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Getting a prospect to agree to a meeting takes an enormous amount of time, effort and money. I estimate that at least half of those efforts fail. Research shows that a small change to the way you handle prospect and client meetings could greatly improve those results.
Under the best circumstances, winning new business is difficult. It’s an important decision for an investor and fraught with uncertainty. You are asking someone, who most likely does not know you well, to trust you with their life savings. It is a big leap of faith.
Even a small increase in your conversion rate can dramatically increase your AUM, which in turn will generate higher revenue and profit. Yet I have never met an advisor who keeps track of conversion rates, much less attempts to do anything about improving them.
This means there are no reliable statistics on conversion rates. However, there’s a lot of data on the science of persuasion. Psychologists have studied it extensively, and their findings are published in peer-reviewed journals. There’s one thing we do know for certain: We are programmed to react in fairly predictable ways to certain stimuli.
Here’s an obvious example. You are in your conference room, engrossed in an important meeting with a prospect. In the distance, you hear the sound of a fire truck. The sound gets progressively louder. Your brain will immediately prioritize the sound of the alarm until it is convinced that you are not in danger. You don’t have to do anything in order for this to happen. It’s automatic.
Based on psychological research on stimuli, here is a simple change you can make in your firm that could increase your conversion rate.
The small change that will make a difference in meetings
There are many well-supported studies demonstrating the automatic, reflexive reactions we have to certain stimuli. One of my favorites involves the effects of coffee.
The study found compelling evidence that in a setting with low distraction, such as in the typical meeting between a prospect and an advisor, consumption of caffeine made it easier to persuade participants to adopt a view different from one they previously held. The caffeinated participants were also able to recall more of the arguments made in favor of the new position than those who had consumed a placebo. Researchers considered the change exhibited by those who consumed caffeine to be deeper and enduring.
The study concluded that the consumption of moderate amounts of caffeine improves attention, reasoning and memory recall.
The reason for the positive relationship between caffeine and the ability to persuade is not entirely clear. The authors of the study hypothesized that it could be because consumption of caffeine aids in logical and analytical processing of a message. It could also be because, as the authors of another study discovered, caffeine increases “emotional arousal” and can improve mood. Those in a positive mood are more likely to be persuaded by a high-quality argument than those in a negative mood.
What are the ramifications of these studies for advisors?
You should be aware of the positive effects of coffee on persuasion. Instead of making the standard offer – “Do you want some coffee?” – consider changing your process.
First, you should be the one making the offer — not an assistant or receptionist. Ideally, invest in a more sophisticated coffee machine that can produce various kinds of coffee drinks, like lattes, cappuccinos and espressos. Stock your refrigerator with a variety of options, like skim milk, regular milk, soy milk and almond milk. Never serve coffee in a foam or paper cup. Instead, serve it in fine china or in a high-quality cup branded with the name of your firm. The coffee itself should be exceptional.
This attention to detail conveys a number of positive images. When presented correctly, excellent coffee and coffee service tells your prospect that you pay attention to detail and take pride in everything you do. Isn’t that the message you want to impart?
By offering coffee in this manner, you may trigger another subconscious reaction. We tend to want to repay someone, or at least look more kindly on them, when they have done an unsolicited favor for us. Psychologists call this the “principle of reciprocity” and it can be very powerful.
The simple act of taking the time and effort to offer someone a “special” cup of coffee can make them more amenable to viewing your presentation in a favorable light.
Dan Solin is the director of investor advocacy for the BAM Alliance and a wealth advisor with Buckingham. He is a New York Times best-selling author of the Smartest series of books. His latest book is The Smartest Sales Book You'll Ever Read. He consults with corporations and advisory firms on ways to improve their sales.
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