Sales Advice From A Master Thief


There is usually a silver lining in any horrible event.  In the Bernie Madoff scandal there is actually a very good marketing and sales lesson built right in.  A lesson that is built around the question…

How did he dupe so many prominent and successful people?

This type of scamming is only supposed to happen to uneducated  or middle to lower class people, not the most sophisticated 1% of the individuals, foundations, and financial institutions on the planet.

Here is a great little article that explains some of the biggest reasons why Madoff was able to pull off such a monstrous scam for so long.

But remember, these are reasons you can use to grow your business and help people in a positive way.  Please don’t use them for evil.

Social Proof

“In ambiguous situations, individuals look to those around them to decide what conduct is appropriate and what actions to take.  A famous example occurs when a group of people are waiting to cross the street and tempted to jay walk.  If a well dressed individual who looks like he knows where he is going begins to cross the street, people are more likely to also begin to cross than if a homeless person begins to cross.  People also associate with individuals who are like themselves in terms of their economic situation, ethnic background, common interests, etc.  In the case of Bernard Madoff, most of his victims were Jewish and well connected in Jewish social circles in New York City and Florida.  Madoff had a long history of supporting the Jewish community and was active in philanthropic activities.  Given that Madoff has a number of wealthy Jewish clients, others within the community naturally assumed that Madoff’s firm was trustworthy.  Social Proof ended up being a reason for lemming like behavior within a community where Madoff was well known and respected.

Authority

Bernard Madoff’s life story, up to the revelation of the ponzi scheme, reads like the ultimate bootstrap American success  story.  Over a period of nearly five decades, Madoff built his market making business from an initial investment of only $5,000 starting in 1960.  The technology Madoff’s firm developed ended up becoming the technology of the NASDAQ which was founded in 1971.  Madoff eventually served as the Chairman of the NASD, a self regulatory securities industry organization.  So naturally, Madoff had impeccable credentials and an aura of authority that could be leveraged to gain clients (or rather victims) for his scheme.  Would anyone approached by a man with Madoff’s credentials question his decisions or record keeping?  After all, this was a man who was heavily involved in NASD and beyond question in terms of perceived integrity.

Scarcity

Madoff did not allow just anyone into his scheme.  One did not simply pick up the phone and open an account with Madoff.  It was necessary to be well connected and to know the right people.  If you knew the right people and if they could “pull some strings”, then just maybe you would be able to get in and have the honor of Madoff handling your assets.  This may seen absurd in retrospect, but the perceived scarcity of Madoff’s services and the fact that only the elite could get in served to create the aura of exclusivity that so many people crave.  After all, if you could not say that you were invested with Bernard Madoff, what would your friends at the country club in Palm Beach think of you?  This is social proof and scarcity wrapped into the same package.

The bottom line is that investors need to watch out and guard against the psychological “weapons of influence” that scam artists often employ to gain access to victims.  Most of Madoff’s victims, while prominent in society in some way, were not competent when it came to evaluating investments or even understanding the risk/reward characteristics which alone caused suspicion.  These victims allowed themselves to fall for textbook tricks that Madoff exploited in an expert manner.”

Related Articles:

Prospecting Weapon #3: “Takeaway Selling”

The Sales Push: “When Push Comes to Nudge”

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Brian J. Kay, Executive Director, Leads4Insurance
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