. Perhaps you might take a leadership role in the association that would enable you to become known by more members. Certainly networking at association events is an opportunity where each member can avail themselves.
Of course, this means that you must become active by attending these meetings and actually networking (bring your business cards). Networking does not mean walking around and asking for the business. It does mean asking others what they do for a living so that they will be obligated to ask you the same question. Always ask for their business card so they will do the same for you. Good sales people ask questions and listen.
Previous Customers
This must be a very significant part of any marketing plan. The definition of previous customers must include those from your present position and those you have served previously-even within other industries. In other words, do not assume that selling mortgages will not be relevant to your previous customers in the auto business.
Every industry experiences different buying cycles. One may purchase real estate every seven years and stocks every few months. These buying cycles will determine how often you market and how you market to your customer base. Remember that you are not marketing just for their business but also for referrals. This is why your blog and newsletter should always contain pieces appropriate for previous customers.
There is no category that illustrates our adversity for cold calling more than the previous customers category. Why cold call when you have not effectively marketed those you have served? You have utilized your most precious resource, time, delivering top-notch customer service. Why go out and spend more time and money generating new relationships if you have not fully explored the relationships already at your fingertips? This is especially true of those selling sub-prime mortgages that can be refinanced after six or twelve months of good payments. Most of the industry ignores previous customers while we spend our resources cold calling. Go figure!
Previous Prospects
Just as you have devoted time and money cultivating relationships with previous customers, those who you DID NOT sell last time around represent a significant investment of your precious resources. Time and money were expended making the phone ring. Knowledge was imparted and some level of service delivered. There may even be a measure of guilt because they used your resources and either did not purchase or purchased from someone else. Stephen Covey would say that you have built-up an emotional bank account.
Most sales people ignore previous contacts, perhaps because they have expended resources and have failed to make a sale. This is a huge mistake in strategy-
Because you have built-up a rapport, previous prospects are fertile ground for referrals. What better time to invoke the law of reciprocity, right after they have used your services but you have received no value in return.
Times change and so do situations. If previous prospects could not purchase because they were not "qualified," this does not mean that they will not be qualified for the rest of their life. They have expressed an interest and desire which is the most important element. Have you put them in a position where they will be in a better position to qualify some time in the future? If you have, then you are continuing to impart value to your prospects.
This is especially true with regard to non-conforming prospects. Have you referred those who do not qualify to credit counseling services? This move imparts value to the prospect, makes it more likely they will qualify in the future and gives you an additional referral source. Don't throw away gold!
The formula for previous prospects is not much different than for previous customers. Continue to deliver value and this will give you the right to continue to ask for referrals and put you in a position to succeed if and when they are ready to purchase. The time you spend cold calling prevents you from fostering these long-term relationships.
Co-workers
It may seem that the co-worker category will not be helpful to you in prospecting if you are working with other sales people. After all, wouldn't they be taking advantage of all the prospects themselves? Possibly, but there are a few important points to bear in mind-
Not all sales people can handle all situations. If you have a particular area of expertise, you may receive referrals from those who do not service this niche, if you prospect within the organization. If your sales organization has offices in other locations, fostering long-distance relationships can be beneficial especially with regard to relocations and long-distance purchases.
Second, every organization has operational components. Get to know those who make up operations. Take them out to lunch and ask for referrals. The company may pay them for bringing in leads, but it does not mean that you cannot be the recipient of this value.
Your Past Contacts - Those who worked with you in previous jobs also represent a major source of referrals. If your previous job was in the mortgage industry, there are most likely those who have left the business (also true for your present office) and have previous customers they refer. If your previous job was in another field these relationships are still more fertile than a cold-call. Why not call someone you worked with for five years rather than someone you have never met? Do not worry about not having kept the relationship going. Do not let call reluctance keep you from mining gold!
Business Professionals
This category can be a bit broad and is generally comprised of the professionals within your life - doctors, lawyers, CPA's, financial planners, etc. There are several reasons why professionals can represent a very lucrative aspect of our marketing plan:
- Professionals themselves can represent an important target for many within sales. They earn more money than most any other target group. If one would like to earn more, then sell to those who are in the higher income brackets.
- Professionals (unless they work for corporations or the government) serve the public. Therefore, they have great access to potential customers and if you have the ability to grant them access to your customer base, then a reciprocal relationship can be very beneficial. Imagine a joint mailing from a CPA and a real estate professional or mortgage broker to their respective customer lists. The real estate list would be fertile ground before tax season or after the purchase of their first home. The accountant's list would be fertile ground after the checks to the IRS have just been mailed.
- Professionals know other professionals. Obviously, if you are an accountant, you will know many other accountants. Your close relationship with a particular professional can lead to relationships with many more.
- It is important to note that many segments of your sphere of influence will be related to others. Just as your customer list may be of interest to a professional, your previous customers can also lead you to professionals. If you are helping someone purchase a home, why not ask the advice of their financial planner and get them involved?
Vendors
Those pesky sales people you have been avoiding may be one of your best sources of gold.
Vendors can be divided into two basic categories:
- Those who call upon you - Instead of brushing off sales people, use the fact they can be especially willing to please you in any way they can (within reason of course). Especially those from whom you regularly make purchases. Remember each of these vendors are in the business of knowing many business people and networking is a vital part of their job. Hmm...people who want to please you and have many contacts.....
- Vendors who call upon your targets - I'm not talking about competitors. These are the vendors calling on your targets and selling a non-competing product. One day you call upon your target and the next day they call upon your target. Setting up synergy partnerships with these people can be very lucrative because you can double your reach without devoting twice as much time and money. Which is more efficient, a cold call to a prospective target, or a call to someone who could help you reach one hundred prospects (prospects with whom they already have a relationship)?
Remember, daily contacts are a must to build your business. Getting into the habit of making those daily calls will help you become a true professional faster. Prospecting is a numbers game, sooner or later, you will hit upon someone who needs your services, and the more that need you, the more referrals you have. That's how a real estate business is built from the ground up.
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