Prospecting. New business development. Finding more customers. Whatever you call the process, an organization must expand its client base to survive and grow. Despite having years of practice in the necessary skills, most people are oblivious as to how to go about it.
This was highlighted to me when a friend brought to my attention the large number of people who show up only once at the meetings of an organization to which we belong. My response to him became the headline for this post.
Throughout my real estate career, I realized that the cost to acquire and maintain a new client was high. Because of the low margins in the property management and appraisal businesses, generally, it took six months to a year before a relationship became profitable. As such, I quickly learned:
Aside from their insistence that they squeeze ever last penny out of a situation, repeat business from them was rare. My having learned all of their negotiating tricks the first time we did business meant they had to find someone new to squeeze. Rarely did I get referrals from them since by the time the matter was completed they had already moved on to someone new.
Most of us carefully choose the people and organizations with whom we do business, especially in the areas of professional services. Think about how you chose your doctor, lawyer, real estate broker, or pastor. You probably knew the person well or were referred by someone who previously used his services.
Why as someone with something to sell would you expect people to suddenly decide the first time they meet you to give you their business? This is why networking seems so fruitless. Most people have the unrealistic expectation that one meeting is sufficient to establish them in people’s minds as legitimate for giving referrals.
The difference is that often friendships develop organically as you go through day-to-day life. But if you examine your friends undoubtedly you note commonalities on which your relationships are built. Finding new clients is a more intentional process but the end result is the same: Enough interaction has taken place for prospects to be comfortable with your handling their business.
With respect to networking, you should have two goals:
- Establish rapport with a prospect. Be interested in the person. The more talking he does the better off you are. There will be plenty of time later for you to make a presentation, if necessary. At this stage there is only one question to answer – is this person a viable prospect?
- Get contact information. The point of networking is to get people’s cards, not give yours out. How will you follow up without a name, email address, and telephone number?
The process is no different being involved in a networking group or professional organization. Your task is to identify the people who will be the best referral sources rather than clients.
Once you have chosen your prospects, continue the process of getting to know them and their situations while they get to know you. It is probably not going to happen as quickly as you think. But the business you do build will be more enduring.
When did restraint improve a situation? When did it worsen one?
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