Remember FTX?
At one point, it was considered the third-largest cryptocurrency exchange in the world by volume, valued at $32 billion. In a matter of days, it went bankrupt, causing millions of its investors to lose everything.
In a hearing following its demise, the new court-appointed CEO, John Ray, said the company’s collapse was the result of a “complete failure of corporate control.” A case of “old-fashioned embezzlement” where investors are highly unlikely to get their money back.
What’s stunning is that many of the investors who lost everything were among a list of well-known famous faces (like my friend Kevin O’Leary and star athletes Tom Brady and Steph Curry), along with many smart and supposedly sophisticated investment firms like Sequoia Capital, Temasek, and Paradigm, to name a few. ALL got taken. Even billionaire oil baron Robert Belfer reportedly lost millions in the FTX collapse. How can this be?
It’s for the same reason people fell for the Home-Stake Oil, Enron, and Madoff scams: Greed plus misplaced TRUST. They cannot argue they did “due diligence” before investing. You’ve got a video-game-playing child in the Bahamas with ZERO experience in running a company in charge of a billion-dollar, unregulated investment entity with his college roommates, who were reportedly all sleeping with each other, with his openly drug-using girlfriend as the CEO. What could possibly go wrong?
In an interview, O’Leary admitted that he relied too heavily on trusting the company based on who was endorsing it and had already invested, not his own research.
That’s important to note because many critical buying decisions are made this way. This causes people to bypass their normal skepticism, skip conducting their own due diligence, and even ignore what their gut is telling them when a TRUSTED AUTHORITY tells them to do something.
Sam Bankman-Fried’s parents were wealthy, well-connected professors at Stanford University and, as O’Leary pointed out, were compliance lawyers. His mother was a big supporter of the Democratic Party with connections that had to have helped bolster his credibility. Further, Bankman-Fried was a clever con artist. He used celebrity endorsements (like O’Leary and Tom Brady) to build confidence in others to give him millions of dollars.
How Even Smart People Fall Victim to Misplaced Trust
First off, there’s nothing new here. This type of scam has been pulled off before. It will happen again too, despite how much the government attempts to regulate it. That’s because the government cannot change human nature. People allow themselves to become victims and easy prey for scams for a number of reasons. These include greed (the desire for easy money) and FOMO (fear of missing out). “Get in early” is the mantra of many investment scams.
But at the core of scams, the biggest reason people get taken, stems from the desire to find a TRUSTED AUTHORITY to make tough decisions for them. They want a shortcut to actual due diligence.
That’s why strategically designing your marketing and sales process to position yourself as a trusted authority is hypercritical. It outweighs differentiation, price, and service propositions by far. If you don’t trust someone and don’t see them as a legitimate authority on the topic on which they are advising you, you aren’t going to sign a contract with them. I don’t care if they’re the cheapest, most convenient, or offer the best terms (no contract, no money down, easy outs, etc.).
What Actually Fuels Trust
There’s a lot of misplaced trust in the world.
Madoff was successful at pulling off the biggest Ponzi scheme in history for two reasons. First, he had credibility. He started and grew Madoff Securities, which was, at one point, the largest market maker of the Nasdaq. In 2008, it was the sixth-largest market maker in the S&P 500 stocks. He was active with the National Association of Securities Dealers and served as chairman of its board of directors.
The second big factor in his ability to swindle people was his affinity with his targets. The majority of victims were people like him: rich, Jewish business owners living in New York. They trusted him because he was LIKE them. In fact, Joan Rivers was quoted as saying she was “the only Jew in New York” who didn’t fall victim to his charms. Trust + Authority = Influence.
To be clear, in no way am I suggesting you should use scam-artist strategies in your marketing. You cannot sustain a successful company on the back of snake-oil sales techniques. However, if you combine known “trust hacks” with legitimate, honest, and ethical business services and practices, you can grow exponentially.
Question: What are you strategically doing to bolster your credibility and authority status with prospective clients?
What boards or associations do you sit on? Are there any organizations that have recognized you as an expert? What tangible, measurable results or outcomes have you been able to consistently achieve for your clients? What are you “famous” for?
Most haven’t ever given this any thought and don’t have the goal of being a “trusted authority” in their marketing and advertising plans. However, once I pose this question, many start to realize that they are lacking in this critical area, even though they are trustworthy, credible experts. As I’ve often said, people don’t know how good you are until AFTER the sale… before they buy, they only know how good your marketing is.
So, here’s the next natural question: What factors contribute to someone being seen as a trusted authority on their topic?
Some of the most common answers I get to this question are education, degrees, certifications, and years of experience. The problem is, while they are a feather in your cap and do contribute to being seen as a credible expert, they are nowhere near sufficient to become THE leading authority and most trusted expert for your target market.
Here are some signs people attribute to someone being a trusted authority:
- They have published a book(s) on their area of expertise.
- They are recognized by other leaders and authorities as credible.
- They publish white papers, articles, and research.
- They are asked to speak at events.
- They are interviewed by media outlets and key podcasters.
- They own media, such as a magazine, news station, TV show, etc.
- They have a large, public social media following and presence.
- They are “slightly famous” in their niche, industry, or market area.
- They produce (or are very well-versed in) data and statistics.
- They are known by a large number of people for a specific topic.
How You Get Introduced Matters
Another critical factor of positioning your MSP as a trusted authority is HOW prospects get introduced to you. To put it simply, first impressions last.
Not all marketing and “getting your name out there” works in your favor in positioning yourself properly and building trust. Prospects will NOT be easily taken from your competition simply because you sent them a “flyer” or because they saw your post on social media. In fact, some marketing methods and media will work against you.
Not all customers are created equal.
When Groupon first hit the scene, thousands of businesses signed up for what seemed like a cheap and easy way to get more customers and clients. However, many businesses suddenly realized that the type of customer they brought in via a Groupon deal was a cheap, non-repeat, discount buyer. I accurately predicted this the minute I heard the Groupon pitch. That’s because a customer won on price will always be lost on price. Yet, thousands of businesses desperate for sales and lacking any marketing or sales savvy had to find this out the hard way. The only reason Groupon still exists is because MOST businesses are not savvy or sophisticated enough in their marketing to understand that not all customers are created equal, and HOW they are introduced to your business and the source of a lead dramatically impact close rate and value.
Recently, a struggling MSP sought my help with his sales process. He was getting leads but was frustrated because the leads were typically small deals. On top of that, he was constantly getting beat down on price, making concessions on his contract to get the deal closed, selling month-to-month agreements, and getting frustrated by A LOT of stalls, delays, and prospects going dark. He was nearly at the point of being totally and completely convinced that it was due to a soft economy, pointing to several extremely cheap competitors in his area who were constantly undercutting him on price.
However, after looking at what he was doing, I discovered that he was depending on spam to generate the leads he was complaining about, setting up another URL unassociated with his own to avoid being blacklisted. The lists were ones he scraped or otherwise bought for cheap. He was only getting about one lead for every 5,000 spam emails sent. Can you already see the problem here? Of course those leads are going to be low-margin, difficult-to-convert clients.
You’re either building trust or destroying it.
You might think this is an extreme example and say to yourself that YOU aren’t spamming. But you’re missing the point. ANYTHING and EVERYTHING you do in marketing and in your sales process is either BUILDING TRUST or destroying it. There is no neutrality.
That’s why referrals are the gold standard of inbound leads. These leads close faster, easier, and with a lot less fee resistance. Unlike with most other marketing and advertising, prospects that are referred come in WITH TRUST IN PLACE, predetermined to buy from you. Unless you totally screw it up, your close rate on referrals with a need you can service should be 100%.
When I invest in sponsoring an industry event and obtain a speaking spot, not only do we get a lot of leads, but they’re high-quality, high-converting opportunities. In fact, a lead generated from a speaking engagement is three times more likely to close, worth five times more initially in revenue, and is four times more likely to buy additional services and membership than a lead generated from digital marketing. This represents a difference of MULTIPLE MILLIONS of dollars. How is this possible? BOTH LEADS are MSPs getting the same sales pitch. BOTH are being offered the same products and services.
It’s because the speaking engagement properly positions me as a trusted authority. The presentation is not a short ad. Rather, it’s a long and carefully constructed sales presentation designed to provide value in advance, building credibility and TRUST. That sets the tone for everything that follows.
Very often, I see the sales and marketing practices of MSPs having the opposite effect they’re hoping for. Their practices are essentially WEAKENING their position of authority, trust, and expertise with new prospects; INVITING price objections; and making it MORE difficult to attract High Value Clients (HVCs) and command the fees they deserve once they get the opportunity to present their services to a viable prospect.
This routinely shows up in the form of price resistance, sales stalls, objections, ridiculous demands to alter your service delivery and pricing, hidden agendas, and “playing” you against your competition to secure the lowest possible price. (HINT: If you position yourself correctly, ALL of this goes away since you aren’t perceived as HAVING any competition.)
Establish trust and you won’t leave empty-handed.
I’ve seen it over and over again where two IT services firms with virtually identical capabilities, credentials, training, vendors, resources, service offerings, and plans have wildly different success rates in closing a new client. One will leave either empty-handed or with a low-margin contract. The other will leave with a very profitable, properly sold deal WITHOUT having to do a lot of gimmes and negotiations. The difference is NOT mechanical–in their products, service delivery, features, benefits, etc. Much of that is the same for all IT services firms. The difference is in how they strategically, intentionally establish trust with the prospect, in the meeting and before they even step into that prospect’s office via their marketing.
This is a critical FACT you must embrace if you are going to have a chance at swimming upstream to higher paying, more profitable, more valuable clients: The MSP sale is based entirely on TRUST.
If you know how to engineer it, you have an enormous advantage over the vast majority of MSP competitors—even those selling at cheaper prices.
For more on winning high-value clients, see Are You Tolerating The Least Desirable Clients Or Choosing High-Value Clients?
