Everyone hears about the growth at Apple. But far too few of us hear about great growth stories of start-up companies in non-tech industries that use today's sales tools to change the game and steal sales leadership from traditional competitors.
Jefferson Financial, which moved its headquarters from New York to Louisville, created dramatic, rapid growth using Twitter and Linked-in to take on industry giants like Schwab and B of A's Merrill Lynch. Readers should take this story to heart, because it shows the kind of success small and medium-sized businesses can have when they break out of traditional thinking and invest in new sales tools while stalwarts remain stuck doing the same old thing with diminishing results.
The Jefferson Financial Story – from Ron Volper, Ph.D
Companies that reduce their sales and marketing budgets in this tough economy—as most have– are doing exactly the wrong thing. While many are trying to cut their way out of the recession, the companies that are thriving in this economy are growing their way out by investing more in sales and marketing. And by capitalizing on new trends, such as social media and technology, to reach out to their customers.
That's what enabled Jefferson National Financial to grow its 2010 $180 million revenues to $280 million in 2011 (a 55% annual increase!) — and capture the dominant market share from much larger companies like Charles Schwab — selling financial products such as variable rate annuities to registered investment advisors and their clients throughout the US.
While most industry competitors cut their sales and customer service teams in the recessionary economy, Jefferson National tripled its sales team from 2010 to 2011. While competitors slashed advertising and marketing, Jefferson National substantially increased its advertising and marketing budget. Sound risky? Read on for the results.
Jefferson National combined hi-tech and hi-touch. For example, it used LinkedIn, Twitter, and YouTube to reach financial advisors (the intermediaries that recommend its products) and their clients (the investors). The company capitalized on a slew of tweets and re-tweets highlighting its relocation to Louisville and the creation of 95 new high paying management jobs. Social excitement induced both the mayor and the governor to attend a celebratory event, and encouraged the governor to designate a day as Jefferson National Day – creating a low cost media following of the company, its products and its success.
Successful viral marketing combined hi-tech social involvement with classic event marketing.
Lacking anything exciting to say, many of Jefferson's competitors reduced their fees (prices) for products and services to maintain revenues. Jefferson National was able to maintain its fees by successfully pitching its story directly to customers on-line, then following up with personal assistance, adding value and promoting a successful investor story. As a result, after only 5 years the company increased its fund offerings from 75 to 350.
Jefferson National leveraged its technology to help financial advisors grow their practices. By hosting financial advisor webinars on how to use Linked-in and other social media to gain referrals from existing clients it created a loyal, growing set of distributors and happy clients.
Additionally, Jefferson National used technology to give financial advisors “an end to end solution” demonstrating to investors on-line, regardless location, the power of tax deferred investment growth, regardless of whether the investor was conservative or aggressive.
The result – the company generated $1 billion in sales since inception and became the market share leader.
According to the Ron Volper Group’s recent analysis of 125 companies (including Jefferson National), 80% of companies that were successful in the 2008-2010 down market (as measured by meeting and exceeding their revenue and earnings goals and capturing market share) recognized that customer buying behavior changed, and altered their sales and marketing approach while their less successful peers kept doing "more of the same."
Unfortunately, too many companies exacerbated failure by cutting advertising and marketing budgets. Today customers demand 8 touches (or contacts) to make a buying decision; whereas prior to 2008 they required only 5 touches. While competition has toughened, customers have simultaneously become MORE demanding! The winners, like Jefferson National, recognized that social media, such as Twitter, Facebook and LinkedIn are immediate and inexpensive ways to attract attention and have followers share their success messages with their networks. Simultaneously they continued to advertise and promote their products in traditional ways, appealing to the widest swath of prospects.
Most companies have not accepted the increased customer demand for increased touch, without higher prices. Most have not modified their marketing and sales approach to take account of changes in customer buying behavior. That’s why this is a perfect time for many small and mid-sized companies to adopt new technologies. These are the "slings" which can allow modern-day business Davids to attack lethargic Goliaths.
Thanks to my colleague Ron Volper for sending along this story. He is a believer that anyone can grow, even in this economy. RON VOLPER, Ph.D., is a leading authority on business development and author of Up Your Sales in a Down Market. As Managing Partner of the Ron Volper Group—Building Better Sales Teams, he has advised 90 Fortune 500 Companies and many mid-sized companies on how to increase sales in tough times and good times; and he has trained over 30,000 salespeople and executives over the past 25 years.
I hope your company can take this story to heart and find ways to incorporate new tools f0r creating growth as market shifts make old strategies less valuable, while creating new opportunities.