Dear Broker, here are your updates for this week...

M a r k e t i n g  t i p
Don't leave money on the table

If you have ever been to a craft market in a tourist destination - especially outside the United States - you have almost certainly witnessed a powerful sales concept in action. You walk into the tiny shop on the edge of the street, take a look at a couple of their wares, turn around, and walk out. The shopkeeper is immediately making overtures to you. The item that was priced at $20 is now all of a sudden only $10, and then $8, and so on. The shopkeeper's actual cost for the item is probably only a couple bucks.

The shopkeeper knows that not completing the sale is worth, at best, nothing. More likely, an unrealized sale probably costs him money. He spent his resources on his facility and inventory, he spent his time with you. And he got nothing for it. If he could get you to buy the item for $30, it would be a great sale. If he could get you to buy for $8, the sale is likely still profitable. One thing he is confident about, the minute you walk out, he has lost the sale; so he'll go to great lengths to do anything he can to turn the no-sale into a profitable event.

Do you go to great lengths? Do you really know your all-in break-even point? How much does an approved deal that you propose to your customer actually cost you? You invest in the marketing and sales to get them to that point; you invest of your time and talent to get them approved and discuss their options. Assuming the additional resources it will take to complete the deal, what is your cost to fund a deal? (Be sure to include the opportunity cost of working on that deal as opposed to working on something else.) If you can recover at least that much in commission, you can reach your break-even point.

For the sake of analysis, let's say it costs you $2,000 to fund a deal (marketing, sales, expenses, labor, opportunity cost, etc). Also consider the intangible positive values of each funded deal: word-of-mouth referrals, opportunity to create a repeat customer, introduction to a new vendor, maintenance of an existing vendor relationship, etc. Once you know your break-even point, the next steps are clear. How can you net, at minimum, $2,001 in commission, or more? Based on the reasons why the customer did not accept your first few proposals, what else could you offer to get the deal to fund and still be profitable? On a sizeable  deal in which your maximum commission is ten points or more, what if you offered to rebate the customer their processing fee or first month's payment? What if you told the prospect that you'll pay for their first $2,000 in fuel for their truck or equipment? Get creative with your offers so they minimize your additional expenses but most directly speak to the customer's sales objection.

Undoubtedly you have a drawer or computer file filled with old, cold deals - those approvals that never funded for one reason or another. You're already in the red on those deals - you spent your marketing dollars, sales resources, admin resources and expenses, but you didn't earn a penny. And you know a lot about that prospect already - from credit to available pricing, from commission opportunity to their sales objection. Did you do everything you could to make that deal profitable? Did you make the leap like our shopkeeper did from $20 to $8?

Take a stack of a few dozen old approvals. You've already made a few proposals to them. Now make them a crazy offer - something modestly above your break-even point. (Remember, you've already spent the money generating the lead and getting them approved.) If that works, grab another stack of old approvals and make a slightly less aggressive offer. Turn those approvals that did not fund - unrealized income - into profit. Don't leave money on the table.

S a m p l e  d e a l  o f  t h e  w e e k
Funding in four days on van delivery truck deal