The Trouble With Cold-Calling
Issue #2277
- WEALTHY: To make your business work, concentrate on its primary purpose (Michael Masterson)
- HEALTHY: The most important part of your fat-loss program? (Craig Ballantyne)
- WISE: Brian DiMartino on making sales
ALSO IN THIS ISSUE:
- A common tactic that violates the Silver Rule of Marketing (Bob Bly)
- Seth Godin tackles the "trust" question
- It’s Good to Know… about erasable tattoos
- Add "canorous" to your vocabulary
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Bartender Goes Into Money-Lending Business
JL, a bartender in Baltimore, writes to ask about a business problem she and her husband have. Last year, they took some training and opened a business loan brokerage business that offers all sorts of loans - commercial, real estate, acquisition, equipment leasing, etc. - to businesspeople all over the world.
The problem, she says, is that their product base is too wide. "We are not specific enough," she says. "We are a Jack of all trades, but a master of none."
She is thinking that a good specialty would be residential real estate. She believes she and her husband can offer investors residential investment loans, rehab loans, and commercial no-doc or full-doc loans. She says there are six investor groups in the Baltimore area, so she feels confident about the "networking" possibilities.
Things started slowly for JL and her husband, because their time was taken up with all sorts of distractions (such as getting licenses and registrations and printing up product brochures). "We just read Chapter Four of Ready, Fire, Aim," she says, "and realized that we have not spent enough time on sales. That will be our focus beginning this week."
She is planning to set up various websites to "complement" her business that would offer podcasts, teleseminars, book reviews, a forum, and a weekly newsletter. Her idea is to "structure the site similar to ETR with many joint ventures." The JVs would be interviewed on the teleseminars and contribute to the newsletter.
"Money will be made in many ways," she says, including "memberships, teleseminars, affiliate programs, e-books, and, of course, back-end products."
JL has copywriters and artists willing to help her out. She is all set to go, but she isn’t sure in which direction that should be. "I am willing to do whatever you advise to become successful," she says.
Let’s start with that last thought. She is willing to do what I advise her to do. As in, she is willing to allow me to make her business successful.
Hold on there, JL. Let me throw some cliches at you:
- First, you get what you pay for. If you are asking for free advice, you are going to get advice that is worth nothing. Why? Precisely because you aren’t paying for it. Success comes from investing your time, care, and money. Unless you have everything on the table, you won’t walk away with anything.
- Also - the devil is in the details. The advice I’m going to give you will be good. But it will be general advice. I can’t give you the details, here, that are so important to executing a specific business plan.
That said, let’s get to the general advice.
You say you want to be a loan broker. A loan broker makes money by doing one thing: selling loans. To sell loans, you need a source of money and clients. Do you have the money? What about the clients?
Forget about becoming another ETR. Forget about all those secondary sources of income. To make your business work, you must concentrate on its primary purpose: selling loans. So I ask you again: What are you doing about getting the money and the clients? First, find the clients. Then find the money. (There is always money to be found if you have clients who are willing and able to pay the interest rates.)
As far as residential real estate goes, I don’t know. Things are bad now and are likely to get worse for a while. On the other side, since banks are tighter now it means that there will be a growing demand for private loans.
When I asked real-estate expert Justin Ford what he thought about your idea, here’s what he said:
"If you’re going to be in the mortgage business, it seems to me you need to become adept at evaluating property values. Use appraisers, but know how to verify their assessments. Many appraisers made giddy appraisals during the boom… and everyone was happy about it as long as there were people to buy the loans before they busted. When things go bad on a loan, the loan is only as good as the collateral, minus the time and costs of seizing and liquidating the collateral.
"But here’s an idea. Why not focus on conservative LTV (loan-to-value) loans on income-producing properties? Then, set up contingent relationships with a few good property management companies in the area(s) where you intend to lend. Then, if you’re forced to take a property back, you may not end up being forced to sell it at a loss. Instead, you may be able to have the property management company run it for you and use the net rental income to continue to pay the loan. This way, you sell the building when the time is right… not in a rush. And you may be able to recover not only your entire loan, but then some.
"The reason most lenders don’t do this is often because they want to be in the lending business and not the property business. And they want to focus on growing their core business… making loans. That’s understandable. But if you’re just starting out, you want to take this extra-cautious approach, especially in the current environment where values are falling in many markets. Make sure you know how to assess values yourself. (It’s not too difficult, even from afar, using tax records and common benchmarks like cap rate and dollar-per-square-foot). Then have a plan for turning non-performing loans into performing properties that you own so that you can sell the collateral when it most benefits you and not in fire-sale mode."
That’s good advice, JL. If you take it, let us know how it works out for you.
[Ed. Note: Get Michael Masterson’s insights into becoming successful in your business and personal life, achieving financial independence, and accomplishing all your goals on his new website. You’ll find updates on Michael’s books, news on upcoming ETR events, Michael’s blog, and room to send in your comments and questions. Check it out today.]
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"Any time that you’re making cold calls…, you’re going to call 100 people, and if you get one good result you’re happy. It’s a numbers thing."
Brian DiMartino
The Trouble With Cold-Calling
By Bob Bly
I won’t deny that cold-calling can work. Yet in 99 out of 100 cases, my advice is never to do it. The reason is that, even if the prospect on the other end of the phone expresses interest in your services, the very fact that you cold-called him puts you in a weak position - for three reasons.
First, people want to deal with vendors who are successful, not those who are desperate and need the work, right? Well, when you cold-call, your prospects assume that you are not busy. After all, if you were, you would not have time to sit there calling strangers and asking them for their business.
Second, cold-calling puts you at a disadvantage when estimating prices and quoting fees.
A large part of what determines how much you can charge is the law of supply and demand. When the demand for what you sell outweighs your supply, it’s a seller’s market and you can name your own price. By cold-calling, you are signaling to the prospect that the demand for your services is less than the amount of time you have available. Therefore, prospects generated by cold-calling are more price-resistant - and more likely to haggle.
Third, cold-calling puts you in a weak position when negotiating terms.
Again, cold-called prospects know that you want and need their business. You are perceived as being easy to hire, and, therefore, they feel they can dictate things like deadlines, payment schedules, and work arrangements.
Why is cold-calling so ineffective? Because it violates the "Silver Rule of Marketing."
The Silver Rule is a universal principle, first stated to me many years ago by my friend, marketing consultant Pete Silver. The Silver Rule of Marketing states: "It is better for them to come to you, rather than for you to go to them" (with "them" being your potential clients).
You can see why the Silver Rule makes sense.
If you go to a potential client, seek them out, ask for an audience, and plead with them to use your services, you are seen as needy and desperate. Your prospects think you can’t be any good at what you do. After all, if you were good, your schedule would be filled to overflowing - and you wouldn’t be spending your valuable time on the phone, dialing for dollars.
The only prospects who buy from needy and desperate vendors are those looking for the cheapest bid. So cold-calling risks dooming you to being the low-priced provider.
When they call you, the dynamic reverses. They call because they have a need or a problem… and they are hoping you can help them.
But how do you get prospects to call you? There are two methods. The first is good, and the second is better.
The first method is to generate inquiries through traditional marketing. This includes Yellow Pages advertising… magazine ads… TV commercials… direct mail… radio spots… billboards.
When someone calls in response to your ad in their industry trade magazine, you know they have either an immediate need - or at least some interest in what you are offering. Otherwise, they would not have called you. However, all they know about you is what they read in your ad. Therefore, they may not be convinced that you are the right one to hire.
The second method of getting people to call you eliminates this problem. I’m talking about establishing yourself as a recognized authority in your field. You can do this by writing articles for an industry trade publication… being interviewed on radio talk shows… writing a book… giving speeches at industry meetings… and/or publishing an informative print or online newsletter on your specialty.
When people call you because they read your book, they - like prospects who respond to your ad - are telling you that they have a need. However, unlike those who merely saw your ad, they are already predisposed to buy from you.
After all, prospects are skeptical of advertising claims. But authors are perceived as experts. So by writing the book (or the article or column or content-rich website) on the topic your prospects are interested in, you will be the one they call first when they need help solving problems in that area.
Think about how you can establish your reputation as a leading expert in your field or industry. Can you volunteer to be a speaker at the next big industry conference? Publish a white paper? Write letters to the editor? Publish a blog?
The best place to start: Write an article about the solution to a big problem your prospects are likely to have and publish it in a magazine, periodical, or on a website where they are likely to see it.
[Ed Note: Bob Bly is a freelance copywriter, the author of more than 70 books, and co-creator of ETR’s Direct Marketing Masters Edition program. Sign up for Bob’s free monthly e-zine, The Direct Response Letter, and get more than $100 in free bonuses.]
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Worth Quoting: Seth Godin on Trust
"WHERE DOES trust come from?
"This is what every marketer wants to know. Without trust, marketers know that there are no sales. Trust means the prospect believes not only that the product being sold will actually solve his problems, but that if for some reason it doesn’t, the company will make good on its reputation of performance.
"We happily pay a premium to buy our jewelry from a fancy store instead of from a shady character on the street. Why? Because we trust the store to sell us the real deal, while the guy with the watches in a briefcase represents substantial risks.
"Corporations pay consultants billions of dollars for their advice, when they could probably find similar advice down the street at the local community college. Why the premium? Because Bain and McKinsey and the like are trusted advisers. They’ve built enough of a track record, and enough confidence, that they can command a substantial premium."
(Source: Seth Godin’s blog)
5 Simple Fat-Loss Rules
There’s a saying in the fitness industry: "You can’t out-train a bad diet." And that holds true almost 100 percent of the time (especially as you get older). I truly believe that nutrition is the biggest component of a good fat-loss program… by far. I also believe that good nutrition for fat loss is very simple…
- Take a look at how much you are eating now.
- If you are not losing weight, eat less.
- Eat fruits, vegetables, nuts, and protein sources. Don’t eat junk from a bag or a box.
- Give yourself one treat meal per week to look forward to. Not a treat day, just a treat meal.
- Plan ahead. Spend one to two hours on the weekend getting your meals and meal plan ready for the week.
That’s it.
It’s simple. Most people do pretty well on Steps 1 through 3. Where they mess up is on Step 4. They stick to their plan all day long, but then, while making dinner or watching TV, they snack on upward of 500 calories in processed carbohydrates that are lying around the house.
This can be avoided by following Step 5.
Combine my five simple rules with three short workouts per week (resistance and interval training), and you have a very manageable fat-loss plan.
[Ed. Note: Fitness expert Craig Ballantyne is the creator of the Turbulence Training for Fat Loss system. For a free online source of information, motivation, and social support to help you improve your health, lose weight, and get fit, sign up for ETR’s free natural health e-letter.]
It’s Good to Know: Erasable Tattoos
Is that flaming skull tattoo on your neck hurting your job prospects? Is the ex-girlfriend’s name etched on your arm a source of constant irritation in your new relationship? The technology to remove tattoos has existed for many years. However, it usually involves multiple painful (and expensive) laser treatments. And there is no guarantee the tattoo will be totally removed.
Freedom-2 seeks to change all that. Using technology similar to that found in scratch-and-sniff stickers, they’re creating inks that can be removed with just one laser treatment. The company maintains that the new inks are also safer and lead to fewer complications (such as allergic reactions) than traditional tattoo pigments.
(Source: Discover Magazine )
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Word to the Wise: Canorous
"Canorous" (Kuh-NOR-us) - from the Latin for "to sing" - means "musical."
Example (as used by Donna R. LaPlante in the Kansas City Star ): " I felt a deep contentment listening to the meadowlark’s complex melody as he sat on his bragging post calling for a mate, and the soft canorous whistle of the bobwhite as he whistled his name with intermittent lulls."
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