How to Sell Like Bernie Madoff (but ethically)
Last month I got to faciliate a roundtable meeting of salespeople, one of my favorite activities - I enjoy the intimate setting and personal interaction far more than being on a seminar stage in front of a large group.
One of the most frequently asked questions came up: "Frank, how can I get more referrals?"
I gave the same answer as always, but what came after is what really surprised me. I told him that the best way to get referrals is to create a 'referral-only' alter-ego. Create a complete image of a salesperson who only works by referral, complete with a separate set of business cards with the words "by referral only" below your name.
After explaining this to the group, someone chimed in that this is exactly how Bernie Madoff reeled in his victims!
Surprised, I went back to my office after and read up on Madoff, since I know little about him and his scam. And, sure enough, it's true: Madoff used the "by referral only" method to persuade people to hand over millions of dollars to a complete stranger!
This was very revealing to me, for the fact that I'm a fan of American Greed on CNBC, particularly the programs on Ponzi schemes. I'm not fascinated by the schemers themselves, but rather on how anyone in their right mind could possibly give a total stranger a check for their entire life savings. As a sales expert, I figured if I could find the answer to this, I'd have the most powerful sales technique in the world in my hands.
And, sure enough, the technique that Madoff - and many other Ponzi schemers - use is the "by referral only" method.
Why is it so powerful?
Simple: Because people want what they can't have. People crave exclusivity.
Nobody wants something that is readily avaiable. That's why anything free is generally not appreciated. I know from experience that I can send out a free e-book or MP3 to my email subscriber list and I receive almost zero feedback on it, because people don't bother with them - because they're free.
But if I take the same e-book or MP3 and put a price on it - even a low price like $20 - suddenly everyone who downloads it dives in and actually reads or listens to it.
The "by referral only" selling method takes this to an extreme and creates the perception that you are in extremely high demand, and people will start clamoring to get an appointment with you.
By contrast, cold calling is the "free" version in this example. Cold calling has the lowest percentage of sales call success for many reasons; one of those reasons is because it shows that you have zero demand.
If you're cold calling people at random, you have no exclusivity. Anyone can get an appointment with you, and YOU will take an appointment with anyone!
And that's only where the negative perceptions begin. I know that when I'm on the receiving end of a cold call, some of the thoughts that run through my mind are, "What kind of horrible service is this salesperson giving his customers that he has to cold call? Why doesn't he have any referrals?"
Or, "What's wrong with that company? If they're so broke that they can't afford decent marketing and have to force their reps to cold call, they probably won't be in business long enough to stand behind their products."
And this is just the beginning.
Always remember that people want exclusivity. Create the perception that someone cannot have something, and they will fight tooth & nail to get it. Avoid sales activities like cold calling that lower your perceived value, and stick with strategies like the "by referral method" that create an aura of high value around you. Do that, and watch how quickly your success rate increases.
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