Marketing v. Prospecting: Knowing the Difference, and Developing a Plan

6 min read
January 15, 2018

In a recent mailbag episode of XYPN Radio, Michael Kitces and I discussed the difference between marketing and prospecting. We were both so invested in the topic, we spent nearly half the episode going over it! That’s because I firmly believe that there’s a fairly confusing cloud of information around both prospecting and marketing. The two terms often get used interchangeably, when they don’t actually represent the same strategy - at all.

What is Prospecting?

In my mind, prospecting is essentially outbound marketing. The goal when prospecting is to chase people that may or may not be interested in the services you offer and, ultimately, convert them into clients. One classic (if a little bit cliche) to view prospecting is the cold calling or door-to-door sales people that branded themselves as financial planners.

This strategy was incredibly common in the early days of the financial planning universe, but since then prospecting has evolved a little bit. Some people still utilize the cold-calling method. But more often than not, “prospecting” now looks a bit more natural. Some advisors choose to go down the webinar or free seminar path, while others still join up with a local networking group and pass out their card until they land a client.

Prospecting isn’t always easy. For many introverts, myself included, it’s more painful than pulling teeth. Still, if your livelihood and business depends on getting clients to sign on the dotted line right now, after chasing them down, you can make prospecting work for you. Some methods are better than others. For example, heading to a networking event or conference (even as an introvert) will be a lot less overwhelming than calling 100 people in a day and getting hung up on by 99 of them.

Something to keep in mind, whether you’re cold-calling or attending local estate planning groups, is that prospecting is time-consuming. The process is a numbers game. The more people you contact, the more likely it is that a small percentage of them will sign on as clients. The amount of rejection one faces while prospecting is huge - and it’s one of the many reasons I prefer long-term inbound marketing strategies.

What is Marketing?

If prospecting is outbound marketing, I view the generalized “marketing” term as inbound marketing. The goal of marketing is to attract people to your services rather than chasing after cold leads. Marketing often has a long-term strategy behind it. An advisor might say, “I want to build a presence that draws people to me and my business.” That’s where a marketing plan comes in. There are about one million ways you could get involved with inbound marketing. Just to name a few:

  • Blogging

  • Developing an email campaign and lead magnet

  • Paid advertising (because, at the end of the day, prospects are still calling YOU after seeing the ad)

  • Podcasting

  • Recording educational videos

  • Social media strategy and engagement

  • Creating a Facebook group (much like the XYPN VIP Radio Community)

XY Planning Network focuses largely on marketing over prospecting - both in our own strategy and what we advise members to do. In fact, we provide a ton of support, services, and content to advisors looking to set marketing goals. Our original focus on marketing over prospecting started out of necessity. XY Planning Network was founded by Michael Kitces and I, and we’re both introverts.

To be honest, the idea of cold calling a list of people makes me feel physically ill. I always use to joke that I could walk into a room of ideal prospects and not walk away with a single client. I proved myself right not too long ago when I was asked to give a presentation to 30 or so professionals who all wanted to start their own planning firm.

I mean - is there a better room for the founder of XY Planning Network to walk into? They were all ideal candidates to be XY Planning Network members! Still, I walked out of the presentation without a single business card or set of contact information. It just makes me uncomfortable, and it’s not how I operate.

I much prefer the natural feeling I get when engaging in a marketing strategy, and I think that a lot of advisors feel this same way. For me, prospecting feels forced. Marketing feels like I have the opportunity to do something I enjoy (like recording podcasts and interviews) and still be building my business’s brand while reaching my target audience.

What If You’re Just Starting Out?

In our podcast episode, Michael brought up a great point - that many new financial planners who join XY Planning Network love the idea of marketing, but don’t love the “long-term” piece of the puzzle. They need prospects right now, and a long-term strategy is great but isn’t going to help them survive in their first year. You may be in this boat, too.

On the other side of the coin, there are advisors (or business owners in any industry, really) who believe that inbound marketing is as simple as writing a handful of blog posts, tweeting a few times, and waiting for people to start beating a path to your door.

Here’s the thing: marketing isn’t the “lazy” route. And prospecting isn’t for the “go-getters.” You likely need a combination of both to get rolling. Before you start cold calling a list of leads, I don’t mean you need to prospect in the traditional way. You need to get active with an inbound marketing strategy - and truly commit to it. When you get more active with your marketing strategy, you’re more likely to draw in clients you’re dying to work with - even if you’re just getting started.

Get a clear picture of your first year for firm ownership before you even start  with this business plan template

It All Comes Back to the Niche

I know - shocker. It’s true, though! The way to get active with your inbound marketing strategy is to start marketing yourself and your business where your target audience is already hanging out. Show up there. And continue to show up.

The more you get involved with the people who are your ideal clients, the more you’ll understand how you can market your services to them in a way that works. With time, you’re going to find some things that work and some things that don’t. You have so many marketing options available to you as a financial advisor, and you can spend millions of dollars on all of them - but you’re better off evaluating where your marketing dollars are best spent given who your target audience is, and what they respond to.

Inbound marketing is all about building your brand so that the people who are looking for you will find you. Yes, it takes a while to become “findable” - but it doesn’t have to take as long as you think. If you have a niche, you’ll be able to produce content that draws them in. You’ll be hanging out and interacting on the social media channels, groups, and forums that they’re already existing. You’ll be building your brand and positioning yourself as the expert in your field who works specifically with the people who want to work with you.

The beauty of marketing to a niche is that you can always switch it up. There’s nothing saying that you have to use one marketing tactic till the end of time - your strategy will grow and evolve as you do (or, more accurately, as your ideal client does).

There Isn’t a Silver Bullet

I think that once financial advisors realize that inbound marketing is going to take time and effort, they turn to prospecting - especially if they’re in year one. It’s almost as if advisors are saying, “I love the idea of a long-term inbound marketing strategy, but there’s another way, right? Something that’s going to work for me immediately?”

I hate to be the bearer of bad news. While prospecting and marketing are both options you have to get your business and your name out into the world - neither of them is a silver bullet. There is no magic, booming-practice-overnight strategy we’re hiding from you so that you knock it out of the park in year one. I wish there was! I’d want to share it with all of you immediately. There’s nothing I love more than seeing the XY Planning Network crew find success.

This is why I personally advocate for a long-term marketing strategy over prospecting. I think that building your brand and being actively involved with marketing to your niche audience is the best way to grow - and it will continue to serve you for years down the road. So, find your people. Market your services to them by adding value to their lives. Determine your comfort level with different marketing strategies, and pursue one that feels natural and exciting to you. The more excited you are, the more excited your niche audience will be, and the more success you’ll ultimately have.

It may take time, and nobody’s story is going to be the same as anyone else’s. Different things will work for different practices. Keep at it. That’s the true path to marketing success.

Listen to XYPN Radio MailbagEpisode #101 for more on this conversation.

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