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The 2% Differential - The Difference That Makes The Difference
By Steve Drozdeck   Printer Friendly Version

Introduction

What are the key attributes necessary for long-term success in sales and marketing throughout the world? We know that the "stars" actually generate 1,600 percent more commission revenue than "average" producers. No, this is not a typo. It is a significant difference. This article was developed by modeling hundreds of highly efficient and effective producers and codifying their conscious and unconscious behaviors. As you read this article you will see things that currently describe yourself, but may also read a few things which people are doing which may enhance your personal style/abilities.


The "80-20 Rule" results in a 1,600% Difference

The 80:20 rule seems to apply to many areas of life - certainly to sales production. As most would agree, 80% of our commission revenue is derived from 20% of our clients. (Looking around many businesses, my associates and I have noted that many sales representatives spend most of their time and effort with the least profitable.) In the financial services industry, for example, most financial services firms get 80% of their commission revenue from the upper 20% of their producing representatives. These reps tend to be members of the top recognition clubs of their respective firms. This is seemingly true in every industry - worldwide - that we've been able to study.

There are some interesting ratios that are derived from the 80:20 rule. Top salespeople are generating 16X more commission revenue than average brokers! [Here is the computation: Assume that $10 in a company's sales revenue is divided among five sales representatives. One salesperson (representing the top 20% of the firm) has generated $8 of the $10 (representing 80% of the total revenue). The other four have generated the other $2 in revenue or $0.50 each. Thus, the star performer has produced 16X more revenue.] Top producers/representatives aren't 16X smarter, more intelligent, efficient, better-looking, deserving than the others. Yet, they are paid as if they were. What are the differences that make the difference? We call them "The 2% Differential."


The 2% Differential

Over the past 20 years we have had the opportunity to analyze the characteristics of star and have noted that there are certain key traits which are shared by the most successful representatives. In one of my books devoted to the financial services industry, The Broker's Edge we call it "The 2% Differential" and devote the majority of the book to how, specifically, these top representatives actually "do what they do." These techniques also form the basis of many of the courses we offer.

The key characteristics fall into four broad categories. They are briefly explored here and discussed in greater depth my books and courses. The key characteristics are:

  • Consultative Selling Mindset
  • Professional Knowledge
  • Business Management Skills
  • Personal Motivation

Consultative Selling Mindset:

Placing the needs of the client first and being concerned for the client's well-being is paramount to this mindset. Top producers realize that their primary responsibility is to help clients identify, define and achieve their goals. They actively try to help clients get what the client wants and needs.

Contrast this attitude with reps whose primary goal is to generate commission revenue for themselves and their companies. We can all intuitively tell when someone is trying to help us and when a salesperson is merely in it for the money. While there is nothing wrong with making a sale - it is the underlying attitude that makes the difference. If the client/customer is seen as a "cash cow" than relationships are by definition short term. The client will choose another vendor quickly and rarely give any referrals. Certainly, he or she will not become your "advocate" and try to help you in your business.

One of the reasons that you have long-term relationships with clients is the innate desire to be of service.

While the consultative selling / "I care" attitude is important, it also hinges upon a series of important skills which are essential for quality business relationships. These essential skills include:

  • Relationship skills: How to quickly establish rapport with people so they feel confident in your competence.
  • Communication skills: Explaining complex topics in ways that a client can both understand and appreciate. This also includes insuring mutual understanding.
  • In-depth needs analysis: Discovering the multiple needs that most clients have and designing a solution to help them obtain their goals.
  • Understanding the psychological needs and makeup as well as the particular "buying motivations" of prospects and clients: Realizing that people buy for their reasons, not ours, top performers intuitively modify their sales presentations to match the client's thought process. Matching such processes dramatically reduces resistance to our suggestions.
  • Effective selling techniques and strategies: Making presentations in a persuasive manner so clients can make "informed decisions" and feel good about the decision.
  • Effective methods for getting referrals, etc..

Professional Knowledge:

The best representatives are perceived by their clients as having a good knowledge of their industry and rely upon their representatives for ideas, information, and decisions that will impact the client's purchases. This knowledge includes knowledge of the specific features, benefits and advantages of different products and services (and their appropriateness.

A characteristic of most top producers is they have a viable business service philosophy and are able to communicate this philosophy to their clients.

Business Management Skills:

Highly effective financial representatives think of themselves as owners of their own franchise, while less efficient reps think of themselves as employees of their firms. These high level producers "run their business like a business" and are very careful regarding time, energy, and resource allocation. They generally have a formal or informal mission statement, a strategic plan for attaining their objectives, know how to make effective goals and then monitor performance (their own and others) relative to the attainment of their objectives.

Culling and Cloning your book of clients and understanding the characteristics and profile of ideal clients (results from a demographic study of their business) is an essential element of business development. Again, the 80:20 rules applies, yet, too many reps spend the vast majority of their time on the smaller client. Large increases in productivity can be expected once we spend our time in a highly productive manner and concentrate on the 20& of our clientele generating the majority of commission revenue.

Effective activities also include getting referrals and financially profiling other clients. Finally, developing other members of your team allows you and your firm to increase account penetration.


Personal Motivation:

The ability to maintain ongoing motivation over the years is partly a result of effective goal setting, having a strategic plan, and having a formal or informal mission statement which are a primary focus of characteristic #3. Highly successful financial representatives have stood the test of time while most others drop out, burn out or attain mediocrity. The ability to handle stress is also a key differentiating factor. Exit interviews with numerous representatives have indicated that the primary reason for leaving the business (a 80% dropout rate within the first five years in the brokerage business) is stress

The combination of the correct mindset + professional knowledge + effective business management skills + maintaining long term motivation results in the stellar performance of this elite group of financial consultants and differentiates them from the average broker.

In summary:

The 2% Differential represents minute, yet important, differences that define the beliefs and behaviors of the top performers lead to quantum differences in productivity. Identifying the characteristics of our personal work style and ethic allow each person to initiate a program that will raise them to the next level of productivity while helping their banks increase account penetration and helping their clients attain their financial goals.


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