Capturing New Clients

Capturing new clients is an important part of success for an association management company. But it can be a rollercoaster ride, flying high one month, or year, and bottoming out the next. During a dry spell you sometimes feel like you are climbing a four-horse hill in a two-horse buggy. And don’t you just hate, hate, hate it when the day after a sales presentation you hear, “You were our second choice.” Coming in second is very similar to coming in last, as far as the net result. Close only counts in horseshoes and hand grenades. However, the good thing about regularly coming in second is that there is probably not a whole lot of improvement needed to start regularly winning your closing opportunities. So, take a few minutes to read this blog and see if it will give you ideas on how to add some horsepower to your sales efforts.

The Three Components of Capturing New Clients

Generating leads – being visible to prospective clients who eventually will be looking for new management. This is largely a social media endeavor in most markets these days. The visibility must be positive. The adage that there is no such thing as “bad publicity” is never more untrue than in community association management. Reputation management is vital.
Creating opportunities – generating enough interest to be considered a serious contender and being granted a precious presentation spot. Generally, after a prospective client has “found” you. There will be a quick screening during which YOU MUST make an impression, positive, of course.
Closing sales – after becoming a serious contender and are granted a presentation opportunity, convincing the client association board that you are the right company for them.

This blog’s focus is mostly on step #3 because the genesis of it was a question posed by a prospective client management company, “Jim, how do I know if I am closing enough deals out of the opportunities I have for presentation. How often should I win?”

Well, the worst way to know is to survey your competitors by casually asking them how often they emerge victors from sales presentations and then assimilating their answers to assess the performance of your company. You will lose that comparison because you will probably learn that many of them win 90% of the time, or at least purport to. Now this is not because we are in an industry of prevarication (well it is partly that), but rather because we justify away a lot of our losses so as to not have to count them in our “batting average” (i.e. “well those guys were jerks so we didn’t want to work with them anyway, so that was no loss”, or “well they said they passed on us because we were too expensive so that isn’t really a loss.”) Oh, and by the way, when you hear that a potential client selected someone else because you were too expensive, there is more to that story. That is truly a euphemism for “your value wasn’t good enough”, i.e. the perception of your service was not worth your bid price. In other words, you simply were not good enough at step #3. Perhaps your bid was 10% higher than the winning management company’s bid, and the prospective client only found your company to be 5% better. What if your company’s was perceived to be 15% better? You likely would have won the account. So, when you say you lost on price, you really lost on value (or on other reasons which were uncomfortable to share).

Before we move on, let’s discuss a very important difference between selling to most businesses and selling to board’s of community associations. Though it may not always seem so, these boards are generally not as price sensitive, for three reasons; 1) each board member is only funding a very small part of the ”purchase”, only kicking in their percentage of ownership. While, 2) they bear a large portion of the pain of working with an inadequate management company both directly and indirectly. See they are the ones accountable for the service and they are the liaison with the service. They feel the pain directly through their interaction with the management company, and indirectly because their constituents are not often shy about sharing their opinions of the management company. And of course, 3) the association board members are generally more price elastic because there is usually no real budget barrier for them (at least not as much of a hard barrier as in for-profit businesses). See community association’s budgets are bottom up, with the revenue being dictated by the total expenses, while for-profit businesses caps on expenditures are based on the revenue that they have to utilize in covering expenses. Now a board could be “strapped” in the short term, but within a year, they can raise more buying power by “printing more money” with a dues increase. So, if a management company is flexible and creative, then usually they are not too expensive for any association to “purchase”. This could simply be by offering to work through the end of the first year at your budgeted rate and then increase the fee at the start of the association’s next fiscal year. Usually, the board will be amenable to the next year’s rate being a little higher than your original bid to compensate for your discounted period.

Now getting back now to the original question of how often you should win, so far, I have given you a poor way to do it, so I guess I owe you more. A better answer would be a mathematical approach. The simple mathematical answer is about 25% to 33% of the time. Well, if you are ok with “average”. That is easy to calculate using the presumption that most associations interview about three to four companies, so those numbers are what an average company should achieve. BUT I HATE AVERAGE! And you should too because you should aspire to be much better. Also averages only measure the mean results. So, for all those companies which are winning 1/3 or 1/4 of their presentations, there are probably some that are winning only 10 or 15% and others which may be winning 85 or 90%. Yes, I ALSO HATE MATHEMATICAL AVERAGES! Mathematically speaking, if a person is standing with one foot in a bucket of boiling water and the other in a bucket of ice water, his feet are, on average, comfortable, at least from a temperature standpoint. So, let’s dive a little deeper into this process to find a place which is more comfortable than “average.”

When you are at step two of the “capture” process, ask the hiring association how many bids they’ll be soliciting and how many companies they plan to interview. The response will not only allow you to determine your “step #2 batting average” and later to determine your step #3 batting average. If they say they plan to take three bids and you never hear back from them, then there are three companies out there that are better than you at process number two. Well, or perhaps they are simply a better match than you. Or maybe a board member has a brother-in-law in the business, etc. At least you can tell yourself all of that. But learn from it, in any event. Oh and worse, if they say they are taking ten bids and you never hear back from them, well, I hope that you have another vocation that you always wanted to try. 😊

This point in the process is also an opportunity to know who you’re up against so that you can customize your presentation to beat out the other candidates. So, I also suggest you ask, “Would you mind sharing which other companies you’re inviting to bid?” Association boards often will share this information, especially if you wait until the end of the discussion to broach the question and precede it with, “Now before we say goodbye, do you have just a few seconds to answer a couple of questions to help us with our marketing?” If they don’t mind, then you should feel comfortable saying “we like to know who is out there competing against us, so……..” You may also preface it with a placebo question such as, “what single adjective would you use to describe the most important quality in a community association management company?” Now I call that a placebo question but of course it (or another similar question or two) would also offer value to you. But I call it/them placebo because their primary importance is to simply disguise the purpose of the more important question at hand, making it seem less abrupt.

You also need to ask another question. And this one is matter of course and easy to ask, “Is your decision process deciding which company you are going to hire or deciding whether you are going to hire a new company?” If you ask the question that way, in addition to the direct answer which is important information, you will probably learn a lot, including what their real issues are with their current company. It is unlikely that they will consider this a simple binary question but rather an opening to tell you about their current company. It is true that you can, and likely will, at some point ask, “so what issues are you having with your current company?” However, I find that you get a more honest answer through the former question and in a more robust way. This is because the board has probably discussed exactly how they want to frame the answer to the later question. But when you ease into the discussion, usually the potential client’s representative will not have their guard up and will answer with something like, “oh no we are not considering our current company, you see they……….” If they do not expand and just say, “no we are not considering our current company”, then you can follow up with the direct question, “Oh, so you are not considering your current management company as a contender, may I ask what your issues were that has caused you to come to that conclusion?” This is still a little softer approach to the question because of the segue.

Of course, the earlier that you find out what they don’t like in a management company (i.e. their current one), the less likely you are to make the mistake of promoting aspects of your company that are similar to the management company with which they are severing their relationship. Because let’s face it, even though each company has differentiators, and many different qualifications, we are all contracted to deliver similar services, we just package them differently. For instance, sometimes the services come wrapped in a friendly disposition (well maybe) and other times with a cynical retaliatory disposition. Yes, those are the two extremes, but dare I say the latter is quite ubiquitous in our industry.

And again, moving back to the original point of this article, if you ask the right questions—like those above—you’ll know what percent you should win if you are “average.” Of course, everyone hopes they’re above average, but guess what? The average company is average, by definition. And most companies ARE close to average. So, a reasonable goal for the average company is to simply be above average, and a more universal goal for most any company is to improve, over time, from whatever you are currently. So, track sale closings as a percentage of opportunities, and try to improve that number each year.

Now, some folks are naturally good at sales (referring to the step 3, closings) while others are not. A couple of things can make everyone better:

Your presenter must know the product—intimately. Failure to know the answer to even one mundane question can cause you to be eliminated. If a board member asks, “Do you charge a fee to an owner who makes credit card payments for monthly assessments?” He asked that question for a reason, and it is likely a very important reason. If your representative says, “I don’t know but I will get back to you”, you lose. Your sales team member can perhaps escape disaster by using the old “block and pivot” as follows:

Your team member: “Why is that important to you?”

Board member: “Because our current company charges excessive fees for every little thing they do.”

Your team member: “Well we don’t. In a recent study of our ‘extra’ fees compared to our competitors’, we were in the lowest 10%.”

By the way, “let me check and get back to you” is a very weak answer. A better answer is “no”, even if you are guessing. But if you are guessing, you had best confirm the veracity of that answer first thing the following day. And if you guessed wrong, then you must quick like a bunny make the correction when you send your follow up the next morning. Strange as it sounds, this has a much less negative effect on your chances of winning that account. And of course, if you were correct, it is even better. Your representative (or team) in a sales presentation just cannot appear to not know the answer to basic questions.

Sell what the client wants to buy, which means—rather than just selling your differentiators (services that set your company apart from others)—you need to listen very carefully to what an association board believes is missing in their current management relationship. In my earlier years of making sales presentations, I had a terrible tendency (and I think most do) to simply recite my canned sales speech to open my presentation. Sometimes it caused me to later have to pull my foot out of my mouth when I later found out that some of my points were either not important to them or didn’t even apply to them! I later learned to open with fact finding questions rather than providing solutions to presumed needs. You might say that you already asked these questions during step #2, the prescreening step, but realize that within the board of directors or the selection committee, there may be entirely different opinions or at least differences in the magnitude and or focuses of these opinions. For instance, the board may include in their list of dissatisfactions, that the manager is too abrupt with homeowners. But among the individual board members, some may think that is a big problem while other pooh-pooh that concern as trumped by the concern about lack of follow through. In fact, some individual board members may think that being abrupt is an attribute, because that is their style, they may even find it a productivity characteristic. I once made a presentation to a very large prospective client. Because they were a coveted account, they were able to set some tough interview standards including time parameters. They also had an abundance of suiters scheduled for interviewing. The first thing they said upon my entry was that I had exactly twenty minutes in which to complete my presentation. Despite this mandate, I took the first ten minutes to go around to each board member and asked them, “please, in just a minute or two, tell me what is most important to you as an individual in seeking a new partner to help you manage your community.” That took up half of my presentation time (though they let me seep over into the next presenter’s time just a bit, probably because they felt badly for using up so much of my presentation time). The first thing the next morning I had a call stating that they had selected my company. I was told that each person in the room later stated that they had decided to go with my company even before I had told them one thing about it! Why? Because they were quite impressed with my time generosity allowing them each some “talk time”, and of course I didn’t blow it when I told them about my company because I had a great feel for how to make each of them happy. Oh, and when I spoke to attributes of my company, I could relate them back to the individuals in the room. For instance, “as I know is very important to you Helen (looking Helen directly in the eye) our company firmly believes that…..”

I once made a presentation to a very large prospective client. Because they were a coveted account, they were able to set some tough interview standards including time parameters. They also had an abundance of suiters scheduled for interviewing. The first thing they said upon my entry was that I had exactly twenty minutes in which to complete my presentation. Despite this mandate, I took the first ten minutes to go around to each board member and asked them, “please, in just a minute or two, tell me what is most important to you as an individual in seeking a new partner to help you manage your community.” That took up half of my presentation time (though they let me seep over into the next presenter’s time just a bit, probably because they felt badly for using up so much of my presentation time). The first thing the next morning I had a call stating that they had selected my company. I was told that each person in the room later stated that they had decided to go with my company even before I had told them one thing about it! Why? Because they were quite impressed with my time generosity allowing them each some “talk time”, and of course I didn’t blow it when I told them about my company because I had a great feel for how to make each of them happy. Oh, and when I spoke to attributes of my company, I could relate them back to the individuals in the room. For instance, “as I know is very important to you Helen (looking Helen directly in the eye) our company firmly believes that…..”

The above story notwithstanding, realize that much of the time you may only really need one vote. By that I mean you may only need to have one person in your audience who you have convinced. Figure out who the board’s leader is, which—as often as not—isn’t the board president. The leader often is easily discernable if you give plenty of talk time to the audience during the presentation. Clues are offered when you keep hearing things like, “as Joe said” and “I agree with Joe,” or “Joe is the one who can answer that”. You then know that you need to win Joe’s vote!

Have some tools—like a differentiator or two—on hand, in visual format.

And speaking of differentiators, which we describe as the methods, attitudes and peripheral products or services that management companies provide their client associations which are different from what their competitors provide. Oxymoronically, these “differentiators” are usually pretty much the same from one management company to the next, or so they all claim. So it’s critical to create differentiators that really does set your company apart—at least from companies you regularly compete with for business. And, it may make sense to create a differentiator which may not be your first choice, because your first choice is probably also every other company’s first choice. In example, if you have 10 companies in your region which are your top competition, and they are virtually all promoting themselves as “the one company that treats our clients kindly”. You may want to promote your company as “the one company which gets things done! We may ‘mow a few people down along the way’, but the results will speak for themselves!” This is likely not your first choice of M.O., but it may be the better choice (well maybe you can choose a bit softer vernacular than “mow a few people down”), but I am sure you get the point of being the antithesis to all of the other companies. Of course you will lose some opportunities with this “outside of the box” approach, but in a strongly competitive market that is where you want to be, outside of the box, perhaps even employing a “blue ocean strategy”.

Let’s do some math on this thought. Let’s say seven of ten clients looking for management feel that they really do want to have a “nice” company so let’s pick from these 10 nice companies. If you are another “nice guy”, then that makes 11, fighting in the “blood red” ocean. That is a 9% chance, on average, of being awarded each of these accounts. But, if on the other hand, even three say, we need to start getting things done, let’s find a company that gets things done. In mathematical terms, you have essentially a 100% chance of getting those accounts. You are out in the big blue ocean with no competitors tendering you a win rate of 30% (three out of the ten), while the other 10 companies are fighting in the bloody red waters of the “nice guys” world and getting 10% of the 70% of clients looking for the nice guys, so each garnering only a 7% win rate. Yes, there are a lot of assumptions and nexus at work in my analogy, and it may not return a 21% better win rate, but if you can affect this strategy, I am betting you would find a gain of some amount.

One last point on this subject. Many years ago, I attended a seminar for management company executives on marketing in the association management industry. We performed an exercise whereby we were each asked to write down our top differentiators. Then we were called upon to stand up and explain the merits of them. Nobody seemed to see the irony (nor the problem with) the fact that everyone had pretty much the EXACT same differentiators! Everyone who stood up to speak, sat down triumphantly thinking “look how good mine were, everyone else agrees with me!” Things that make you say, “hmm”.

But what if you just can’t improve your win rate with your current team. Take a hint from the world sports. If the team isn’t winning, they replace the team, or at least key members of it. Most management companies aren’t large enough to include a dedicated marketing/sales professional staffing, so sales/marketing and operations are generally “picked from the same tree.” By this I mean that the sales team is chosen from the executive team or from among the association managers, but most often from the executive team. In small companies it is usually the duty of the CEO him or herself. But the skill sets of successful CEOs, executives or association managers do not necessarily equate to making a good salespeople. The good news is that there are a lot of people from which to pick. So, for instance, you may be the best darned CEO in town, but you may not be a salesperson. That’s alright. Identify real salespeople from within your company’s ranks, and replace the imposters. Since this is not one’s full time job, it is not taking away anyone’s livelihood.

Even if you do have the good sense to have picked your salespeople from those who have the skill (rather than the way-too-common method of picking those who most want to do it or those who tell you they are skilled) you still need to monitor their methods. And this is tricky. It’s hard to improve your sales program when you usually don’t know the real reason you’re rejected by a client. Oh, I know you probably ask, but the client will often tell you it’s because of the price. As mentioned earlier, it usually isn’t. But that is an easier statement than, “well, we didn’t like the person who presented to us” or “we didn’t like your company”, which is of course based on how your sales team represented it.

But, assessment and improvement in selling techniques is difficult in our industry. You may not often see your sales team at work. And even less prevalent are opportunities to see your competitors’ sales teams at work which would be vital in order to make relative comparisons. You can, however, get relative comparisons from within your team.

There is an exercise that may be used to that end. Stage mock sales calls. Have your sales folks take turns presenting to the other sales team members and/or the executive team who play the role of the board of directors. Discuss each person’s sales approach, specific technique, and what seemed most effective. Interject during the process positives that you see in one member in order to promote such positives in all.

One other twist that I love to employ in this exercise is to have the mock board members be surreptitiously assigned conditions including biases, pet peeves and/or idiosyncrasies for each to assume during the role play. I would write various ones on slips of paper and each mock board member would draw one or even a couple from an envelope. Examples might be; 1) prefers working with people of similar age to him, 2) doesn’t like weak personalities, 3) hates it when people don’t respond to him quickly, or 4) overly detail oriented. Then the “board members” would assume these conditions while playing their roles. The value of this add-on (in addition to adding a lot of fun to the exercise) is, of course, that it is the way things are in real life when you are selling. Each potential buyer comes to the table with preconceived conditions including biases, idiosyncrasies, and pet peeves. Sometimes they will be announced, while other times they will simply be implied. An example of “announcing” would be, “I don’t want to work with anyone who doesn’t follow through.” Displaying the same pet peeve by inference would be a bit more subtle statement, such as “We need to start hearing what has been done rather than what is going to be done.” Often these are displayed even more subtly appearing only in simple facial expressions or intonations; “We asked for our list of action items, but we still haven’t seen it (with heavy emphasis on the word “still” and eyes rolling). If the sales team has the skill to perceive these conditions, it is of terrific value in how they interact with the potential buyer in both their sales approach and even their sales message. Your sales team does not have to lie to accommodate these characteristics but can simply adjust their focus. For instance, to someone who likes to work with people his own age, let’s say he is 60, a great line might be, “We really believe in hiring managers who are seasoned, who are experienced in life because in this industry one needs to have an eclectic knowledge base, which is best learned as we ‘go through life’”.

The above all notwithstanding, perhaps your company just isn’t all that good at and can’t improve at closing opportunities. That’s OK too. You can still improve your company’s grow rate by getting better at either Step #1 or #2. For instance, if you’re only closing 20 percent of your opportunities and can’t improve on that, you can achieve an equal net result to a company closing 40 percent by being twice as good at creating opportunities. The same principle applies to increasing the number of leads you generate. If you win 20% of your twenty presentations compared to another company winning 40% of their ten presentations, you are keeping pace.

Also, realize that a save is as good as a close. Don’t lose sight of the need to retain your current clients while seeking your future ones. You need to stay ahead of the game in this regard because once a client makes the decision to talk to some other companies about service, you are at a decided disadvantage. You are suddenly competing against promises rather than performance, and that is tough competition. Every company can talk a better game than they can ever achieve. Now I say they “can” rather than they “will”. But in reality, they will.

If your retention rate for current clients can be improved, so will your growth rate. So keep track of your retention rate as well as your competitors’. Only by knowing both, can you judge yours correctly. And I don’t mean compare your actual retention to what the other companies say theirs is. You will lose that battle all of the time (for the same reasons discussed earlier with regard to sales closing rate comparison). I used to track my retention rate as compared to the actual retention rates of all of my top competition through a clever process which took a while to set up, but which took very little time to maintain, and which delivered invaluable data. In fact, the employment of this process helped me sleep a lot better at night because I had always thought we had a terrible problem with client retention, but in relative terms it turned out that we did not.

Darn, I wish I had time to share the entire process with you, but I have taken far too much of your valuable time already. So, for now, I will leave it at that. But, if you are dying to hear more about the retention rate tracking system or anything else that I touched on, give us a call or an email.