This title may have gotten your attention. I hope it did. Of course you should be prospecting in a down market or an up market or any market.
Many people do not. As a matter of fact, when I ask people a question about prospecting I normally say, “in addition to referrals, how are you developing new business?”
But you say, “I always prospect. Isn’t that what referrals are?”
The reality is: Everybody wants referral business. But is that enough?
One of the principles I have taught for years is this: Always have at least one channel of developing new business in addition to referrals.
Now why is that?
Because, in a down market, referrals tend to dry up.
In the down market following March 2000, I saw lots and lots of people exit the industry stage left. Not only was this crowd heavily invested in growth stocks, but they had also been telling me, “Bill, I don’t have time to prospect. I’m generating all the business I can handle.”
Came the crash, it was then apparent that the rising tide of the bull market had not only been confused with investment expertise, but with marketing expertise as well. Neither, of course, proved to be the case.
Down-Market ProspectingBefore discussing down-market prospecting, let’s look at: “When is the optimum time to prospect?”
Obviously, it’s not in an up market. Then, people are throwing money and referrals at you and you don’t have time.
Equally obvious, it’s not in a down market. You are depressed. Your clients are depressed. Nobody wants to talk to anyone.
This theoretically leaves only two days in any market cycle in which you can prospect. You can prospect on the day the market changes from an up market to a down market or on the day that it changes from a down market to an up market.
But since you won’t recognize that for a few weeks or months, it is apparent that there is no good time to prospect.
But of course that’s false. In up markets, you want to have a prospecting system in place so that when a down market hits, you can just turn up the heat. Starting a prospecting system from scratch in a down market takes much longer than it would if you started it when times are good.
So when should you start on a second prospecting channel if you don’t have one?
Now would be a good time to do that.
How Much Prospecting Is Enough?This is a question I have wrestled with for years. Back in the days of transaction heaven, I did an analysis of people whose business was up in the down market of 1991. I found that a significant number of people whose business was up that year were opening more than 100 accounts a year (you read that right — it was commonplace). The people who were down were prospecting significantly less.
Those figures no longer hold.
Today, you can get by on far fewer new clients and new assets, but you have to have the ability to regulate the flow so that you yourself don’t sign up for the fabled income reduction plan.
Now let me answer my own question.
“How much prospecting is enough?” has two answers.
The offensive answer is: You need to prospect enough so you can double your business in two or three years.
The defensive answer is: Bring in enough new clients and new assets so that income doesn’t go down.
Figuring How Much Is EnoughI’m going to give you an example. The mathematics for this is not complicated, and you can immediately get it and apply it to your own situation.
Let’s say for the sake of argument that you have $100 million in assets under management. You want to double your business. Obviously, you need to manage around $200 million.
Where is it going to come from?