This is just a quick word about what we do when confronted with a prospective client who thinks they are well equipped when it comes to their currency activities.
The prospect in question is a wholesale manufacturer of garments and accessories and they supply some of the UK's best know high street fashion brands.
With a 'woman on the inside' we knew before we approached that this business was relentlessly contacted by currency companies.
They have factories in both China and India.
Almost all of their suppliers invoice in US dollar.
The business holds it's own US dollar account, from which they settle incoming invoices.
Rarely do they repatriate the US surplus they carry, preferring to leave it on balance so as to ensure they're flush with USD.
They do, from time to time, exchange sterling to USD to top-up this account.
The usual response given to currency companies who come a-callin is that they do neither sufficient volume, nor sufficiently regular payments to be an attractive target.
Knowing the set-up well, they also inform would-be suitors as to the margin/spread given to them by their bank.
They had previously engaged a currency broker, but, when their bank got wind that their FX would be moving to another provider, the bank simply tightened the rate their offered the prospect.
Knowing all this we still wanted to talk to this prospect.
Our first step was to acknowledge the fact that the prospect had a system they were content with and, by anyone's standards, they were being offer an above average rate of competition from their bank.
We swiftly identified that we could squeeze a further 0.25% out of the margin that was being offered by their bank.
The overriding view of this prospect is that their exchange activities are 'too small' and infrequent to be of interest to a firm like Prime Cap.
We suspect they arrived at this conclusion because previous brokers they spoke with probably lost interest once it was confirmed that payment activity was not sizeable and both ad-hoc and pitted against an already attractive margin for the client.
We take a different view - if we can offer a saving and the process and additional expertise we can offer means a measurable improvement/cost saving for the client, we will never turn away business.
So long as our bottom line is covered, we are committed to on-boarding corporate clients regardless of the frequency of trade...
Now we come to the strategic sales approach we take when it comes to prospective clients like this.
Rather than saying 'you don't the model of a target client' and leaving at that and moving on, we have invited the prospect to get quotes from us and and when they consider their next exchange.
Yes, we know they are unlikely to change provider from one comparison, but, they do compare rates to make sure their bank stick to their tighter margin, so, we want to position ourselves as one of the firms from which those comparisons are sought.
Over time our hope is that the modest improvements we make, when considered as a whole, will serve as a compelling saving over the course of whatever length of time it takes.
So, we are taking a step back.
We are not trying to aggressively shoehorn our better rate in to discussions, nor are we arrogantly telling this prepared client that their current process is bad. It is not and we want the prospect to take something positive from the confidence we have in our position.
Time in the market - by that we mean the longevity of our commitment to giving them sound advice - will hopefully mean that we reach a point whereby we can say something like 'over the past 18 months we could have saved you £2000, surely that is a compelling figure?'.
It is a waiting game.
Our brokers are not incentivised based on the number of new clients they register.
Nor are we blindly trying to categorise this prospective client as anything other than another referral whose set up is more sophisticated than most.
A less experienced set of brokers would either wash they hands of the opportunity and introduction because there isn't sufficient margin/profit in it, but, the incremental growth of our portfolio is what we are after which means we have all the time in the world to wait for the penny to drop with regards to shifting FX activity to us.
Another string to our bow when it comes to strategy is that, now that a polite and useful validation of the strength of this prospect's currency arrangement has been provided, we can work to become a trusted source of additional information.
We make a big deal of the fact that even though a business or individual might not have formally engaged us, our experts are always willing, eager and happy to add insight and recommendations to any discourse without fee.
Every person working for the prospect in question, everyone we have cause to be in contact with, is both a prospective client and a potential source of referral in their own right.
If we can fashion a position for ourselves as a go-to source of sound advice. Non-pushy and respectful of existing structures, then there is still value in the relationship with this prospect; and that is really what underpins our approach to business sourcing.
We try to focus on the individual we are talking/dealing with. It strengthens our network and distinguishes us from the less experienced, less focussed 'factory firms' that will call this prospect weekly if not daily.
So, moral of the story is that no referral is worthless.
- There is always a silver lining -
It may be a thin one, but, making sure we extract every ounce of good will that comes from a referral means we have a strong and varied pipeline that is based on more than just a cold calling MO. The churning and burning of data is not an approach we support.
Many London based brokers for businesses take the view that it is a 'numbers game'.
We do not share this view for a number of reasons, chief of which is that it disregards the importance of the relationship one might be able to forge with the person at the end of the telephone.
Furthermore, cold calling and data churning relies heavily on experienced brokers and sales staff identifying the most profitable prospect and working them to a successful conclusion (ie. them becoming a client from whom one can make 'decent' margin). If we take the view that every single connection we make is worth the same to us and that the identification of our ability to save money for them is the goal, then we find ourselves in a far stronger long term position than many if not all of our competitors in this space.
If the above sounds like you or your business, if you're getting what you think is a good rate from your bank or you believe your activity means you deserve to be relegated to the pile of UK businesses whose bottom line cannot be improved by working with a broker, then we want to hear from you.