SMSF advisers need to establish the action threshold of a client to determine how to most effectively communicate their value proposition and in turn build their books of business, according to motivational speaker and bestselling author Jordan Belfort.
“Every person has their own predisposition towards either buying or not buying. An action threshold is the level of certainty that you must be at before you say yes to buy something,” Belfort told delegates at the recent NowInfinity Conference 2013 in Hawaii.
If an individual liked to purchase goods or services, they had a low action threshold, while those who did not purchase items easily had a high action threshold, he said.
Advisers needed to understand what drives an individual’s action threshold in order to know how to address it, he said.
“As human beings before we buy anything we say to ourselves: ‘If I do this, what’s the worst that can possibly happen and what’s the best that can possibly happen?’ We always run an upside-down buying scenario,” he said.
In regard to this process, people with low action thresholds usually run very brief negative analyses, with high action threshold individuals assessing the downside of the proposition in more detail.
Belfort added advisers needed to also be mindful of the “energy in, benefits out” theory, where the energy was accumulated wealth and individuals being naturally guarded about the level of benefits they would achieve from their “stored energy”.
“If someone has to expend massive sums of energy and they get only a few benefits, are they going to buy? Probably not. Yet if they only have to spend a tiny bit of energy and you get massive benefits, people tend to buy,” he said.
Once the action threshold was established, it could be lowered by examining the worst-case scenario with the individual to lessen the perceived severity of situation, he said.
In addition, if the adviser could figure out the individual’s pain threshold, they could further lower the action threshold, he said.
“Pain threshold is when people are feeling uncomfortable or in pain about something and in these situations they will tend to act. It actually lowers their action threshold. If someone is in pain, they will act,” he said.
“Once you know where their pain is, you’re past half of the battle to close the deal.”
It was crucial for advisers to determine the full extent of a person’s pain threshold rather than try to find a solution for it immediately, he said.
