Sell Well - Grow Well : "Main Bhi Fund Guru"
Try this 10-10-10 strategy to win new clients

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Sell Well - Grow Well, a joint initiative between SBI Fund Guru and Wealth Forum, is an effort aimed at encouraging and guiding distributors on a path towards right selling - which we firmly believe is the best way to grow well on a sustainable basis. There are many facets to "right selling" - some which are behavioural and some technical. In the Sell Well - Grow Well series of articles, our endeavour will be to provide some perspectives on both aspects.

We now commence a new series within this section, called "Main Bhi Fund Guru" where successful advisors share their winning sales strategies for the benefit of the wider distribution fraternity. In this article, Ashish Modani, SLA Financial Solutions, Jaipur discusses his 10-10-10 strategy which has helped him drive up his new client acquisition numbers significantly, even amidst poor stock market conditions.

Here's a question for you

Here is a question that I ask AMC sales persons and many of my distributor friends : "What is the best product that should be offered to a prospective retail investor?" The most frequent answer that I hear is "Equity SIP". Then I ask them, "What is the product you will pitch to your largest corporate prospects?" The answer that I invariably get is "Liquid funds". Look at the situation : the most well informed, experienced, sophisticated investor is pitched liquid funds but the least informed, least experienced investor is asked to get into equity funds with a long term view. Are both the propositions wrong for the respective investor classes? No. But, do you get enough new retail investors to jump at the suggestion and sign up for an equity SIP? No.

Product may be right. But is your timing right?

We may know that long term equity SIPs are right for retail investors. Why then are we finding it so difficult to convince new investors to sign up for long term equity SIPs? We reflected a lot on this issue and came to one simple realization : a new investor first develops confidence in the advisor and then in the product. Imagine going to a new prospect, who you are meeting for the first time - an investor who has not invested before in equity markets. He doesn't know you, he is not familiar with equity markets and here we are, asking him to commit to a 10 year SIP in a product he has no experience with, through an advisor who he is meeting for the first time. Put yourself in his shoes : will you go ahead?

Show results, win confidence

Our job is to first win the confidence of a new investor. Confidence is not won through slick presentations and future projections. Confidence is not won on the promise of delivering results 10 years from today. Confidence is won on the basis of delivering something now. It is this basic realization that made us change our entire new client acquisition strategy and adopt what we call our 10-10-10 strategy, which is really driving up our new client acquisition numbers significantly.

What is our 10-10-10 strategy?

When we go to a new client, we talk about our firm and our services, but we make it a point to say that we will first offer to only help him optimize savings and surpluses that are typically 10 day surpluses. These are monies that are always lying in savings and current accounts. We talk about liquid funds, about the tax benefits, about the convenience of investing and redeeming through SMS messages on mobile phones. We ask the client to start with just Rs.5000 in a liquid fund. Now, what we have to understand is that from a client's point of view, he sees that he has nothing to lose in this offer. There was money lying in a savings or current account. Here is somebody who is anyway asking me to try with just Rs.5000 and check out for 10 days. No harm in trying.

We open the account. We make sure that we redeem the amount after 10 days and show him his MF account statement and ask him to verify his bank statement to see evidence of the returns in 10 days. He can see clearly that a liquid fund made his idle funds work harder in those 10 days. We then get him to re-invest through an SMS and get a redemption done again through an SMS. By now, he is fully convinced about the product as well as the convenience of the product. Very importantly, he can see that we have added value, we have made a difference.

Then we go to the second 10 out of the 10-10-10. Now, we start discussing surpluses that are available for 10 months. We discuss accrual based funds, we showcase their features, performance and how they are better than short term bank deposits. By now, this new client has developed some confidence in his new advisor and is willing to try out accrual based debt funds for short and medium term surpluses.

Now, we have the client investing regularly in liquid funds through SMS messages and can see his monthly portfolio statements which show how his accrual funds are performing. Once he has seen us and our advice delivering on both these counts, only then do we go for the last 10 out of 10-10-10. It is at this stage that we begin a discussion about his long term savings - his 10 year savings. We look at his goals, we make goal based plans and we recommend equity SIPs for long term plans. We take the client through the upside potential of equity as well as the volatility aspect. We give him the confidence that we will be there through this journey to help him realize these long term goals. The client is now a lot more willing to take our advice and commit to these long term plans, in products that have volatility that he may not have experienced earlier. That comfort comes from the fact that he has now developed a confidence in and a rapport with his advisor and is willing to take the advisor's word that this solution is good for him.

10-10-10 works for both - client and us

Our experience with 10-10-10 has been very good. We rarely find new clients not wanting to start doing business with us, because our first 10 is really hard to ignore or refuse. It is a no risk proposition for both. Beginning the relationship of a firm note is absolutely critical for long term success. Going step by step and getting clients to gradually experience riskier products helps them deal with risk a lot better. Its like asking a child to first go into a baby pool, then the shallow end of a swimming pool and only then the deep end. Try putting a child who does not know swimming straight into the deep end, even with a float. The child is not going to take comfort from the float - it has never experienced a float to know that it will prevent him or her from drowning. The child will cry and refuse to swim or attempt to learn swimming. Taking an equity fund, even through a SIP route to an investor who has never invested in mutual funds or equity markets is somewhat similar. Especially at a time when equity SIP returns have not been great in recent times.

10-10-10 needs a fundamental re-orientation in our approach

This 10-10-10 strategy however needs a fundamental re-orientation in the distributor's mindset. I often find distributors talking about how difficult it is to win new clients, how much time it takes to get new clients and how much time it takes to get KYC done when they are finally convinced. At the end of this entire process, the distributor expects to see a large cheque to be invested in a product that gives healthy commissions, to justify his efforts. This "instant gratification" approach is not going to help us scale up. We want our clients to adopt a long term approach from day one, but we are unwilling to adopt a long term approach with client profitability. We don't want to wait for reaping the rewards of our efforts, but we expect clients to wait. For you to successfully implement the 10-10-10 strategy, you will need to adopt a genuinely long term approach towards client profitability. You will need to start small - with Rs.5000 in a liquid fund, that earns you nothing. You will need to service that. You will make a clear loss in the initial period, as the time you take to get KYC done, to get investment, redemption, reinvestment etc of a 5000 rupee amount in a liquid fund, will clearly not be justified by the negligible income for you. But, it is this investment of your time and effort in building up a new client relationship, which will set the base for long term profitability of these new client accounts. We need to adopt a genuinely long term approach in our own businesses first, before we advise clients to do likewise with their savings.

Sometimes, you don't have to wait too long for 10-10-10 to deliver for you

While each new account will take its time to become profitable for you, one tangible benefit is that the pace of new client acquisitions will quicken considerably. Not only do these prospects find no reason to not try you out, but once they see the convenience of liquid funds, they refer us to their colleagues as well. I continue to be amazed with the low levels of knowledge among retail investors about liquid funds. I continue to see how easily referrals come through from clients who have experienced the convenience of liquid funds and the feeling of having done something useful with their idle savings. Its not about how much more money they made - its about a convenient way to put idle money to work a little harder.

As I found out to my pleasant surprise, sometimes, the fruits of our efforts come through rather quickly. We adopted this 10-10-10 strategy with 5000 rupees for an individual and were taken aback a couple of months later when he called us and asked us to collect a Rs.17 crore cheque from his company to be invested in the same liquid fund.

There is only one target that my team and I focus on

In my 10 years in this business, I never set myself or my team any targets on AuM or sales of any product category. My team and I work on only one target : how many new clients are we going to add each week, each month. My team is very happy to take this target on and go with a 10-10-10 strategy to achieve this. Once we sign up a client, the 10-10-10 strategy ensures that we gradually develop the relationship and make it win-win for both of us. With a 10-10-10 strategy, I don't have to worry about where the stock market will be tomorrow or next week, and how my new clients will react to the first mutual fund statement that they see. My team and I can focus our energies on acquiring more and more clients, and using the 10-10-10 strategy to gradually deepen each new relationship.

All articles in the Sell Well - Grow Well section are created by Wealth Forum. These are not to be construed as opinions given by SBI Mutual Fund.



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