Target Marketing and Prospecting Methods - Learning Objectives

Target Marketing and Prospecting Methods - Learning Objectives free pdf ebook was written by JaneH on June 03, 2009 consist of 45 page(s). The pdf file is provided by www.theamericancollege.edu and available on pdfpedia since May 16, 2012.

1 target marketing and prospecting methods learning objectives an understanding of the material in..of a basic marketing plan. the elements and procedures for writing..answers the question, “what can my products and services do for...

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Target Marketing and Prospecting Methods - Learning Objectives pdf




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Target Marketing and Prospecting Methods - Learning Objectives - page 1
1 Target Marketing and Prospecting Methods Learning Objectives An understanding of the material in this chapter should enable you to 1-1. Define the five questions that must be answered when constructing a basic marketing plan. 1-2. Explain the eight steps of the selling/planning process and the client-focused selling philosophy. 1-3. Describe the three steps of the target marketing process. 1-4. Outline common prospecting methods for accessing prospects from the three types of prospecting sources. OVERVIEW OF THE TEXTBOOK An advisor’s primary concerns are getting in front of the right people (marketing 1 ) and knowing what to say and ask once he or she is before them (selling). This textbook, Techniques for Exploring Personal Markets, will address the first concern, building on basic prospecting and selling skills you have mastered already. The objective of this textbook is to provide information and ideas to help you create, implement, and measure the effectiveness of a basic marketing plan. The elements and procedures for writing the plan are discussed in Chapter 7, “Delivery, Service the Plan, and a Basic Marketing Plan.” The rest of the chapters provide the information you will need to answer the five questions that form the basis for constructing and evaluating a basic marketing plan: (1) (2) (3) (4) What are my objectives? What am I marketing? To whom am I marketing? How will I market to them? 1.1
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Target Marketing and Prospecting Methods - Learning Objectives - page 2
1.2 Techniques for Exploring Personal Markets (5) How effective am I? What Are My Objectives? You sell products to earn income. Thus a marketing plan must begin by identifying objectives for income and the activities to attain your income objectives. (We will circle back to this question later when we discuss how to construct a basic marketing plan.) What Am I Marketing? A marketing plan answers the question, “What can my products and services do for people?” The key is to view your products and services as tools that enable people to achieve and/or protect their dreams. For example, a couple may dream of traveling during retirement. Retirement planning and mutual funds (to fund an IRA) are tools that can make that future possible. Likewise, young parents want their children to succeed in life. But if one or both of them die, the success of their children will be impeded by worries about basic necessities and funding for higher education. Life insurance proceeds can fund both of these needs. Unlike a shiny, new sports car, financial products are intangible. To market them successfully you must connect the results that financial products can produce to the people, plans, and purposes that prospects care about. In the above examples, the advisor could position mutual funds as “a retirement travel fund” and life insurance as “a plan to give your children the opportunity to succeed even if you aren’t there.” Take the time to truly understand what your products and services can do for people. In other words, understand what you are marketing. To Whom Am I Marketing? qualified prospects target market Ideally, you will only set appointments with qualified prospects: people who need and want your products and services, can afford them, can qualify for them, and can be approached on a favorable basis. Imagine the increased efficiency and effectiveness of your marketing efforts if you could market to a large group of prospects that share common characteristics and needs, and have a communication (networking) system. Such a group of people is known as a target market. Not surprisingly, successful advisors typically focus on one or a few target markets. Identifying and selecting target markets are critical aspects of creating a basic marketing plan. For the purposes of this text, we will focus our marketing efforts on personal markets, meeting the financial needs of individuals and families. Personal markets are in contrast to business markets, which address the financial needs of business owners that result from their owning a business.
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Chapter 1 Target Marketing and Prospecting Methods 1.3 How Will I Market to Them? Of course, not every member of a target market will be a qualified prospect. It follows that for each target market selected you must choose and apply prospecting methods to access qualified prospects. These prospecting methods should reflect the prospecting source, the most probable financial needs and goals, and the target market’s preferences. In addition, you must identify and implement appropriate ways to position your personal brand and products and create awareness of them. Finally you should find effective methods for approaching prospects and setting appointments. One marketing paradigm, life-cycle marketing, is an effective way for identifying probable needs. It will be one of the core topics discussed in this textbook. How Effective Am I? A basic marketing plan identifies ways to measure and evaluate marketing effectiveness. The most common measures are effectiveness ratios. Analysis of these ratios enables the advisor to identify areas of improvement and make changes to increase productivity. Effectiveness ratios are also the basis for planning in subsequent planning periods (typically annual). THE SELLING/PLANNING PROCESS AND PHILOSOPHY Before delving into matters related to marketing, it is important to understand how marketing integrates with the overall selling/planning process and client-focused selling philosophy. Introduction to the Selling/Planning Process You may be familiar with the 6-step financial planning process advanced by the Certified Financial Planning (CFP ® ) designation (see Table 1-1). Although most financial services professionals are not financial planners, they still use the financial planning process when working with clients. However, the financial planning process does not reflect the crucial steps of identifying prospects and obtaining an appointment with them. Nor does it reflect the reality that advisors often have to motivate clients to obtain products that will meet their needs. These realities are reflected in the following selling/planning process and in its underlying selling/planning philosophy.
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1.4 Techniques for Exploring Personal Markets TABLE 1-1 The CFP ® Model of Financial Planning 2 (1) Establishing and defining the client-planner relationship. (2) Gathering client data, including goals. (3) Analyzing and evaluating the client’s financial status. (4) Developing and presenting financial planning recommendations and/or alternatives. (5) Implementing the financial planning recommendations. (6) Monitoring the financial planning recommendations. The Eight-step Selling/Planning Process selling/planning process You will notice right away that the selling/planning process is simply the six-step financial planning process with two additional steps: identify the prospect and approach the prospect (see Figure 1-1.) These are the steps that will be the predominant focus of this textbook. Let’s review briefly all eight steps. FIGURE 1-1 The Selling/Planning Process
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Chapter 1 Target Marketing and Prospecting Methods 1.5 1. Identify the Prospect. Effective selling begins with getting in front of qualified prospects: people who need and want your products, can afford them, can qualify for them, and can be approached on a favorable basis. If possible, you should work with qualified prospects who will value an advisor’s guidance and consequently become a source for repeat business and referrals. Identifying prospects involves target marketing, which operates on the premise that people tend to congregate with people of like values and characteristics. By definition, a target market has a networking system. Thus if you behave professionally and provide valuable products and services, referrals are very likely. 2. Approach the Prospect. In this step, you contact individual prospects with one objective in mind: to set an appointment. The approach is made either on the telephone or face to face. You should base the request for an appointment on a relevant, potential need the prospect may have. This approach will yield more appointments with fewer calls. value proposition 3. Meet with the Prospect. In the initial meeting with a prospect, your objectives are to establish rapport, describe your services and the process involved, ask some thought-provoking questions, and listen attentively. Based on the prospect’s responses, you then establish a mutually beneficial reason to do business and describe it in the form of a value proposition, which is a clear and compelling reason to conduct business with the advisor. You then see if the prospect wants to proceed to the next step. 4. Gather Information and Establish Goals. Using a company-approved fact finder, ask a lot of questions to gather personal information and qualitative data about the prospect’s needs, goals, priorities, and attitudes. You will also collect quantitative data about the prospect’s financial situation, often using such documents as a cash-flow statement, personal balance sheet, annual Social Security statement, and so on. You may also gather product design information, especially for insurance plans, to customize the product within a dollar commitment to which the prospect agrees. 5. Analyze the Information. In this step, you analyze the information gathered by creating and/or examining appropriate financial statements; identifying obstacles to desired goals; looking at the prospect’s current insurance coverages, savings and investments; analyzing possible alternatives; and so on.
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1.6 Techniques for Exploring Personal Markets 6. Develop and Present the Plan. After analyzing the information, you develop recommendations in the form of a plan. In addition to summarizing the client’s situation and the findings of your analysis, the plan should include recommended actions. If alternate solutions are provided, a synopsis of their relevant advantages and disadvantages, and a projection of anticipated costs and outcomes should also be included. During the presentation you will do the following: Confirm the prospect’s needs and desires. Identify and explain solutions and alternatives that will address the prospect’s needs and desires. Present recommendations. 7. Implement the Plan. If recommendations are based on the information gathered using a properly completed fact finder, implementing the plan should simply be the logical next step in working together. That does not mean the prospect will not have some concerns or objections. You should be prepared to address them as well as to motivate prospects to take action. Once the prospect has agreed to the recommendations, help him or her acquire the necessary products and services. For those who sell financial products, implementation includes completing all of the required forms and applications and, in some instances, delivering an insurance policy. 8. Service the Plan. This is the step in which you turn customers into lifetime clients. Service cements the relationship with a customer, giving you the opportunity to make additional sales and obtain referrals. Some service is reactive—the customer initiates it by requesting a needed change, such as an increase in coverage. In these situations, the customer should expect to receive excellent service. What can differentiate one advisor from another, however, is the proactive element of his or her service strategy. Many people buy a product and never hear from the advisor again. Proactive servicing strategies, such as monitoring the plan through periodic financial reviews and relationship- building activities, enable an advisor to stay in touch with customers. It is this high-contact service that builds clientele. You need to communicate what reactive and proactive services you will provide and then make them happen! Client-Focused Selling/Planning Philosophy Selling involves communicating, motivating, and persuading. Selling skills are inherently neutral. You can use them to help people implement a plan to achieve their dreams or to manipulate people to buy a product that is
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Chapter 1 Target Marketing and Prospecting Methods 1.7 client unsuitable for them. For this reason, the philosophy underlying the selling/planning process is critical. The selling/planning process described in this textbook is based on a client-focused approach to selling and planning. The objective is to cultivate a mutually beneficial, long-term relationship with a client, someone who follows your advice consistently, buys from you again, and refers you to others. (For our purposes, a person who pays an annual retainer, asset management fee, and so on is a repeat buyer.) In other words, the end result is an ongoing relationship that benefits both parties. The initial sale is an intermediate, rather than final, step. Manipulative, high-pressure strategies are incompatible with the client- focused philosophy, which utilizes consultative and financial planning strate- gies. Creating solutions that reflect overall client goals, values, and needs requires a careful gathering and analysis of very personal information and feelings. As a result, good communication skills such as asking probing open-ended questions, listening carefully, and confirming your understanding are invaluable. Moreover, motivation and persuasion are employed with the prospect’s best interests in mind—not to generate commissions or fees. With the client-focused philosophy everyone benefits. Clients buy valuable products that meet their needs, and advisors receive repeat business and referrals. Consequently the reputation of financial advisors is enhanced in general. The client-focused philosophy should pervade the entire process, beginning with identifying and approaching prospects. TARGET MARKETING The first two steps of the selling/planning process, identifying prospects and approaching prospects, can be completed in different ways. Over the years, the most successful approach has been target marketing. Target marketing is a process in which the advisor aims products and services at a target market. A target market is a group of prospects that meets the following criteria: The group is large enough to provide a continual flow of prospects. Members of the group have common characteristics that distinguish them from nonmembers. At least one common characteristic provides a basis for customized marketing messages and approaches. Members of the group have a common need or needs, usually attributed to a common characteristic. The group shares information through a formal or informal communication or networking system. This makes it more likely for an advisor to be referred and for the advisor’s reputation to precede target marketing
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1.8 Techniques for Exploring Personal Markets him or her. A communication system is the most important criterion in defining a target market. The reasons for target marketing’s popularity are many. Here are a few worthy of mentioning: Successful target marketing will result in enhanced referability due to the communication network. Concentrating on a few target markets enables the advisor to tailor postsale service strategies to facilitate deeper relationships, which generally translate into increased loyalty. Gaining a reputation within a target market for being the expert will discourage other advisors from trying to penetrate the market. Target marketing results in higher profits through lower acquisition costs. Working with people with whom the advisor has a lot in common will increase the advisor’s job satisfaction. Target marketing can be divided into three major steps: (1) segmenting your market (2) targeting a market (3) positioning your personal brand and products Segmenting Your Market market segments natural markets The first step of the target marketing process is to segment your market into groups of people with common characteristics and common needs, or market segments. While market segmentation can be performed on any large group of prospective buyers, such as your general market, the most logical approach is to identify the market segments that comprise your natural markets, which are those groups of people with whom you have a natural affinity or access due to similar values, lifestyles, experiences, attitudes, and so on. All things being equal, natural affinity and/or access translates into a higher likelihood of being able to approach prospects on a favorable basis, which is arguably the most difficult part of meeting a qualified prospect. A very basic and effective approach to segmenting your natural markets is to analyze your personal background and history. Brainstorm to identify the types of people with whom you would like to work (see Figure 1-2). In some cases, you will readily identify groups (markets), while in other cases you will identify personality types for which you will then need to identify where you might find such people. For example, if you are deeply analytical and enjoy working with people who like spreadsheets, you might consider
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Chapter 1 Target Marketing and Prospecting Methods 1.9 targeting engineers. This analysis will identify initial target markets for you to perform Step 2 and Step 3 of the target marketing process. A second approach is based on the process used by marketers in other industries. Although it is applied here toward past personal production, it can easily be applied to segment a newly appointed agent’s friends, family, and acquaintances list. Furthermore, one could apply it to the undifferentiated, or general, market. This approach involves completing the following: Identify your top 20 clients. Select relevant segmentation variables. Apply the segmentation variables. Identify market segments and create profiles. FIGURE 1-2 Natural Markets Checklist Your personal background and history have a lot to do with defining your natural markets. Take a few minutes to make a list of the following: occupations you have worked well with in the past social organizations/associations in which you have been successful types of people whose company you enjoy and with whom you enjoy working businesses you know fairly well organizations, businesses, and associations where you are recognized by most people Identify Your Top 20 Clients Print or review a list of your current clients and identify the 20 clients with whom you enjoy working the most (out of a suggested minimum of 100 total clients). By enjoyment, we are not talking necessarily about those who generate the highest amount in commissions or fees, but those clients with whom you have the greatest rapport. Select Relevant Market Segmentation Variables Next, you will select relevant market segmentation variables, which you will use to divide your natural markets into market segments. A market segment is a potential target market. Segmentation Variables. There are generally four types of segmentation variables that marketing experts use to divide a market: geographic,
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1.10 Techniques for Exploring Personal Markets demographic, psychographic, and behavioristic. 3 The segmentation process utilizes a number of variables from one or more of these four categories. geographic variables Geographic Variables. Geographic variables segment a market by using political divisions such as states, counties, cities, boroughs, and so on, or by territories delineated by neighborhoods, regions, miles, and so on. For most advisors, geography is used to define their territory, mainly because of licensing requirements (advisors must be licensed in each state in which they practice). However, with technological advances, especially cell phones and broadband Internet, more and more advisors are setting up virtual practices that market to a very small high net worth niche market (such as dentists, doctors, or professional athletes) located in several states or even the entire country. Example: Rachel lives in Burlington County, New Jersey. One of the characteristics of her target market is that many individuals in that market are preretirees. Rachel knows that there are several over-age-55 communities in the county. Geography is a meaningful segmen- tation variable for her. demographic variables Demographic Variables. Partially because they are easier to measure (through census information or marketing data companies), demographic variables are the most commonly used segmentation variable. The differences in prospects’ needs and wants are often linked to these variables. 4 For example, interest in Medicare supplement insurance occurs primarily around age 65 because that is when such insurance is an issue for people. Along with age, demographic segmentation includes variables such as gender, education, ethnicity, occupation, income, size of family, marital status, religion, generational cohort (Silent Generation, Baby Boom, Generation X, and so on), and family situation (single, married with kids and a single income, married with no kids and two incomes, single parent, empty nester, divorced, and so on). Psychographic Variables. Advisors use psychographic variables to divide a market by lifestyle and attitudes. These variables include leisure activities, values, personality, interests, and hobbies. For example, you may have a few clients who are running enthusiasts, play in a softball league, participate in a bowling league, and so on. Behavioristic Variables. Behavioristic variables group people by their buying and usage behaviors. This type of segmentation categorizes people according to when they buy (birth of a child, marriage, divorce), type of user psychographic variables behavioristic variables
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