Derek Coburn on How He Built an Engaged Tribe of Raving Fans (and Paying Clients)

Derek Coburn 4in x 6in x 300dpi x FC

Do you wish there were some way to generate twice as much revenue in your business without doing twice as much work?

Derek Coburn felt the same way with his wealth management firm. He realized that in order to significantly increase his revenue, he was going to have to either work a lot more hours, or find a different way of working.

Luckily for Derek, he was able to specialize and differentiate himself from other financial advisers, which significantly increased his client retention, as well as the amount his clients valued him. In Derek’s case, this value came from what he calls “The Ultimate Tie Breaker” – he was able to differentiate himself by sending clients referrals. There’s nothing a business owner loves more than more business, right? Derek was so good at making those connections that he made a whole second business of it (cadre).

Luckily for you, Derek has shared his story with us. He includes details on cadre, which he co-founded with his wife Melanie. They call cadre an “un-networking” group, and have had great success by helping their group members help each other.

When you listen to this interview, you’ll hear Derek and I talk about:

  • (03:25) Introductions
  • (06:00) How he built his financial firm
  • (08:30) An explanation of his first networking group
  • (10:30) How to add extra value to his clients by referring them clients
  • (13:30) How he expanded the conversation with his clients, to talk about more than financial planning
  • (16:00) How he used surveys to reach out and ask how to provide extra value
  • (17:15) How he created the time to launch his second business, cadre
  • (23:30) Going from idea to reality with cadre
  • (26:40) How he used a webinar to launch the concept
  • (31:00) How he got existing members to refer more
  • (36:00) How his business model has evolved to justify $3000 upfront to join
  • (41:00) How he ran a launch meeting
  • (46:00) His plans for the future of cadre
  • (48:30) An introduction to his book
  • (50:00) The Boise launch plan
  • (1:03:00) An overview of how to be more useful to your clients

Resources Mentioned

cadre
The Thank You Economy
Care.com
Informly’s podcast
Amy Porterfield’s podcast
Human Business Works – Chris Brogan
Youtility – Jay Baer
School of Greatness – Lewis Howes

More About This Episode

The Bright Ideas podcast is the podcast for business owners and marketers who want to discover how to use online marketing and sales automation tactics to massively grow their business.

It’s designed to help marketing agencies and small business owners discover which online marketing strategies are working most effectively today – all from the mouths of expert entrepreneurs who are already making it big.

Listen Now

Enjoyed this Interview? Here’s How To Leave us a Positive Review on iTunes!

If you enjoyed this episode, click here for more information on How to Leave Us a Positive Review on iTunes! Your review will help to spread the word and get more entrepreneurs like you interested in our podcast. Thanks in advance - we appreciate you!

Transcript

Trent: Hey there Bright Ideas hunters. Welcome to the Bright Ideas
Podcast. I am your host, Trent Dyrsmid. This is the podcast for
marketing agencies, marketing consultants and entrepreneurs who
want to discover how to use content marketing and marketing
automation to massively boost their business without having to
massively boost the number of hours they work every week.We do this by bringing on experts who share with us the story of what
made them so successful and this episode is no different. We are
going to be joined by a fellow by the name of Derek Coburn who
is a partner in a very successful financial advisory firm and
has about 15 employees and he has been doing that for quite a
while.But, more recently he’s also the author of a book and founder of
another company. The book is called “Why Networking is Not
Working” and as you might guess from the title it’s about
obviously why networking is failing and Cadre, his new business,
is predominately a DC based community of remarkable
professionals. Their members are the cream of the crop in their
industries and more interested in sharing resources than
gathering leads.So, in this interview Derek is going to share with us exactly how he
realized there was a need for this service and then how he
launched it and some of the ah-has he had along the way and
ultimately he is going to share with us his story on how he’s
making it a very successful company.But, before we get to that I want to tell you briefly about a Bright
Ideas product. If you are a marketing agency or a marketing
consultant and you are struggling with lead generation you will
want to check out my MobiLead Magnet. M-O-B-I Lead Magnet
.That’s at mobilead.com. It’s a WordPress plugin and will allow
you to build landing pages very quickly that display how bad
someone’s non-mobile friendly website looks on an iPhone and it
also shows them how good it could look if they had a mobilized
site. The idea is to use this landing page to capture their
interest and get your foot in the door to have a marketing
conversation.So, please join me in welcoming Derek to the show. Hey Derek welcome
to the show.Derek: Hey Trent thanks for having me.Trent: No, problem, man. I am jacked about this interview. We have got
a lot of really cool stuff that I want to talk about. Just
before Derek and I got on the air we were talking about how he
took himself from one business to two businesses and he’s got
two kids and he’s writing a book and he’s got a lot of really
cool stuff going on. I really want, because I know there is a
large percentage of my audience that still has a job and they’re
trying to make a transition and they’ve got a part time business
and they want that business to become more fulltime. Derek has
already gone down that trail and done it successfully. So, we
are going to get him to talk all about it.So, Derek thanks so much for coming on. Maybe just real quickly,
introduce yourself. Tell us who you are and what you are doing
to get through to all of the results that you’ve got.Derek: Thanks so much, Trent. So, I’m Derek Coburn. I own a wealth
management business with two other guys. We have been running
that for about 15 years now. We have 15 employees. Right now, I
spend about 20 to 25 percent of my time in that business, but
it’s hyper-focused on a segment of clients that I really enjoy
working with that are a great fit for me.I also co-founded what we call an “unnetworking” community in DC. I
co-founded this with my wife Melanie. It’s called Cadre. We have
right now about 105 CEOs, business owners, mediapreneurs if you
will that we bring together through offline events of different
types, facilitating connections online through our private
member community and about 90 percent complete with a book that
should be coming out in the next couple of months called
“Networking is Not Working.”Trent: And you have two kids.Derek: And I have two kids. My three year old started pre-school today
for the first time. So, I’m pretty excited for him. Time’s
flying by, but I try to make time for obviously those two and my
wife as well.Trent: Absolutely. So, for the folks, this interview is probably going
to be useful for a whole bunch of people but the ones that I
really want to speak to because I know I have a large following
in my community of folks as I mentioned earlier that still
either have a business and wanting to start another one for
whatever reason or they have a job and they want to start a
business of their own again for whatever reason. The reasons
aren’t terribly important for your and I discussion. The point
is, the desire is there and they’re trying to make that
transition.So, let’s go back to the point, so, you had a wealth management
business that you built up and was successful. Cadre did not yet
exist. How did it get created? Where was the motivation? I think
you were doing financially pretty well with the financial
advisory business, so something was tugging at your heart
strings.Derek: Yeah, so it really occurred to me back in 2008 that I had built
up a pretty good client base via cold calling and some referrals
from existing clients. I was focusing my growth strategy in
terms of meeting new clients by attending networking events.
Towards the end of 2008 that was the very beginning of what
would end up becoming the biggest sort of one of the worst
financial markets, if not the worst, financial markets since the
Great Depression.

The wealth management business, at least for me, is a recurring
revenue model, which is good. In fact, we use that same model
for Cadre. What it means is that if we are not providing good
value and a high level of service for our clients they can take
their money and go somewhere else.

So, obviously at that time there was a lot of additional hand holding
that was needed. We had to spend more time with our clients and
we wanted to really. We wanted to make sure that they had their
money and we were making the recommendations and providing the
advice that was in line with what they felt comfortable with.

So, what I realized was I was running out of time in my day. For a
variety of reasons I had to rethink really everything that I was
doing. What I realized, the average financial advisor has close
to about 400 clients. At that point, I had about 100 to 120 or
so.

The nice thing is cold calling and growing your business when you’re
first starting off, it’s great. You will almost work with
anybody. But, once you get a taste of what a really great client
relationship looks like, that’s sort of when you don’t want to
cold call anymore. That’s where you want to try to focus if you
can on only adding new clients who are going to be aligned with
you and are on the same page as what you are providing them.

Essentially, what I did was I said, I don’t want to be this guy
that’s working 70, 80, 90 hours a week with 300 clients that are
sort of all over the place. I began to really focus on quality
at that point. I slowed my growth and I realized that going to
these larger networking events was not a great use of my time.

And I ended up a way that I could fill both services or both
activities if you will in terms of providing great value for my
existing clients while also meeting new people that would be
ideal clients for me was I formed my own networking group of
about 20 or 25 people. This was not Cadre, but it was an event
where I brought together some of my great clients, some of their
top advisors and some other professionals that I had handpicked
and I was facilitating getting connections and adding value in
ways above and beyond the core service that my clients were
expecting of me.

Trent: Okay, and so was there some kind of a structure you had? What
did you tell these first 20 people when you said hey, I want to
start this networking group?

Derek: I had this big ah-ha moment for me. It’s what changed
everything. A client of mine, who I’ll call him a landscaper,
called me up. He was one of my best clients and he said, “Derek
I got a call from one of my really great clients and their
brother-in-law does what you do and they asked me if I would do
them a favor of meeting with their brother-in-law. I told them
that I really had a great relationship with you. I was happy. I
wasn’t looking to make any changes, but it was one of those
things where they were a great client and they said no
obligation whatsoever you would just be doing us a favor if you
just took the meeting.”

So, he told me about it ahead of time which was great. He called me
up the day after he had a meeting with this gentleman. He said,
“I got to tell you what happened, Derek. 45 minutes into the
meeting which was a pitch which is pretty consistent with the
way a lot of folks in the financial services industry would
approach a first meeting. He got to the end and the conclusion
that he drew was if I had my money invested with him instead of
with you, Derek, for the past couple of years I would have
earned an extra 2 to 3 percent a year in my portfolio.”

My client responded and said, “here’s something else that you might
want to take into consideration. Derek has referred me to
clients, to my business, over that time that have resulted in
over 2 million dollars of revenue for my business. If we were to
look at the big picture, Derek,” which I did not do by the way,
but “Derek could have lost half the money in my portfolio my net
perspective would have still been better off working with Derek
than working with you.”

He was laughing. He was saying that I had nothing to say. It made me
realize I am doing this without a lot of intention for a lot of
my clients right now. I’m focusing on their business and how I
can add value for them above and beyond what they expect of me.
What if I just started really focusing on it and building out a
process and trying to identify clients who in addition to
providing great value and a great service in terms of investment
planning, financial planning, what have you, that they have
businesses that I understand and I get and I might be able to
affect their business by identifying clients and being an
extension of their business development or marketing department.

Trent: Seems like a very good idea.

Derek: So, I call that the ultimate tie-breaker. If you think about
it, it’s also a great thing to be able to say from a marketing
perspective as long as you can back it up. So, I wasn’t going
around saying this to everybody, but most professionals, most
entrepreneurs, probably a lot of folks in your audience, they
probably feel like one of the best things that could happen to
them in their business is to get a great referral for a great
client.

I think that just to take that a step further and say gee, probably
the best thing that could happen for my clients, right now,
would be for them to get a great referral and if I am the one
that’s providing them that great referral you are going to have
a client for life and you are going to have somebody that’s
motivated to help you and somebody that’s going to be interested
in finding ways to help you succeed either through introductions
or additional business for them.

Trent: So, when you got nose to the grindstone with your financial
business. I think you described it that you were working pretty
hard. Was it a decision at this moment in time that you were
going to start referring clients to your clients or had you been
doing that all along with your 120 clients?

Derek: I certainly wasn’t doing it for all 120. I was doing it for the
ones where there was maybe a more obvious way to do it. But,
what I did was identify clients that I had yet to do this for.
That I felt like I might be able to help. I sat down with them.
I interviewed them. I got more information from them and shared
with them this additional role that I was going to be serving in
terms of the value and the deliverable that I was going to be
bringing to the table.

Trent: Was Cadre born out of your desire to do this, because I do want
to shift to that. But if it’s not I want to talk about how you,
I guess for lack of a better term, structured it? How did you
actually refer? Did you have a process that you used or a habit
or whatever to refer your clients? Obviously, they are going to
love you for that. That’s a no brainer. But, I want to know how
you actually made it happen.

Derek: Once again, for anyone that’s in a transaction business, when I
say transaction I mean you sell something one time and you are
never going to sell something to them again, I don’t think
that’s very many people, but because even if you sell something
to somebody now, there’s a pretty good chance you have another
service, another product 6 months, 12 months from now you could
potentially reach out to them in terms of an ideal client.

Really, for me, it was all about expanding the conversations that I
was having. What else is going on in your life? What else is
going on in your business? I think in any industry if you are
somebody that can help your client solve other problems they are
having. Whether you can provide the end benefit if you will or
not, then you are going to become important to them. Once you
start showing that with an individual one time, two times, then
you have these individuals that are reaching out to you.

My clients started calling me every time they had to make a decision
about anything. I’ve referred a great car salesman, probably 20
or 25 opportunities over the past few years. Anywhere from
larger purchases for companies all the way down to baby
photographers.

It takes a little bit of time, but if you just focus on what else can
I do for my existing clients and the important people to me in
my network, then you are going to find yourself in a position to
do this and to start adding value for them and then they are
going to start coming to you more often and referring people to
you, etc.

Trent: So, let me just make sure I understand this. Let’s say for
simplicity of this, you have two clients. One of them sells
mattresses. I brought that up because I bought a king size
mattress on line before we started this episode and the other
one needs a mattress and you find out there’s one of your
clients that needs a mattress and you know there’s one of your
clients that sells mattresses, so you say to your client that
needs the mattress, “Hey, I’ve got a really great source, a
client that sells mattresses, you should call him.” Is that
essentially what you are doing?

Derek: That’s fairly straight forward and that definitely happens, but
if you think about it a lot of us wait until we have something
to sell or it’s just an annual check in with our clients and its
always about how they are doing in relation to what we can do to
help them.

So, if you start reaching out to your clients, I know you’re big on
surveys. I’m big on surveys, getting information. Finding out
what else is going on in their business. They will appreciate
the fact that you are reaching out to learn about how you can
help whether you can help them or not. They will still hold you
in really high regard for doing that.

But over time as you build out your network you are going to be in
the position where you can start helping them and you are going
to be the go to person when they have really any sort of
business decision or personal decision for that matter that they
are going to reach out to.

Trent: So, the reaching out to wasn’t necessarily always on with one
on one phone calls. The surveys are a very time effective way of
telling your client that you are thinking about broadening the
conversation.

Derek: Yep.

Trent: Okay, cool. I’m just making a quick note here, all right. So,
at what point did you decide hey, I want to start Cadre?

Derek: All right, so we started Cadre back in 2011. My smaller
networking group was going really well, but the thing about the
wealth management business is it’s highly regulated. Compliance
departments are really on you about everything. Because of the
handful of individuals in my industry that like to try to take
advantage of people and take advantage of the system, they sort
of ruin it for everybody else.

Trent: Yeah.

Derek: I had the editor from the Washington Business Journal reach out
to me to offer the opportunity to write a weekly column for them
in the form of a blog. They were calling it a column, but it was
a blog. I went back to my broker dealer and just like 99 percent
of financial advisors out there right now, that just aren’t
completely independent, they said no chance.

The reason is pretty ridiculous. The reason is we can approve the
initial article, but we cannot approve or monitor the comments
in the blog. If somebody leaves a comment and says hey for me
and my situation how would you handle this and then I answer
them specifically, they are worried a year from now someone else
is going to search, find it, and think that answer applies to
them and make a terrible decision. So, that’s how ridiculous it
was.

I had been reading a lot of great books. The Seth Godin’s all of his
books. “Trust Agents” by Chris Brogan. I saw this other way.
Gary Vaynerchuk wrote his last book, “The Thank You Economy”. He
said, “if you are in legal or finance you better really love
what you do, because those are the two industries, that you are
really not going to be able to take advantage of all of the
other opportunities from a marketing, word of mouth, etc.
standpoint that other businesses can take advantage of in terms
of one line awareness in marketing.”

That’s when I said you know what I have way too much information and
I see all the great ways that I can be growing my brand, finding
clients, and I’m not going to be able to do this if I just have
the wealth management business. But, I like the business and I
like my clients so I’m going to figure out a way to start
another business. That’s sort of what happened at the very
beginning that had me thinking, okay, I want to do something
different.

Trent: I think a huge, let’s compare your wealth management business
to, I don’t know if this will be a fair comparison, but we’ll
try it, to “your job.” I’m trying to make it so that the people
who have a job can relate to where we are going to take this
conversation in the next few minutes. How is that you’ve freed
up time in bread and butter number one so that you had the time
and mental energy to start bread and butter number two?

Derek: So, the answer that I give you might not directly benefit those
with a job, but for me I had some good revenues coming in at the
time with the wealth management business and because I also had
two other partners, we were able to pool our resources together
and hire people that were really good at a variety of things.

So, it’s really been a while since I’ve sat down and rolled up my
sleeves and really taken a technical look at my client’s
portfolios. I do that at a high level but we have really smart,
awesome people covering a variety of topics, a variety of areas
that we counsel clients on, in place.

For me, I wrote a 300-page systems manual for that business. I got
very specific about who would be doing certain things and I
wanted to set up my financial advisor business so that it was
similar to going to the doctor, right. Where when you go to the
doctors you doctor doesn’t check you in and say fill out this
form and I’m going to take care of you. Your doctor has other
people in place that are perfectly capable of doing all those
things so the doctor can focus on the high level really
important health issues and really the reason why you are there.

I do think clearly, through virtual assistants, I figure out to this
day what am I doing right now either personally or
professionally that I can pay someone else to do? For example,
through a website called Care.com, which I think is a national
website, I found a housekeeper. She works 10 to 15 hours a week
for us. She comes in. She takes our dry cleaning. She picks
after the kids. She cooks for us one night a week. Really, just
takes care of all of these things that I would have to do if she
wasn’t doing them. We pay her $15 an hour.

I think that for a lot of us, especially if there is another
business, another idea that you have or that your listeners
have, take a look at it. If this works and we can start
generating money from this what am I doing with my time right
now that I can find someone else to do and pay them so that I
have that time freed up and I’m going to make more money to
justify the difference in that cost.

Trent: Makes perfect sense. You need to have your time make more than
$15 an hour which is not terribly difficult to do, especially if
you are selling something to a business person.

Derek: Absolutely.

Trent: So, for the folks we used the term Cadre and I know we
introduced it at the beginning of the show, but I want to make
sure people understand what we are talking about. Briefly
describe what Cadre is and then I want to walk through the idea
on a napkin to the 100 plus paying members that you have now.

Derek: Sure. You had mentioned, I think it was one of your recent
interviews, I think it was with Andrew Warner, you had a comment
that said, “just build what you want to be a part of that does
not currently exist.” Even though things were going well in the
wealth management business and with my smaller networking group,
which didn’t have a name by the way. I planned round table
lunches. I hosted wine tastings. I did some things on line. We
can expand this and there’s not really anything out there where
I know I can go into a room or to an event and I can be around
people that all have the same intentions that I have when it
comes to developing relationships.

Not trying to push their own agenda, not trying to sell me something
or get their business card into my pocket as quickly as possible
but people who were successful who had a really great business
and had a pay it forward approach and I can take the time to get
to know you and help you and knowing you are going to do the
same thing for me.

I reached out to a handful of individuals that were in my current
networking group, and I said I want to do what we are doing now
but I want to do it on a larger scale and I need your help. I’m
not sure it’s going to work or not because it sounds like
rainbows and unicorns. It sounds like this happy place where you
can walk in and everyone there is going to be on the same page
as you. They are going to have a good business. They are going
to be interested in learning more about ways they can help you
and your business.

I didn’t want them to recommend other folks from their network and
have them pay us unless I really felt like it was going to work.
I was skeptical. I felt like they are going to invite people and
maybe 50 percent of them are going to still try to take
advantage of the situation and try to sell everybody else on how
great they are.

We just did round table lunches at the beginning. That initial group
with the help of these individuals, we had about 60, 70, 80
people on a webinar where I introduced the idea. We said for the
next two months you can go to one lunch a month. You will have
five or six to choose from each month. Based on your
availability we are going to assign you and put you together
with other individuals who are participating. You are going to
have 5, 6, 7 minutes to share your story. What a good
opportunity for you looks like. What your ideal client looks
like and then you are going to have the opportunity to hear that
same information from 8, 9, 10 other people.

We did this for the first two months. We didn’t charge anybody
anything. We asked everybody who’s in and we had about 80
percent commit to remaining a member.

Trent: I don’t know if this sounds or not, but did you let them take
it home and try it and make sure they like it and if you want to
keep going then pay.

Derek: Yep. It was still a very low risk situation for us because it
was giving us an opportunity to meet 50, 60, 70 individuals that
we previously didn’t know. Even if it didn’t work we decided not
to move forward with it we were going to expand our network and
meet some pretty great people in the process.

Trent: Absolutely, you were. There is not a lot of downside to
reaching out to successful business people. Let’s talk briefly
about the webinar. How did you get people on it and what was the
core message that you shared?

Derek: The way we got people on it is something that I still do to
this day that works better than just about anything else.
Whenever I have anything that I want my network to help me out
with, to share, to promote. So now we are doing larger events
with best-selling authors. I’ll say here’s a link to share on
Twitter. Here’s a link to share on Facebook or LinkedIn or other
places.

But, if I actually type out an email that is verbatim, in most cases
they don’t make any changes to it. If I type out an email that
looks like it is coming from them and they can copy and paste
that into an email I am allowing people that are willing to help
me I’m making it incredibly easy for them to do this because I
am doing all the work. I think a lot of times we say you have a
referral for me, that’s great, or you have somebody you want to
introduce me to or a business you want to introduce me to, and
we sit around and wait for it.

What I realized is we have and I have probably 30 or 40 different
types of emails like this saved as templates that if I do the
work ahead of time and I’m making it really easy for you to do
it then you are much more likely to do it assuming that’ I’ve
done enough on my end to warrant me doing a favor for you.

Trent: Yes, if I like you and you send me an email and say, Trent, cut
and paste this and send it and I think you are a good guy
chances are pretty high that I’m going to do it.

Derek: You still might do it otherwise but it’s still work on your end
and you have to make the time for it and it may or may not
happen. I equipped these individuals that I was asking them for
help. I gave them the email and made it easy for them to send
along. The other great thing about this strategy whether it’s an
introduction, referral or whether it’s come to my webinar, you
are framing it on your terms. You are able to specify the action
or the next step that you want them to take.

A lot of times, if I hadn’t done that I would have gotten many emails
that said meet my friend Derek; they are putting together a
networking group that I think you would like. You should reach
out to them then what are they going to say? They are going to
say, “Oh that sounds interesting. Let’s get on a call or let’s
have lunch sometime.” I certainly did not have time to meet 75
people for lunch to tell them about my idea. The way that the
introduction was made was if you want to learn more then sign up
for one of these webinars and that’s how you can learn more
about it.

Trent: Do you remember what the wording of the email template was that
you gave to these people.

Derek: I have it somewhere. I can probably share it with you if you
want to include it.

Trent: Yeah, send a copy to me and I will include it in the shows.

Derek: I will give you another example if you think it will be
helpful.

Trent: Sure. Please, go ahead.

Derek: When we started expanding Cadre and we went from 70 to 100 we
had been asking our members were loving it, what we had put in
place. They were getting a tremendous amount of value. They
wanted to help. They wanted to make some introductions. We were
asking people they were saying they wanted to do it for a lot of
the reasons I just described. We were getting some but not a
lot.

In August 2011 or 2012, it was in August is all I know because I
documented this. We created an email for them to share to invite
prospective members to learn more about Cadre by coming to one
of our events and learning more there and the results was we
ended up having 60 interested individuals, 60 referrals that
came to learn more about Cadre. About half of them ended up
joining. What I always like to say is that all of my members
they didn’t like me more in August than they liked me in June or
July. I just made it incredibly easy for them to help me in
doing something that they were willing to do.

Trent: Absolutely. If I remember correctly, months ago when you and I
talked about this, you had mentioned to me back then some type
of incentive for the early adopters to become a paying member of
Cadre. You have gone through your two months. You are saying to
your members this needs to be commercially viable in order for
it to keep going, therefore there is going to be this cost. If
you get on board now, it’s this. If you get on board later, it’s
this. Am I remembering this correctly and if so can you explain
what the inside looked like?

Derek: Absolutely, so everyone at the end of that two month period,
everyone that had participated, the offer that we gave them was
to be what we called a charter member. Charter members were
going to pay $249 a month and then as soon as this two week
period was over on accepting Charter members, and any new
members after that would be paying double that $499 a month.
It’s something that we’ve never changed.

Once again, it worked for two months, but let’s create some incentive
for these individuals that started with us from the beginning.
And it also created some sort of incentive for them to go off
and say hey I’ve been coming to this for two months now and it’s
great and you should think about joining also. So, they were
able to bring some other individuals to the table at that lower
price point, if you will. Now in fact we’ve evolved where we
were just $500 a month, then we were $1000 up front and $500 a
month, now we’re $3,000 up front and $500 a month, month to
month.

Trent: Wow. We are going to get to that in a minute. I want to make
sure I understand the charter business part of it. So, after the
two months how many people were going to lunches? You could
chose, you could go to how many lunches per month could you go
to during this free period?

Derek: One.

Trent: How many lunches were happening per month? The lunches were
only 8 to 10 people each right?

Derek: Yep. Including those first two months going through the end of
the first year, we hosted 79 lunches. There were anywhere from 7
to 11 lunches per month that we were scheduling and we were
giving all of our members the opportunity to say these five
would work for me and then we would try to slot them to a lunch
where they could meet people and try to keep the repeats at a
minimum.

Trent: You had a lot of logistical legwork to make sure you had the
right people at the lunches, seated at the right tables. Did you
guys actually show up to the lunches or did you just have the
people say hey I need to be at the whatever restaurant at
whatever date at whatever time and 10 of them would show up and
just chat at each other.

Derek: We were at every single one.

Trent: Yeah, because you need structure.

Derek: Sure.

Trent: Okay. At that point in time 79 lunches in the first two months.

Derek: No, no, no. Not in the first two months. That was for the first
year.

Trent: Okay.

Derek: That was for the first nine months. Let’s call it six lunches a
month for those first two months.

Trent: Okay, so six lunches per month. Where I’m trying to go with
this is how many people converted from free to pay. I think you
said about 80 percent, right?

Derek: It was about 80 percent.

Trent: So, then you got some cash flow on which to now continue to
grow this business. Over time you have ratcheted up the price
for new people. The guy or gal that’s joining today, they are
going to fork out three grand up front which is not a small
amount of money and then $500 a month. What are they getting for
that?

Derek: The model has changed significantly since we started off. Our
intention was never to have larger events at all. We are now
doing larger events. We built out a pretty robust private member
only community online. It’s not another Facebook. It’s not
another LinkedIn. There’s a lot of other stuff that’s in play
right now, than when we first initially set it up. Quite simply,
$3,000 is a lot of money to some people and it’s just the right
amount for others.

Trent: Yep.

Derek: Before we got up to $3,000 we very strategically were charging
$499 a month without a long term contract. Part of what we were
selling was engagement and fit. We wanted to make sure that
everyone that was participating, what I was selling to everyone
else was you are going to meet other people like you that are
going to be engaged, that are going to be interested to help you
and to provide value for you. And if they are not or they don’t
feel like it’s a good fit for them or a good use of their time,
we want them to be able to leave and we wanted the ability to be
able to ask them to leave if they weren’t. So, there are other
organizations that charge an annual fee upfront. It may be 6
grand or 10 grand or 20 grand and I think what happens a lot of
times if it’s not a good fit or their not the right type of
member well you have to let them play out their contract.

Trent: Yeah.

Derek: We wanted people to just drop out if they didn’t think it was a
great fit. In 2012, I started conversations with 25 people,
proactive conversations, ranging from you’re no longer a member
to hey what’s going on. If you are not able to start attending
or getting back in touch with people no harm no foul but it’s
not going to be a great fit. 25 people and the majority of them
were at the $499 rate. We basically said goodbye to $150,000 of
annual revenue for the sake of maintaining culture and making
sure that what we were selling was actually true.

Trent: Absolutely.

Derek: Along those lines I think pretty consistently the goal is that
for anybody that looks at $500 a month and says okay this is
something I can do, I think the main thing we are selling at
this point is access to a phenomenal network of experts of
individuals. Some of them have been on your show before. Our
roster from top to bottom is phenomenal. I think there are a lot
of successful entrepreneurs and successful business owners that
would pay $500 just to be in a room without all of the rift
raft. Just to know they’re not spending their time going places
where they are not being pitched, they’re not being sold, or
their not meeting anyone that’s not relevant to their business
or their clients.

Trent: I couldn’t agree more. I’ll make this comment for the folks
that haven’t attended a lot of these networking events. Back
when I started my company I attended a ton of the banker board
of trade events. There are no CEOs going. It’s all the business
development guys and gals who are looking for new clients. If
you are a CEO and you are looking for other CEOs where you can
have CEO level conversations about business challenges, going to
the local board of trade isn’t the place to be.

Derek: I would also say to if you are a business development person or
you are in sales the CEOs in the companies you are selling to
probably aren’t the decision makers and probably not the ones
you are wanting to meet either. The quality of any networking
activity I think is it’s all based on are you surrounding
yourself with people that are in a similar situation to you in
terms of the market they serve and do they take the same
approach that you take when it comes to developing relationships
and strategically working together with other professionals.

Trent: I want to skip back a minute. I realized there was a question
that I skipped past without asking.

Derek: Sure.

Trent: When you were doing these lunches and it’s back in the first
two months when it was free you said you attended all of them
Obviously you’ve got to make the right, there’s a message you
needed to communicate. How did you do that? What did you say at
these lunches so that the people realized hey this is something
I want to be a part of?

Derek: I think that the main thing we were guarded against at that
time was that we wanted to make sure that we had the right
people and I would say that I mentioned 80 percent earlier in
terms of what we converted. Ten of the remaining 20 percent or
50 percent of the remaining 20 percent we didn’t even extend the
invitation to. Because they were either following up with
everybody in a salesy way or they weren’t showing up to the
lunches.

It was really about quality and really about hey I have this other
business that I’m running and I’m not talking about I’ve never
positioned myself as a financial advisor inside of Cadre because
I never wanted anyone to think that my reasons were for doing it
were a back door way to get additional clients to that business.
In fact, there are other financial advisors in Cadre that are my
“competitor” in my other world.

I wanted to be very clear that I was doing this because I was
passionate and I enjoyed helping people and I felt something
like this was missing in the marketplace. One of the basic
things I communicated was we want to encourage and we want to
embrace the idea of our members hiring each other and working
together, but we also don’t want it to be a pitch fest and we
are not going to be a leads exchange group.

So, what does that mean? That means anyone that you meet at any of
our functions you cannot follow up with them and say great
meeting you at the lunch. Can we meet again next week so I can
tell you more about how awesome I am? It has to be, I was really
intrigued by your story and think you are somebody that I can
help or that I can see us collaborating on some different things
together so let’s see if we can jump on the phone and come up
with a way to expand on that relationship.

Clearly, if somebody did not have a good story or they weren’t
connected or it was never going to work for them that’s where
that whole they could drop out whenever they want thing comes
into play. If somebody just says I’m a CPA and if you know
anybody that needs a CPA, they would be a great client for me
and you can refer them to me and that would be great. Well,
that’s different than the CPA that says I like to work with
business owners that have revenues between $500,000 and $5
million that are going through X, Y, and Z and they are painting
that picture and they are describing in more detail what an
ideal opportunity looks like. They are going to get a lot more
mileage than one that doesn’t do that.

Trent: Yeah, that’s true. That’s really being clear who your customer
is and that’s something that everybody should be doing because
that makes it easier to get customers because when you find them
they are going to get so much more out of what you are saying.

Derek: The message then and the message today is that we are one of
the only professional organizations that I know of that is
vetting for intention and quality in addition to some of the
more tangible metrics. There are a lot of organizations out
there that are similar to ours, not really a competitor but they
are similar and it’s hey do you make X amount of money per year?
Do you have a certain role? Do you have a certain number of
employees?

I think that our price point automatically gets us to the right
people because clearly if somebody has a business where they are
making a certain amount of money that $500 would be 10 or 20
percent of their revenues they are not going to do it. We don’t
have to say you have to be doing this or you have to be doing
that. But, we are the only ones that aggressively vetting for do
you believe in word of mouth marketing? Are you in a position
where you can add value for other people because you are
informational with your clients and within your network? Are you
somebody that’s willing to do that knowing that you are going to
be around others that are going to be doing that for you?

Trent: Feverishly writing notes again. Wish I could write faster. Let
me keep the questions rolling. So Cadre started off from what I
understand as a very localized business because you needed to be
able to come and attend these lunches. You live in DC so I’m
guessing in the beginning it was only in DC?

Derek: Still is.

Trent: Still is?

Derek: Yep.

Trent: Do you have growth plans or do you plan to scale it nationally?
Where are you going from here?

Derek: I think we’re finally to the point now that we are feeling like
we are going to be able to do that and that’s the next move.
We’ve decided a while ago, if we wanted to loosen up on our
ideals or our culture of who we are looking for we could have
150 to 250 members at this point. Mark [has shared] and you’ve
had on this show before as a member of Cadre. He talks about
assignment selling a lot, which is this idea of you want to
really aggressively tell people that are not a good fit for your
business or for in my case for Cadre you want to let them know
on a website you want to let them figure that out.

Between the website and a phone call with me I’d say 70 percent of
the people, I’m making that up, but I bet 3 out of every 4
people that are interested in learning more either go to the
website or have a conversation with me end up not being a good
fit. So, getting DC to like 200 members was never a big goal but
what we’ve been doing with DC is we’ve been through heavily
surveying our members and having conversations with our members.

We actually closed off entry for any new members for a period of
about six months and we just reopened that about a month ago
because we were so focused on evolving our model and sort of
taking that next step. You can almost look like what we’re doing
in DC right now that’s how we’re establishing our product and
really honing on who is our ideal member? Who is going to really
benefit the most from this and how do we communicate with them?
How do we find the message that we want to deliver them? We are
basically using DC and continuing to evolve DC to help us get it
exactly right for when we want to take it to other markets
across the country.

Trent: You are writing a book. Does the book also play a role in that
or what’s the purpose behind the book and please do name the
book for us?

Derek: The book “Networking is Not Working,” where I’m stressing the
not part. It’s everything that happened. A lot of what I shared
earlier, what took place in my wealth management business. It
will mention Cadre very briefly just to establish some
additional credibility. Okay, if you are growing your business
and you are attending networking events, there’s probably a more
efficient way to do that. Here’s what I did in my wealth
management practice where I freed up the time. Because you had
asked this earlier too, a big part of the way I freed up my time
to do this is I stopped attending networking events two times a
week.

Trent: Yeah.

Derek: I stopped playing golf one or two times a week which was 5 or 6
hours of time each time I did that. That’s really where I was
focused and wanted to share in the book or the process I used to
build out this 25 person group that I had and the ways that I
was integrating the value that I was delivering to my clients
with my networking efforts to meet more of the right types of
individuals for my practice.

Trent: So, let’s use me as a guinea pig for an example. I’m going to
get super selfish here. Tomorrow my wife and I pack up the
moving truck and we move from San Diego to Boise, Idaho. I
basically know nobody in town. What should I do? I really would
love to build good, deep, meaningful relationships in the
business community. Many of whom will never buy anything from
me, but that’s just fine because I want I want to have those
relationships anyway.

Derek: Good for you.

Trent: I love the idea of having a Cadre of my own, but let me not
taint your answer. What should I do my first 30 days in town?

Derek: Well, I still feel like that spending time online is a great
way. I don’t have to convince you or your audience this is a
great way to meet people. I think Twitter is the greatest, large
networking event that anyone can participate in or “attend”
because you get to see who’s on there, what they’re talking
about. You’re not interrupting conversations that are not
relevant to you. You can see who shares your interests, who
shares your passions, and use that as a way to meet them. You
already know that so I won’t spend a lot of time saying okay go
to Twitter and meet people that way.

The larger networking events, honestly I mean I’m not going to tell
you to go to a Chamber of Commerce event, not that there’s
anything wrong with them. There will be other people there that
would be good for you to meet, but there’s probably going to be
a lot of people there that are going to waste your time and are
not going to be a good way for you to spend a couple of hours
talking to them or a variety of them, if you will.

I think it’s something that you have to have a long term approach to
this but anytime you can go to a larger event where’s there’s
something else there, there’s additional ways to “win” if you
will, that’s what I’ve always looked for. It’s not like I don’t
go to larger networking events anymore, but if I do go I am
going to attend the ones who have speakers, who have material
that I am interested in learning more about. That way if I don’t
meet anybody, if I don’t get any quality connections out of
that, out of attending it, then hopefully I learned something.
Then I can say it was a good use of my time because I got some
great ideas. Do you have any clients there now?

Trent: No.

Derek: If you do get some clients, if you do get some individuals that
might be prospective clients or just good people to talk to,
start asking them which events are you going to or I found this
event. Then they can bring somebody else along, or you can bring
somebody else along and it’s a way for you to expand your
network where even if this event ends up being a total stinker,
then you are spending additional time with somebody that you
already had a relationship with and you are able to get to know
the person that they brought along and they are able to get to
know the person that you brought along.

Trent: So, let me tell you what I was thinking as far as a plan and
you can tell me what you think.

Derek: Let’s do it.

Trent: They have a vibrant technology sector in Boise, much to my
pleasant surprise. I was planning on finding who the CEOs are of
the fastest growing companies reaching out to them all asking
them to be on my show. Of course, then having lunch with them
and then having a conversation of who else in town I should
meet. What events should I go to? What groups should I
participate in and just letting the garden grow from there.

Derek: Clearly, I wasn’t sure if, because you are in a very unique
spot, so you have this great podcast and it’s a great way for
you to add value so you absolutely should take that approach. I
think if I were you I would say look, I’m new to town and I have
this podcast. You want to have a conversation with them first
and you have some pretty aside from me you have some pretty
amazing guests on your show on a regular basis, so you want to
be somewhat selective on who you have on and who you are having
these conversations with, but the types of people you want to
meet it’s going to peak their interest and make them want to
learn more about you and give you the opportunity to learn more
about them.

Trent: You are right. It’s true. Having a podcast makes an unknown
door very easy and it’s one of the reasons why I encourage my
listeners to start a podcast because it is the most powerful
networking tool I have ever discovered. You can literally tweet
people in 140 characters or less and they’ll come on your show.
I’ve done that over and over again. You say I have all these
fabulous past guests. That’s how I got a lot of them. I just
sent them a tweet. Either they are doing it for selfish reasons
because they want to get exposure, which is fine. If they have
value to add, I don’t mind giving them the exposure.

But, there’s also a lot of them out there that simply just much like
yourself have a good message and want to share it if for no
other reason other than to help other entrepreneurs succeed. I
think that’s a common trait among successful entrepreneurs. They
really want to give back. They know when they were young and
getting started other people played a huge role in helping them
become successful. So it becomes a huge part of the DNA.

So, if you are not yet doing a podcast out their audience I really
encourage you. It’s not a hard thing to do at all. The equipment
costs, you can do it for under $100. It doesn’t sound quite as
good as this but you can spend under $100 to get a really nice
microphone.

Derek: Okay, something I’m thinking about man I feel like you are
talking to me as well.

Trent: You should be, Derek. You certainly have the voice for it. It’s
not that hard. It’s like anything. It’s uncomfortable the first
time that you try it and then you get better. Then you get an
email like I got the other day. I got to tell this. Some guy
wrote me and he told me I’m so incredibly boring that he wants
to chew his arm off when he listens to me drone on. I hope that
he is listening to this. The only reason he listens to my show
is because I have such incredibly interesting guests.

Derek: That’s awesome.

Trent: Normally I get emails that are the opposite of that they have
a lot of really nice things to say about the show, but that one
was the first.

Derek: I completely disagree. I like your personality and I like the
show a lot. I’m trying to think where I heard this. Maybe it was
a podcast with Seth Godin a couple of weeks ago. He said anybody
that gives you one star on Amazon or one star on iTunes they are
never going to buy your products or be a customer of yours or do
anything with you. He’s actually gotten to the point where he
doesn’t even read them anymore because it’s so
counterproductive.

It’s great that you are laughing about it. I’m sure that it’s a lot
easier to laugh at something like that when you are getting as
many great notes and all the great feedback that you are getting
from everyone else it complete dwarfs that number.

Trent: That is the truth and also when you decide to become a blogger
and a podcaster you in essence become something of a public
figure in your own little world. There’s always going to be
people out there that don’t like your stuff and some will have a
mission to tell you that they don’t like your stuff. It hurt in
the beginning. You don’t like hearing that. You get to the point
where you look at it, I actually called my wife, I was laughing
so hard, and I said you’ve got to come read this. This is
probably the best one ever.

Now, in his defense I don’t think he’s a bad guy. He’s probably
listening to this, so I don’t want him to think I’m hating on
him or anything because he actually, the next episode he
suggested that I stand up. So the next episode I stood up to see
if I could make my voice any more exciting. When I introduced
this show I made sure I put more inflection into my voice than I
normally did. I turned down the bass a little bit on my mixing
board, because I thought maybe I was making my voice sound a
little too much like that. So, I kind of messed around with
things a bit. It’s not like I didn’t pay attention to what he
said and he didn’t write it in a malicious way. I wasn’t
insulted. It was taken as constructive feedback but at the same
time it was pretty damn funny.

Derek: It was nice that you took his advice you were able to do that.
I am often told that my super hero trait is that I’m the guy who
will tell you that your baby is ugly. I don’t think I would tell
anybody that their baby is ugly but people come to me
specifically to shoot down an idea or strategy or something that
they are doing. When your feedback is positive and its good
those people tend to like the fact that you are doing it. It’s
like when Simon Cowell on American Idol tells you that you are
really good, it carries so much more weight than when Paula
Abdul tells you that you’re good.

But then the problem is that when you start telling people what they
don’t want to hear, then they don’t like it as much. I am trying
to get better at massaging how I am providing feedback or
criticism to those individuals without taking away from the
charm of being the guy that will tell you that I think what you
have stinks.

Trent: Absolutely. Let’s wrap this up. There’s going to be a link in
this show. Derek it might be helpful for you as well. I’ve
written how I’ve podcast in the past. My guide to podcasting,
but a past podcast guest of mine by the name of Dan Norris, this
guy is a content creation machine. I’m going to put a link to
his guide to podcasting because it’s better than mine. It goes
into so much more detail than I did. I would encourage anyone
who is listening to this that wants to have a podcast to go and
check that out.

Also, in the show notes that invitation from you Derek, so please do
make a note to send us that. The email template on how you got
the people to come to the webinar to get your Cadre off the
ground, so to speak. Before we wrap up I’d like to ask you two
more questions. One is, are there any other podcasts that you’ve
listened to and would recommend?

Derek: I assume you want me to answer that one first.

Trent: Yeah, go ahead.

Derek: Without being completely obvious let me think here. I listen to
several but I am trying to think of who I can recommend that
might not, I think Amy Porterfield has a new podcast that is
really good, that I get a lot out of. I would also say Rich
Brooks has started one recently on marketing agents. Do you know
Rich?

Trent: No, I don’t. If you would like to make an introduction that
would be wonderful.

Derek: Sure thing. I have a lot in my rotation. Entrepreneur on Fire,
I love Smart Passive Income, I love. The Human Business Way
from Chris Brogan. All of them are great. There are about 15 or
so I can keep going if you want but those are a few for you.

Trent: Okay. I’ll include links to all of those. So, sorry the Human
Business Way?

Derek: The Human Business Way is a podcast that Chris Brogan does.

Trent: Okay, all right I’ll link to all of those.

Derek: I like Lewis Howes a lot, School of Greatness.

Trent: Okay. I’ll put that one down, School of Greatness. Then let’s
finish up with one book recommendation.

Derek: One book recommendation. I got to tell you it’s fairly new and
so it’s unlikely anyone has recommended it yet but Jay Baer new
book “Youtility”. Have you read it?

Trent: I have not.

Derek: Have you heard of it?

Trent: I have.

Derek: Youtility spelled Y-O-Utility. The basic premise is that so
many of us in business spend so much of our time trying to be
mind blowingly awesome. Over the top special. What Jay suggests
which I completely agree with is that we could probably get a
lot more mileage on focusing on how we can just be more useful.

I gave an example of that I think with the ultimate tie breaker where
I could have stayed awake for an extra two or three hours a
night and focused all my time, energy, and effort on how to
create a financial plan that was .001 percent better than it
already was or I could spend that time learning my clients
businesses and figuring out ways I can add value for them above
and beyond what I do.

So, the premise in the book is a lot of great suggestions for whether
it be apps. Whether it be events. It just a lot of great ideas
for ways that you can be useful and add value for your clients
and prospective clients.

The other sort of angle is that you Youtility is about creating
marketing that people want and there’s this huge competition and
you’re competing against friends and parents and spouses and
everyone else. Your email, Facebook and all those people are
already interesting to your ideal target audience. If your
emails or your newsfeed updates are going to remain relevant or
get opened by your community, then what you are sharing has to
be as relevant as what they are sharing.

I think obviously with the changes recently made by Gmail and
Facebook we already all know that they are not showing your
updates to 85 percent of your fans anyways. Just really figuring
out how can I remain relevant and useful and really help the
people that I want to reach so when I do have something I want
to sell they are much more likely to open it and be interested
in it.

Trent: Very good advice. And, finally if people would like to learn
more about Cadre what is your link to that?

Derek: Cadre is C-A-D-R-E-D-C.COM. CadreDC is also my Twitter handle.
I am going to be shifting especially as we look to expanding and
grow Cadre. I am going to be shifting my platform over to my
name dotcom, derekcoburn.com. That should be up in about a
month. I am going to start blogging. For people that go there
and give me their email address. It may come eventually, Trent,
after listening to all the benefits of your show. I don’t have
Infusionsoft set up right now. I am not going to be sending out
any sort of immediate emails. It’s just give me your email
address and I’ll let you know when the book is coming out
because I am going to have it available for free for 48 hours on
Amazon.

Trent: Cool. All right I want to thank you very much, Derek, for
coming on my show. Hopefully no one had to chew their arm off
because I was too boring.

Derek: Or because I was too boring either.

Trent: I’ve done over 100 of these things. I think we did a good job.
I don’t think we have to lose any sleep that anybody is going to
lose any arms today. Let’s wrap it up. Thank you so much for
being on the show and I want to keep in touch with you.

Derek: Great, man. Same here. Thanks’ for the opportunity, Trent.

Trent: Take care. To get to the show notes for this episode all you
need to do is go to brightideas.co/73. If you really enjoyed
this episode I would love it if you would head over to
brightideas.co/love where you will find a pre-populated tweet
and also you will find a link to the iTunes store. That’s
probably even more important than the Tweet. If you would take a
moment to go and leave a five star rating in the iTunes store I
cannot tell you how much I would appreciate your taking a moment
to do that. It helps the show get more exposure.

That’s it for this episode. I am your host Trent Dyrsmid. Thank you
very much for being a listener. If you have not yet visited my
blog you can get to it at brightideas.co. I look forward to
seeing you there. Make sure you become a subscriber so you never
miss another episode. I look forward to seeing you in another
episode soon. Take care.

About Derek Coburn

DerekCDerek is the Co-founder and CEO of cadre, an un-networking community for successful professionals in Washington, DC, a partner with Washington Financial Group (a wealth management firm) and author of the soon-to-be-released book, Networking Is NOT Working.

Derek is married to Melanie (the other co-founder of cadre) and has two boys and a pitbull mix.

You can reach out to Derek via Twitter (https://twitter.com/cadredc) or visit his website at www.derekcoburn.com.

Thanks for Listening!

To share your thoughts:

  • Leave a comment in the comment section below
  • Share this episode on Twitter or Facebook

To help out the show:

  • Leave a review on iTunes. It's your best way to say thank you to our team.
  • Subscribe on iTunes

Never Miss an Episode

Welcome to the Bright Ideas Community of Entrenpreneurs

  • Owen McGab Enaohwo

    Trent did you ask the guy who sent you the email you mentioned in this episode for constructive feedback on how you can be more fun during your interviews? I’d like to know what he said/suggested!

    • He didn’t have any suggestions other than I should ‘stand up’.