Kitces & Carl Ep 51: Fighting The Fear of Focusing When Trying To Select A Niche

***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.

Show Notes

• Kitces & Carl Ep 49: Getting More Referrals Beyond Just Trying To Be More Remarkable
• Kitces & Carl Ep 50: Overcoming Referral (Asking) Reluctance And Taking The Risk Of Marketing Yourself
• Why It’s Easier To Market To A Financial Advisor Niche
• Google Analytics
• Measuring The Success Of Your Financial Advisor Website Using Google Analytics To Track Activity And Goals
• Adam Cmejla's Integrated Planning & Wealth Management
• Seth Godin: Almost No One
• The Practice by Seth Godin
• Zig Ziglar: "Don't become a wandering generality. Be a meaningful specific."
• René Girard and Mimetic Theory

Kitces & Carl Podcast Transcript

Michael: Greetings, Carl.

Carl: Hello, Michael. Good morning, afternoon, whatever it is where you are.

Michael: Good morning, afternoon to you too. The great joy of being on different continents. I'm sure people realize you are in the UK now and have been a resident there for a better part of a year.

Carl: Yes.

Michael: This is now a transatlantic podcast.

Carl: Exactly. Coming to you live from London, and where?

Michael: DC. Washington, D.C.

Carl: Yes. Hello. How about London and Washington, D.C. Come on. That's a pretty big deal.

Michael: Yes. At some point, we should just take the direct flight, but I guess we'll do it virtually for now, because it's a little pandemic environment.

Carl: Exactly. Exactly.

Michael: We had a great conversation on the last podcast around pursuing referrals – sort of our referral reluctance – this kind of fear sometimes of holding yourself out. Trying to bring people in and saying things like, "I'm a financial advisor. I do this thing." It reminded me of another challenge, kind of similar to what I see out there a lot. I feel like there's sort of this twofold piece. The first is, it's almost so negative to say you're a financial advisor right now that we don't even want to say it. So we find cute sayings and other ways to say, "I'm a financial advisor." "I'm not a financial advisor, I help people craft their financial futures." That's my elevator pitch thing.

I find there's sort of this related fear and challenge of trying to get more focused in the business of who it is you're trying to attract and work with and go after as clients. So the infamous 'niche' conversation, but not so much about niches per se, as sort of the opposite. I feel like we have this fear of niches, this fear of focus. Like if I could work with any human being on the street I meet, that's safe. If I have to pick a particular clientele to go after to work with, that's scary. I feel like it's a mindset thing because I tend to look at it from the opposite direction like, you know what’s scary is trying to be everything to everyone where nobody ever actually says 'yes' to you, which is why we all have very, very low close rates. Versus being super focused in a particular area where it's like, "I can go off to that group of clients and succeed. I don't know how to win for everyone. I know how to stand out for one group in particular and go after them."

I don't know if that's just part of my mindset – whatever weird way I'm naturally wired – that I'm more excited to go after the focused group than I am to go after everyone. I don't know how to compete for everyone. I know how to compete for a focused group. I find, for the average advisor, picking a group to go after is scary.

The Paradox Of Saying 'No' – What Makes Niches Scary? [04:04]

Carl: Were you always that way?

Michael: Yes, I think so. Yes, I guess, in terms of, I've always been a little bit different in what I do and different things. I guess I've carried that little special aspect throughout – it wasn't always blue shirts. It was probably always something. Yes, I think I've always had that tendency and inclination of...I guess saying, if I want to try to be successful, I have to stand out and be good at something. The world's just too big to be good at everything. So even when I was first starting my career, in the first year or two – I've told this story, I think, on one of the prior episodes – I had to figure out how to stand out in the advisory firm office that I was in. So I became the resident expert on annuities, which back then – this was 20 years ago, like the heyday of annuities – would guarantee living benefit riders and a bajillion different riders no one knew how they worked.

So I read every prospectus; I met every wholesaler. Really, I read every prospectus. I met all the wholesalers. I made a ginormous spreadsheet out of it. I became the go-to person. That was even how I got into client meetings as a paraplanner, when I didn't have a lot of experience yet, was I knew this stuff better than anybody in the office. So anytime we actually had to talk about the technical details of an annuity, it was like, "Get Michael out here. He knows all this stuff cold, anyway." So yes, I guess I've always been wired that way to some extent to say if you want to succeed, you've got to stand up and show up for something.

Carl: Yes. Look, I think it makes sense to me why people would be nervous because it feels...and I think what they hear you say, and what I've been saying for years, and what often people who've experienced it, say to them, it feels paradoxical. It feels like, "Wait, I'm supposed to say 'no'?" That's the first thing; it's like, I'm supposed to say 'no'? Then you also get this... So first on the understanding, and then I think we can talk about, what are some things we can think about to shift that mindset? Because it is completely a mindset. It's a story that we've told ourselves. It's a story that the industry has told us. We've been taught, if they have a pulse, they're a prospect. So I think saying 'no' can feel paradoxical.

Then the other problem you get is sort of like, "it must be nice". It must be a nice problem, which is like, "Oh, cute. You, 10 years into the business, now telling me... it must be nice. You weren't that way when... I would love to be at a spot where I could be selective." So I think...

Michael: I was. It's always been that way.

Carl: Yes. I also think, too, that there's a thought, a story that we tell ourselves around that. It's like, but wait, I have pressure building business now. So people think that this suggestion of specializing, they think it's a suggestion to forego some short-term gain in order to eventually get to this really cool business. What I have found, and tell me if you disagree, but what I've found is it's actually the fastest way to the really cool bit. If you want to succeed quickly, the fastest way to succeed is to get as narrow of a niche as possible, as early as possible. I'm not saying that, oh, do that as soon as you can because you'll really love your life, it'll be great.

I'm saying, if you want to meet the realities of your business growth goals, whether you're at a firm, you're going to get fired, or you're not going to be able to pay your mortgage. The fastest way to build a business, in my mind, is to get narrow. That feels counterintuitive. It feels like I'm saying 'no' to opportunity. So that's why people feel that way.

Michael: I think you make an interesting point around this, because certainly when I think of it for just even like myself, having done this and lived this with multiple different businesses, it's not about saying 'no' to people. It's not about saying 'no' to a bunch of people. Frankly, it's just about getting more people to say 'yes' to you. We tend to look at different things, like our close rates. How many at-bats do I get sitting across from prospects? Then, how many of them do I close and work with? I think of this much more broadly, like, how many people did you walk by and meet on the street over the past month? Granted, that's a little bit weird in the pandemic world. Take yourself out of the pandemic world where there are lots of circulating in public places and meeting other human beings. How many human beings do you cross paths with in any particular month? For most of us, like hundreds that we interact with, at some brief moments throughout our days and lives, like hundreds of people. Okay, how many of them became clients? Okay, well, maybe you got one or two, for a lot of us. So one or two new clients a month is actually a pretty good number.

My starting point was like 99.9% of the people you meet, don't do business with you. Let's just be clear upfront. So if all you did is walking around with a freaking neon sign on your head that said, "I'm the best financial planner for doctors there is." You would talk to more than 1 out of 1000 people just because more than 1 out of 1000 people are doctors. You would actually have a better prospect rate than what most of us do right now, who never have a meaningful way to strike a conversation with pretty much anybody but the small few that get in front of us. Even then, it's really hard to differentiate ourselves. If you look at most financial advisors’ websites...I know a lot of us don't look, like go look at your Google Analytics.

Carl: Go do that. Yes.

Michael: Go look at your Google Analytics. If you don't have Google Analytics...well, we have an article on the website we'll have in the show notes, but call your web person, whoever made your website or did website things, and install Google Analytics. It tracks how many people show up to your website. So for most advisors, I find something like a couple hundred people a month show up on their website. Miscellaneous searches. People moving around. Some of them got referred to you that you didn't even hear about yet, but they came and scoped you out, and they found your website. You're probably going to see a couple hundred people.

Now if I asked most advisors, "How many leads do you get off your website every month?" The answer is usually zero. Literally zero. "Nobody contacts me off my website and does business with me." So, cool. So let's put this in the real world context – your website is like your digital storefront. It's basically the digital equivalent of your front office. So a couple hundred people a month is like 5 to 10 people a day. It's like one every hour or two. So imagine, you're going to sit in the front office of your lobby – your actual physical front office – your front lobby of your office, where the prospects come in, where the clients come in. So you're going to sit there, and once every hour, a stranger walks into your office, sees you sitting there, looks around, glances at the materials on your table – on your coffee table – takes in the decor, and leaves. Then in the next hour, a new prospect comes in, looks at you. Checks out your office. Waves a little slightly awkward wave and leaves. So this happens every hour of every day for 30 days.

Hundreds of people just walked in your front lobby, waved at you, gave a little nod, looked around, and walked out. If you watched 300 people walk into your lobby, look around, check you out, and leave, and not a single one asked to meet with you...frankly, you’d probably feel pretty bad about the state of the marketing of your firm, when hundreds of people walk into your front lobby and not a single one wants to talk to you to learn more about what you do. The reality is, that's how our marketing is actually working today. If you turn on your Google Analytics and find out, that is literally happening. So when I talk about something like, "Why do you become more focused? Why do you have a niche? Why do you go down this road?" I'm starting with every month 300 people show up in your virtual lobby and reject you.

It's already happening. It doesn't feel bad, because we don't look at our website statistics to realize it, but it's happening. So you're being rejected 300 times out of 300. All I'm suggesting is that if you get a little bit more focused, you might only be rejected 297 times out of 300, which would be a 1% conversion rate and a drastic increase in the activity of your business. We only get focused on the few people we talk to, and not the other 300 that come and check us out and never do any business because we were never identifying clearly enough in the first place. So again, if that website just said "the best financial planning for doctors in Paducah" or wherever it is that you are. If two or three of those people that walk through the virtual lobby happen to be doctors in Paducah, you're probably going to get an opportunity to talk to them. You just increased how many people you're talking to.

Carl: Totally. Yes. You skipped the empathy part, first of all. We first were supposed to have an empathetic hug for the struggle, of how hard this is. You went straight to the punch in the nose which is completely fine.

Michael: Well, I'm a little direct sometimes.

Carl: No, no. It's not a problem. Sometimes it's an empathetic hug; sometimes it's a punch in the nose. So I understand why there's fear. It feels paradoxical to feel like you're saying 'no', but what you're pointing out is you're actually not. You're already saying 'no'. Like, here's the reason that's true.

How Focusing On A Niche Is Not Actually Saying 'No' To Potential Clients [14:42]

Michael: Well, just turn it around, not to make it depressing. It's not that we're saying 'no' to a bunch of people who don't fit into our niche. It's that everybody is saying 'no' to us. Almost everybody says 'no' to us. So I'm just trying to get to more 'yes'. I'm trying to get them to say 'yes' to me more. I'm not saying 'no' to more of them. I'm trying to get a few of them who otherwise were going to stroll through like everybody else to actually pause for a moment and say, "Wait. What do you do?" Because it seems like you are for people exactly like me.

Carl: No. Listen, I don't even know how to help. We do a lot of work with advisors around marketing and communication, and I don't even know how to help. Literally, I don't know how to help you if you don't have a niche. Because I don't know what you do. Everything you've just said – here's the reason it's all true – is because everyone doesn't exist. There is no such thing as ‘everyone’. How would you even communicate to everyone? What would you say? The days of that, I think we're still basing that on, I don't know if half the people listening to this won't even know these days where you turn on the television, and there were three channels, Channel 3, Channel 4, and Channel 5. That was it. Maybe everyone existed then, maybe. Everyone does not exist. It didn't exist then either. It certainly doesn't exist now where there are 872 channels. So everyone doesn't exist.

Then, the second piece that I think is really important to realize, and this was an interview I recently did with Seth Godin. He said this, he said, "Almost no one is going to listen to you, and that's plenty." I was thinking...

Michael: Oh, I love it. Seth says it much better than I do.

Carl: Yes. I think of Adam when I think of this, is that what he is saying? 99.6% of the population is going to be repelled by his website. 100% would have been repelled if it simply had a picture of a lighthouse, a compass, and a couple holding hands on the beach, and said something like, "You can trust me, I'm a financial planner." Or, we use the word, “I'm a fiduciary”. I'm sorry, that doesn't mean anything to anyone. It should. Just everybody knows – I don't want any emails about this. It should, but it doesn't. So I think the fastest way to 'yes'...and here's part of the problem, I think, no... 'Yes', is like a shotgun. It's not a very effective shotgun. 'Yes' is just like spray and pray. 'No', in that sense of when you say like, "No, I don't work with people like that." That's a surgical strike. It's a very clear decision. It's the fastest way to get to a big 'yes' is through being very clear about who it's for.

The word I like to think about here is 'relevant'. How can I be relevant in someone's life as quickly as possible? Because there's so much noise, and the only way to be the signal is to be relevant. That means, by definition, you're going to have to say, quite often, actually, it's not for you. Because there are going to be people showing up more often that are saying, "It's for me," which is what you're saying. Like I want them showing up saying, "Hey, it's for me."

Michael: Although I would actually even push back on that a little bit, Carl. Only that, again, as you sort of said, this is like, "Where are you now versus where were you 10 years ago?" When I was getting started, I didn't have a whole bunch of people coming in where I was like, "Oh, no, I only work with these people. I'm going to say 'no' to all the rest." I didn't have diddly squat coming in. I had nothing coming in. All I'm hoping is that one freaking human being notices what I'm doing enough that I have an opportunity to talk about what I do and explain my value.

Carl: Oh, here's your empathetic hug. Everybody, notice. Here's the empathetic hug.

Michael: Oh, now you built it up too much, I don't know if I can get there. All I wanted was one freaking person to pay attention to what I was doing because otherwise, no one did. So it wasn't this idea of, "Oh, well, in order to be successful, I need to say 'no' to 99% of my prospects, so I can just be awesome at the super one." Again, maybe I was just feeling really humbled by the business getting going, I was like, you know what my current batting rate is? Zero. Literally zero. I'm getting nothing here. So you know what, if I just take a giant swing at one particular group and become freaking awesome at them, and maybe I get a few of them? That's a few more than the basically zero that I'm getting right now.

Maybe it's just because we anchor differently. I don't think about the prospects I'm going to get to talk to and then have to tell a bunch of them, "Oh, I'm sorry. I only focus on doctors and not you." The truth is, I wasn't getting that many prospects. I wasn't getting that many referrals. There wasn't a lot of stuff coming in, anyway. There was very, very little to lose by getting focused and a whole lot to gain because once I got real about how many people I interacted with, I crossed paths with, that saw my website, then all the rest, and it became clear. Like, "Oh, there are hundreds of people every month who see what I do and I'm talking to basically none of them." All of a sudden, having something that was relevant to 1% was actually going to be a really big step up in the path of the business. That's why I did it.

Carl: I think the important piece I need to clarify here is that I'm not saying somebody comes in, and you're going to have to say 'no' to them. I'm saying it feels like...and you might have to, by the way, you might have to. It feels like if you get opinionated on your marketing, it feels like you're saying 'no'. If you go to Adam's website, it feels like he's saying 'no' to everyone. When he created that there was probably a feeling, it's easy to interpret...

Michael: This is Adam Cmejla?

Carl: Yes, Adam Cmejla's website. I would imagine, there was a feeling, like, the fear that we have is, "Oh my gosh, by putting myself on the hook for serving this group, I am saying 'no' to everybody else." What we're saying is actually, no, you're not. You're actually not saying 'n'o to anyone, because nobody is saying 'yes' to you. If somebody comes in...

Michael: You're not saying 'no' to them, no offense, but they were already saying 'no' to you. They already were not working with you.

How To Create Marketing Materials That Say “Yes” To The Right People [21:45]

Carl: If they come in and want to work with you, somehow they find their way in and they're not in your niche, then you have a decision to make. It's just fine to say, "I'll worry about this later. These just seem like nice people. I'll help them." All of us are clear about that reality. I can't remember – especially early on – I can't remember a prospective client coming in who was good for every other reason. Good revenue-wise, nice, people I'd want to work with, had a problem I was interested in solving. I can't remember saying 'no' to very many of those people. I did make my...the marketing stuff was opinionated. So maybe the better way to say that is what you've been pointing at. The marketing stuff is a giant 'yes' to the right people. So that they would say 'yes'.

I think when you understand what you're saying is like... It's sort of a little bit like when you hear people say, ‘financial life planning’. I often feel like...look, I have nothing against the term. Sorry, ‘goal-based planning’. Somebody said this. It's not my quote. Somebody said, "That's like saying ‘oxygen-based breathing’." Of course, we have goals when we do planning. I think this marketing is the same thing, like 'niche marketing'. I don't know how else you would do it. What would you write, a general interest piece? Who was it? Seth said this again, but it wasn't a quote from him. It was either Zig Ziglar or one of his other...Tom Peters. It was, "Don't be a walking generality. Be a meaningful specific."

The first question I think you should answer, like, if we get practical about this, it would be...and we probably should do a whole episode on, we're asking our websites to do too much, these poor little websites, we're asking them all...they're like beasts of burden. It can't do it. So the first question I would ask is, "If I show up at your website, would I know who it's for?" Would I know who it's for as quickly as possible? To use Adam's as your ‘how quick’ gauge, you don't even have to read anything to know who it's for.

Michael: Yes. Well, yes, you don't have to. We'll put it in the show notes. First of all, Adam's niche is optometrists. His homepage says "helping optometrists plan life". There's a big picture of glasses.

Carl: There's a big picture of eyeglasses. Yes.

Michael: Yes. Like that. There are literally pictures of glasses.

Carl: Yes. So I think that idea of saying, "Who's it for? Who's it for? Who's it for?" Let's just all operate under the assumption, it can't be for everyone, because everyone doesn't exist.

Michael: Again, I think the key piece being like... not to tear us down further, but just understand how many people say 'no' to us on a continuous basis, not just to our face. The ones who see what we do, hear about what we do, check out our websites, check out our office, scope us out and decide that there's not enough interesting there to even have a conversation with and explore. Not that I'm trying to be depressing or anything, but hundreds and hundreds of people see our websites and interact with us. If you've got a big firm, it might be thousands of people, but even there are a lot of solos. There are dozens and hundreds of people who see our website, who interact with us periodically throughout the day, throughout the week, throughout the month. Most of us I can count the number of qualified prospects we're getting on one hand, to maybe two. I'm pretty sure I can count the number of new clients on one hand without even using all the fingers.

So, we already get rejected by 99.9% of the people that we interact with. I'm not saying that to depress everyone. I do think there's a story sometimes that we tell of not actually acknowledging that reality because it would feel freaking depressing to realize, "Of the 500 people, or 300 people that interacted with me in the past month, 299 of them didn't contact me". Once you ground yourself to that, it's just that reality. It's a crowded world. Life is busy. A lot of things are going on. It takes a lot to move us out of inertia and to get us to actually want to do something, say something, raise our hand and take an action. Once you recognize that, how freaking hard it is to get any of those 300 people to actually contact you and interact. Picking something that just has a decent shot at a couple of them gives you a huge leg up on moving forward and growing your business.

It's not about rejecting the other 297, they were already rejecting you. They already weren't calling. You can't have people who weren't calling you, not call you and have it be a failure. It's where you already were. We just don't pay attention to them and pretend they're not there, so then it's really scary when we say we're going to reject them. The truth is, they're rejecting us already. So how do you get the few that actually that you can show up for and be relevant for when you recognize how many we just don't reach already, and say, "What would I have to do to just get a couple of them to finally pay attention and interact with me?" The answer, I think you used the word well, it's just be relevant for them, be super relevant for them.

Carl: Yes. I think the reason all of that is going on, like, why are you doing that, Mr. or Mrs. Advisor? I know this because I do it too. I'm doing it currently with projects I'm doing, is, it's scary. It can feel a little scary to... In Seth's new book, I hate to overhype this, but we just finished an interview with him. On his new book, "The Practice," which is actually really good. I've been reading Seth's work for 20 years. I didn't expect to find anything new, frankly. I was shocked at how...

Michael: This is "The Practice?"

Carl: "The Practice." It just came out.

Michael: Okay. We'll include that in the show notes for anybody who wants to check it out.

Carl: Yes, it's really great. He uses this term ‘on the hook’. I think one of the reasons for having a specialization, making yourself relevant, is the same reason that we don't do referrals. It's all pointing to the same thing. It's much easier. I love this. You've pulled the rug out from underneath this other story that we've been living in, which is it's already happening. Look at the data. Which is just brilliant in its brutality, just in its brutal honesty. So it's much easier once you...the reason you do this, at least the reason I do is once I say, “I'm doing this,” I put a stake in the ground. "I'm going to work with entrepreneurs that have had a successful exit over $10 million," which is, by the way, what I would do, because of me. Don't take that as a suggestion. That's what I would do if I were starting a new business, because of me, because I love those people. It's a problem I'd want to solve.

If I did that, though, and I put that on my website, you show up on my website, the only thing it says. I'm now on the hook for that. It's much easier, much more sort of like to fail behind the scenes, quietly, desperately fail, meaning 300 people show up within the website every month, and nobody contacts you. You don't even know that. It's much easier to just live in that story. Some of us actually become...I know I do this, really identify with that story. I see this a lot with my artist friends. I have plenty of friends who are more interested in being a struggling artist than they are in doing the work. They meet at the coffee shop to talk about it. They write about it. It's like, "Well, then why don't you just do the work?" We're more interested...and this is René Girard's work on mimetic desire. We're more interested in appearing to be creative and innovative than actually being creative or innovative.

This is one of those cases where we're more interested in appearing to be a successful advisor than actually being one. Because being one takes the emotional energy of putting yourself on the hook. What we're explaining – what Michael is explaining – is that's all a lie. I think it's a lie of the devil who's trying to trick you, trying to trick you into believing this subtle thing because it's a trick. The trick is, it's actually better than a lie. It's a paradox. It's wrong. The best way to be successful – and that's the goal – is to put yourself on the hook, and say, "I work with these people." Put a stand on the ground and be relevant, because 'everybody' doesn't exist. You're not alone if you're playing that game, but that's the game you and I are playing when we play that game. That's the story we're telling ourselves, is we'd rather just fail quietly, and not even know about it. Then we can blame structures and systems and noise and markets and economies, we can blame those things.

When Michael pulls the rug out from underneath you and says there are 300 people coming and not one has contacted you, then suddenly you can go...and which I love the idea of, if we live in that truth, if we accept that, then we can suddenly go, "Hey, there are some things I can do to change that." I don't have to blame outside forces. I can take responsibility and change that. One of the ways I can change it is to say, "This is who it's for." This is who it works for. So I think that's awesome. I never thought about looking that way at Google Analytics of, "Hey, it's not working already." That's beautiful.

Michael: I love the quote that you framed up. I want to go look up who this is now because I love the quote, "Don't be a walking generality. Be a meaningful specific."

Carl: Yes, "Don't be a wandering generality, but be a meaningful specific."

Michael: "Wandering," oh, that's even better. "Don't be a wandering generality. Be a meaningful specific."

Carl: To wrap things up from my perspective, the reason I care so much about this is because the people out the window need your help. The only way they're going to learn about you is if you're a signal, if you're relevant. If we're just part of the industrial noise complex, from the financial pornography network to the circus, to the whole, nobody's going to know that you're any different because you can't say, "I'm different, I'm honest, I'm a fiduciary." So that's why I care so much about this, is like, please build a niche because the people need you, not only for your sake but for theirs.

Michael: For me, it just comes down to the fact that we put a lot of time and effort into learning to be financial advisors, to have the education, to have the knowledge to be able to help people. Like I just want to see us collectively succeed for all the time and effort that we put into building up our business and our knowledge and our education and our experience to get to this point. It's hard for me to see so many advisors kind of run this phenomenon of, there are already hundreds of people showing up on your website, and they're already not doing business with you. Unfortunately, we got to take it a notch down and recognize where the bar actually is. Then you may realize, like getting more specific at anything, is what gives you a leg up on that.

Carl: Totally. Totally. What you said earlier about the idea that having a niche is about getting...it's not about you saying 'no' or 'yes'. It's about getting other people to say 'yes' to you. That's super powerful. So thank you, Michael.

Michael: Awesome. Thank you, Carl."