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My wife and I were invited to dinner by a neighbor. As we were walking home, she said, “We really have to set a date to have them over for dinner at our place.” She just illustrated the power of the principle of reciprocity.
Helping someone in ways other than reaching their financial goals is a powerful, yet seldom-used way to convert prospects to clients.
ARK Invest is known for targeting high-growth technology companies, with one of its most recent additions being DraftKings. In an interview with Maverick's Lee Ainslie at the Robinhood Investors Conference this week, Cathie Wood of ARK Invest discussed the firm's process and updated its views on some positions, including Tesla. Q1 2021 hedge fund letters, Read More
The powerful principle
The principle of reciprocity was popularized by Robert Cialdini in his seminal book, Influence: The Psychology of Persuasion. The essence of this principle is the well-demonstrated need to give back something when something is received.
In his book, Cialdini set forth a study demonstrating an increase in waiters’ tips when diners were given a mint. When they were given two mints, tips increased even more – much more.
Using this principle when you have nothing to offer
It’s not always possible to use this principle in an authentic and natural way to increase AUM, but you should at least be aware when an opportunity is presented.
I received a call from a reader of my social media posts. She congratulated me on starting my new company, and quickly transitioned to a discussion of her qualifications. Her agenda was to be included on my “short list of referral candidates.” She was very well qualified and I was happy to accommodate her request.
While she may not have been in a position to refer business to our new firm, I wondered how I would have felt if she said something like this, “Tell me more about your new firm? What kind of clients are you interested in? I don’t have anyone in mind, but I’m going to be alert for opportunities to refer business to you.”
Instead, she had an agenda and a set goal. She proceeded with her efforts to achieve that goal, without giving any thought to how showing (even feigning) an interest in my new company might have helped.
Sometimes you have nothing to offer. That doesn’t mean you can’t put your agenda aside and do something positive for your prospect or client in the future.
When you have something to offer
Advisors are struggling to demonstrate value to their clients. But there’s measurable value staring you in the face, which many of you are ignoring.
Assign someone in your office to find ways to implement this recommendation. That’s how important it is.
Whenever possible, refer business to your clients. What could be more valuable than that?
Start by patronizing your client’s business. If they own a restaurant, become a regular diner. If they own a plumbing-supply business, buy your plumbing supplies from them.
Take it to the next level. Make a spreadsheet with the occupations of all your clients. Circulate it to every member of your staff. Encourage them to do business with your clients.
In your social media posts and newsletters, plug these businesses.
Once this idea is part of your routine, you’ll find many additional ways to implement it.
Read the full article here by Dan Solin