Marketing To The Rich

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mttrNelson Paramus was a struggling investment consultant for years before striking it big. His marketing methods were, well, primitive. Anyone who was breathing was a prospect. Moreover, of Paramus’s clients, who came from a hodge-podge of occupations and industries, only a handful invested more than a few thousand dollars. So he decided to focus his efforts on clients with higher disposable incomes.

Among the hundreds of well-to-do respondents whom I’ve interviewed at my organization, the Affluent Marketing Institute, word-of-mouth endorsements were most influential in their decisions to patronize businesses. In fact, high-quality products or services–while important–have little to do with the buying habits of the affluent. I suggested to Paramus that he concentrate on the food distribution–service trade, because few investors targeted the affluent in this industry. Then I asked him whether any of his clients were in the food business, and he said he’d had only one. Today, he has many more. After winning the respect of a multimillionaire–and gatekeeper who helped him penetrate this market niche–Paramus does not mamage investments anymore. Instead, he’s built an impressive client base, whose business he refers to other money managers.

Before you develop a marketing strategy, address this question: What types of industries within your trade contain the highest concentrations of affluent individuals? One way to find such a group is to contact your local chamber of commerce or state trade bureau. They can tell you your area’s top industries according to sales revenue. Many of the suppliers to these industries are also affluent.

Enterpeneurs like Paramus who’ve succeeded by influencing the influential already know the secret: Enhance the concerns of others before seeking business for yourself. For instance, the most important thing you say to convert a prospect into a devoted client is, “Given me a stack of your business cards. I have many clients who are likely to buy from you.” You’ll see from the case studies here that a client will go far out of his way to endorse you if you do something extraordinary. So to begin building your customer base, think about what you can offer. Then use one or all seven of the following networking approaches.

1 THE TALENT SCOUT

Armed with the names of wealthy opinion leaders in the food distribution-service industry, Paramus took the talent scout approach. First after learning that most of his potential clients read Food Distribution magazine, he called the editor and said, “I hve some financial articles to contribute. Would you accept them?” The first was published two months later. This enhanced his credibility.

Next, Paramus sent a letter to the heads of 25 food trade associations announcing the formation of his Food Industry Advisory Council, offering the investment advice and speaking skills of investors he knew. Within a week, Mary, head of one of the most influential groups, contacted Paramus asking if he knew of someone who could speak at a local trade show about the financial market’s impact on the food industry. So–acting as talent scout–Paramus provided the services of a top food industry analyst as the featured speaker. How was Paramus rewarded? Mary endorsed him. At his first association meeting, Paramus left with 320 business cards from affluent attendees. Better yet, after Mary opened an account with him, 10 more accounts were started from the attendee list. Why did Marv the millionaire respond positively? Because Paramus addressed Mary’s needs before mentioning his own.

Now Paramus asks his clients to acknowledge their best suppliers. He, in turn, asks these suppliers for their suppliers. Because most feel that by ignoring Paramus they’ll tarnish the relationship with their clients, names are offered. Targeting suppliers of suppliers is a productive way to obtain prospects and build a network.

2 THE REVENUE ENHANCER

Fred Peterbaum, an independent businessman who owned an equipment distributorship, was a conduit of critical information about the construction business in his area. He was among the first to know when a major construction job was about to start. He visited sites every workday. And building contractors who anticipated successful bids would place orders with Peterbaum–but not only for equipment. You see, they viewed him as a for-free headhunter, a person who’d provide them with the names of talented craftspeople. In essence, Peterbaum acted as a revenue enhancer, an informal development agent for his own customers. His referral system, based on his genuine desire to help clients, was simple: You can’t tell equipment to a customer who has no customers. In return, Fred Peterbaum’s customers, who paid on time, made endorsements on his behalf.

3 THE ADVOCATE

J. Conrad Peterbaum, Fred’s son, is successful for similar reasons. Not only is he a talented dentist, but he’s also an advocate for his patients. He goes beyond fillings ane extractions. He establishes rapport.

Early in his career, many of his patients in the practice where he was a partner were members of an airline union. One Monday morning, Peterbaum read an article that reported the airline was considering having its planes repaired in a Third World country to save money. Not long after, the president of the machinists union was sitting in his chair. After discussing the news, the president admitted that he and his constituents were frightened. Immediately, the two began to think of solutions. Peterbaum, playing the role of advocate, offered to write letters on the union’s behalf and to have all his patients address petition cards to their congressional representatives requesting the government do something. The campaign succeeded, and the airlines backed down. But by now, Peterbaum had quite the practice and launched his own. So the president of the machinists union, who felt indebted, took out a large ad listing Peterbaum’s new address in the monthly magazine distributed to airline employees. Unpon reading the ad, scores of pilots and corporate executives sought out Peter-baum’s service. As advocate for his patients’ causes, he was given access to the airline’s network. Today, Peterbaum has more airline employees as patients than any other dentist, with 1992 revenues exceeding $4 million.

4 THE MENTOR

I recently received a phone call from Mr. Gordon, a financial consultant for a regional brokerage house, requesting permission to reprint part of my book, Marketing to the Affluent. After a brief conversation, I asked him what industries he was targeting. He replied that he was pursuing the construction industry. As it turns out, Gordon wisely spent several hundred dollars to become a member of a construction trade association–the one with the highest concentration of wealthy business owners and executives. For his money, he got a biweekly newsletter, a journal, and a directory of who’s who in construction contracting. But the most interesting comment Gordon made during our conversation concerned the association’s newsletter: He’d persuaded its editor to add a Winners Profile section in which he would interview people about their achievements and then write profiles to be published in the newsletter. What a splendid way to meet winners of multimillion-dollar contracts and to be recognized as an industry columinst! Although Gordon is not paid for his service, he is able to teach the association members how to market to other business owners-thus becoming a mentor to the movers and shakers in the construction industry. In this way, he is using his know-how to fill the role of expert and mentor.

5 THE FAMILY ADVISER

Carmine Stardust runs a high-grade limousine service in Los Angeles. He always puts prospects first. During the L.A. riots, he never refused to accommodate their needs. On one occasion, Stardust picked up an influential executive at the airport and drove him to his home 70 miles south of the city. The client revealed that he was concerned about his two daughters: They commuted to a college in the middle of the riot area and were scheduled to take their the final exams the following day. Because of the college’s decision to remain open during the unrest, the two had to take their exams or they would not graduate. Stardust’s client, however, refused to let his girls drive to school–nor would he be able to take them himself. Acting as a family adviser, Stardust said, “There’s no reason for you girls to miss their exams. Have them ready tomorrow. I will escort them to her classroom, wait till they finish, then drive them right home. Standard rate, no extra charge.” The client was thrilled. Whenever he can, that influential executive actively makes referrals on Stardust’s behalf.

6 THE PURCHASING AGENT

Art Gifford, a CPA, is the best networker I’ve come across. When he founded his company 11 years ago, he employed three CPAs. Today, he has 34 accountants, 20 support staffers, and more than 800 clients. All of his prospects became clients because of his network system. Yet he’s never fail to make a sales call.

Currently, Gifford’s network includes owners of automobile dealerships. Why would auto dealer go out of his way to make referrals on an accountant’s behalf? Because Gifford often acts as a purchasing agent of cars for cleints. When prospects walk into his office, he spends 15 minutes asking them about their problems and needs. It’s all part of his intelligence-gathering ritual.

From this, he learned that many prospects don’t have the time to shop for the best bargains on cars. So Gifford began maintaining a list of selected dealerships that sell luxury automobiles as well as owners and top sales reps that give Gifford’s clients significant discounts. Now, when a client tells Gifford that he’s shopping for a new car, he’s handed a copy of the list. Or Gifford will actually negotiate the purchase or lease himself–that is, he’ll do the price haggling. He explains: “A wealthy client decides to buy two Mercedes. I say, ‘Before you do that, where are you getting them and how much are you paying? Maybe I can save the money.’ So I call a dealer on my list, and we end up saving my client $8,000.” Acting as purchasing agent, he also subscribes to publications that list the estimated value of used cars. Now are all the dealers on Gifford’s referral list his clients? No, but they will be soon. Since he sends them business, most reciprocate with referrals.

7 THE LOANS BROKER

So you know you must go beyond offering core services to clients. But what can you offer? Consider this: There’s nothing more important to the affluent than obtaining financial credit. I found a positive relationsship between income and credit use. For example, the average American household spends $700 annually in interest on loans; households in the $1 million-plus income bracket spends more than $150,000.

How can you leverage these credit needs to play the role of informal loan broker for your customers? Train yourself: Scan the papers for reports that identify start-up credit suppliers: examine the yellow pages. You’re likely to find more than 100 firms that lend money.

Take P.W. Charles, a money manager. During the early stages of his career, Charles prospected small banks that had no in-house investment experts. He’s successful today because he offered revenue enhancements and investment advice. With many of his clients, he didn’t limit discussions to investment topics. When someone said they needed money, he’d refer them to his network of banks.

By sending dozens of clients to these banks each year, he also build a solid client base of bankers. In light of this, banks within his area were delighted to have him manage their funds. Interestingly, even senior officers began opening accounts. Today, his network is no longer limited to small banks. Loan officers from two of the largest commercial banks in his region have accounts with him and refer business his way. Why would senior loan officers direct business to Charles and not to their own trust departments? Their departments rarely, if ever, send business to the loan officers.

What all these individuals have in common is something the dictionary defines as symbiosis–the union of two dissimilar organisms in a mutually beneficial relationship. I call it networking.

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