FNSSAM403 Prospecting for New Clients

In your own opinion, what are some areas which are important to say about yourself and your business when creating a Facebook or LinkedIn profile Why would correct and professional information be important to your organisation.Deceptive information provided on social networking sites like Facebook and LinkedIn Profiles can lead to mistrust towards company and company might have to face legal consequences on the basis of providing fraudulent information and misleading information. Thus for maintaining a positive image and a trust based relationship with the clients it is very important that correct and professional information is provided 

What is cold calling Is cold calling an effective prospecting method Explain your answer.Cold calling is a prospecting technique which allows a sales person to make contact via telephone and explain about their product to the client. Cold calling is like fishing in a big lake.How would you build a relationship with a client through cold calling.

To build a relationship with the client through cold calling, it is important to target the right clients who have a specific need for the product or service being offered. Also it is necessary to be polite with them. Also it is important that the sales person be adaptable. This is important because there are various types of personalities out there. Again, it is important that open ended questions are made while cold calling and be able to communicate insight, value and credibility to create interest and trust Why do you believe is it important to encourage prospective clients to express their needs and goals when completing a data collection Do you plan to experience any financial changes in the near future, like a college tuition coming up or receiving a large inheritance.After you have completed the product research how would you prepare for the next contact.

In Australia, over some 120 years or so of not quite so accurate statistics, property prices have risen at an average compound rate of 10.4%, very slightly ahead of England.  Again, property prices have doubled every 7 years or so despite droughts, wars, changes of government, interstate and overseas migration, interest rate movements, exchange rate movements, changing rates of unemployment, CPI movements, etc.

Property cycles

When one takes a short-term view of property price movements, one can get confused by apparently contradictory statistics. However, if you understand that property prices move in 7-10 year cycles, the picture becomes a lot clearer.

Let’s take one obvious example. The movement in NSW and Victorian property prices tend to be counter-cyclical to Queensland prices (especially South East Queensland).  This is heavily influenced by what is happening in the NSW & Victorian economics which encourages migration to Queensland, and at other times in the cycle, people returning to NSW and Victoria.

So, when Queensland prices are moving ahead strongly (because of this additional demand from interstate migration), prices in NSW and Victoria exhibit slower growth, and vice versa.

A study of cycles shows that the Sydney market is much more volatile than, for example, the Melbourne market. Sydney prices rise faster but can also experience significant falls in each cycle – Melbourne prices tend to rise rapidly (+25%, +20%) in the first two years of an upturn and then more moderate increases of 3-7% in the remaining years of the cycle till growth spurts again.

Relative prices in each capital city

Over the last 100+ years in Australia, each of the six State and Territory capitals have established a fairly stable ranking with each other in terms of their median house and apartment prices.

Traditionally, Sydney has always been the most expensive followed by Melbourne, Canberra, Brisbane, Perth, Adelaide, Darwin & Hobart. Increases in prices in each of these markets, for whatever reasons (mining booms, economic recessions, rural booms and droughts etc) can cause some temporary shifts in the relative standing of each of these cities. But these are normally temporary shifts and the long-term standings re-assert themselves as the various cycles evolve.

In the last 3-4 years, Perth & Darwin prices (and to a lesser extent Adelaide and Brisbane prices) have increased dramatically due to the boom in mining and oil company revenues and increased demand for labour (and therefore housing) in those cities. Sydney and Melbourne prices, while still rising, have slipped behind these other cities in terms of relative price increases.

Basic demand & supply

The ever-increasing need for housing in Melbourne and Sydney is not based on temporary boom factors but on underlying (substantial and permanent) shifts in population. Each city has a strong underlying economy, which is not dependent on one particular industry.  In addition, estimates of Melbourne’s population for 2020 is over four million people (an approximate increase of 25% in 13 years). This is huge in terms of population increase and the need to accommodate these extra people.

The reality is that Melbourne’s building industry cannot build more than about 140,000 accommodation units (houses and apartments) per annum due to shortages of qualified tradespeople of all types and shortage of suitably zoned land and the building permit process. Demand, on the other hand, is estimated at approximately 170,000 accommodation units per annum. Added to this, State and Federal governments have all but completely removed themselves from supply of affordable housing.

The inevitable consequence is that house and apartment prices will continue to rise (quickly over the next 2-3 years and then more moderately). And rentals, which are already moving up quickly, will continue to rise ahead of CPI.

Relativities with other capital cities will be restored by above average price increases in Melbourne and then Sydney.

Interest rates

The spectre of a return to 16-17% interest rates (experienced only once in Australia’s history and then only for a few months in 1990) has loomed large in many would-be investors’ minds. This fear is understandable but not justified.

Interest rates are now approximately 1-1.5% above the lowest they have been in the last 40 years. From an economist’s viewpoint, they are currently above the theoretical long-term average that they should be (arrived at by adding the present CPI increase and the additional incentive needed to be offered for people to save and lend their money to others – historically 1.5-2.0%).

Currently rates are above their theoretically justified level. This is not to say that the Reserve Bank will not use one or even two more 0.25 per cent interest rate rises to send a message to the market not to get “overheated”. Even two such increases will leave interest rates within 2% of their 40-year lows. A 0.25% per cent increase in the average mortgage of around $220,000 is equivalent to an extra $10.60 per week ($45.80 per month) in repayments.

By comparison, a 10% increase in the median house price in Melbourne is equivalent to an $817 per week ($3542 per month) increase in the owner’s wealth.

The level of rents (determined by supply & demand) and the value of the properties to which they relate establish the rental return per annum. The rental return rises and falls at different times in the cycle as real rents and property prices move up at different rates.  Rental returns on residential property tend to vary between about 3.5-4.0% and 5.5-6.0%.

Melbourne’s rental returns have moved very close to the top end of this range and are showing every sign of continuing to rise further as vacancy rates continue to show a decline from over 4% to a little over 1.1% in most parts of Melbourne. The city’s long-term imbalance between the new accommodation that can be supplied and the level demanded by increased population/increased member of new household formations noted above, allows the actual level of rents to continue to rise quite quickly. This will attract new investors into the residential house and apartment markets, which will, in turn, keep pushing prices up.

Housing affordability

There is much debate about whether houses have become “unaffordable” for young couples. Much research has been done on the number of years’ salary it takes to buy the “average” house, and the proportion of income taken up by mortgage repayments.

This is a very complicated issue, which has received a lot of publicity during this faux election campaign. Despite all the rhetoric I have seen no viable recommendations come forward and even less political commitment to solving the problem.

My view is that Australia (which has enjoyed the highest rate of home ownership in the world) will slip in the world rankings. Those who have parents who can help them will still be able to buy a home (especially with abundant bank credit persisting) while those who don’t may be consigned to a life of renting. This will further stratify Australian society with the rich getting richer and the poor getting comparatively poorer. This, combined with governments removing themselves from constructing accommodation, will put more reliance on a healthy private rental market and make it suicidal for governments to remove or reduce investment incentives.

It would be prudent for a person to hold on to a property over a long term because the real estate market seems like a chaos unless it is understood in terms of cycles it fluctuates. Australia enjoyed the highest rate of home ownership in the world but will slip in the world rankings as home affordability in Australia is getting tougher. There exists an imbalance between the number of new accomodations being contructed and the ever increasing demand for the accommodation results in a continuous increase in rents, which in turn attracts investors further increasing the finanacial gain.

Many research are done on the number of years’ salary it takes to buy the “average” house, and the proportion of income taken up by mortgage repayments.with increasing property pricing over the years it is getting more and more difficult for first time home buyers to invest in a property and secure a home for themselves. A 0.25% per cent increase in the average mortgage of around $220,000 is equivalent to an extra $10.60 per week ($45.80 per month) in repayments. By comparison, a 10% increase in the median house price in Melbourne is equivalent to an $817 per week ($3542 per month). For an average salaried family it is very difficult to secure a home loan and if they do it will be difficult to pay the mortgage when the families would also try to maintain a decent lifestyle, with school and tuition money and college fees.

The advicers’ role is typically of providing financial products and services to clients, depending upon the liscence they hold. They can offer both life insurance and variable annunities. He can also create financial plans for the client and also provide financial products and services both. The advicers in Australia are subject to fiduciary obligations.

The role of the organisation is to provide the advisers with complete training and understanding of the product and services are to be offered to the client The organization also needs to comply with the rules and regulations enacted by law in the concerned country. The organization need to establish an effective and efficient knowledge management system and an efficient organizational structure to establish an effective before and after sale services

The interpersonal skills required in encouraging a client to express their needs and goals would require the adviser to have a good communication technique and good listening skills along with understanding the client’s non-verbal communication. The adviser should be able to make the client feel relaxed and at ease while discussing the goals of their life. A good listenting skill would enable the adviser to understand better what the client is trying to say and a good communication skill would help the adviser to communicate to the client all the product and services related information so that no misunderstanding prevails. In terms of financial products and services it is very important that the client clearly understands all the terms and conditions.  

It is important to understand a prospect’s level of financial understanding before making any recommendations so that the client’s financial goals, needs and priorities are understood so that an appropriate recommendation can be given to the client.It is important to protect the client’s financial information because it is confidential and personal information shared by the client with the organisation based on trust. The client is assured that the information they provide and the information about their finance would be kept confidential and protected by the company thus, it is crucial that all the measures are taken to protect client information so that no misuse, modification, falsification is not caused to it.  

Having a prospecting database enables the advisor to predict future buying behaviours. Prospecting database can be categorized as geographical, demographically and psychographically and help the advisor to understand who will most like buy their products. It would also help the advisor to categorize the clients’ accordingy to their preferences for their particular product and services.

The database established would help the advisor recall how and when and where the client was contacted and how often the client was contacted. The marketing materials forwarded to the client, what marketing material to be forwarded to the client, etc. the advisor can easily classify leads as hot leads and cold leads from the prospecting data available with him. From contact history to classification data prospects provide easy accessible information to the advisor.

The database of the client available with the advisor can be used by the advisor to segregate the clients’ preferences, needs and categorize them according to their preference for different products and services available an approach the client accordingly. The database can also be used to contact the clients’ once new product and services are launched. This database can also be used to keep track of the clients’ purchase history and contact them again once the product and services expires. The maiantainace of database also assure that the duplication of the contact history can be avoided.

Prospecting database is used by the advisor to anlyze the client’s real needs and real preferances and present to the client only those products and services which are truly appropriate for them from all the products and services available with the client.

The advisor thus can prepare for the next contact only after utilizing and analysing the database available with them. It helps the advisor to dvelop confidence too as it gives an insight into the client’s preferences and needs and thus gives an upper hand when it comes to offer products and services. 

Refernces

Blount, J., 2015. Fanatical Prospecting: The Ultimate Guide to Opening Sales conversations and filling the pipeline by leveraging social selling, telephone, email and cold calling. New Jersy: John Wile & Sons.

David, P.A. & Petersen, J.C., 2015. Integrating an experiential client-based tickets sales center into a sport sales course. Sport Managment Education Journal, 9(1), pp.66-72.

Elson, A., 2011. Governing Global Finance: The Evolution and Reform of the International Financial Architecture. Springer.

Gambi, L.D.N. et al., 2015. The relationship between organizational culture and quality techniques, and its impact on operational performance. International Journal of Operations & Production Management, 35(10), pp.1460-84.

Howard, R.H., 2012. System and method of making sales calls. U.S: U.S.Patent and Trademark Office.

Kelly-Louw, M., Nehf, J.P. & Rott, P., 2016. The Future of Consumer Credit Regulation: Creative Approaches to Emerging problems. Routledge.

Rodriguez, M., Peterson, R.M. & Kriahnan, V., 2012. Social media’s influence on business-to-business sales performance. Journal of Personal Selling & Sales Management, 32(3), pp.365-78.

Schiffman, S., 2007. Cold Calling Techniques: That Really Work. U.S.News and World Report.

Ustuner, T. & Godes, D., 2006. Better Sales Networks. Harvard Business Review, 84(7/8), pp.102-12.