BankBosun Podcast | Banking Risk Management | Banking Executive Podcast

BankBosun is a biweekly syndicated audio program that provides the multi-tasking bank C-suite officers ideas and solutions from key executives from all types of businesses operating in the banking ecosystem. BankBosun provides relevant ideas and solutions clearly, concisely and credibly to better enable them to navigate risk and discover reward. Kelly Coughlin is a CPA and CEO of BankBosun, a management consulting firm helping bank C Level Officers navigate risk and discover reward. He is the host of the syndicated audio podcast, Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank, and Merrill Lynch. On the podcast Kelly interviews key executives in the banking ecosystem to provide bank C suite officers, risk management, technology, and investment ideas and solutions to help them navigate risks and discover rewards. Kelly earned his undergraduate degree (BA) from Gonzaga University and a master’s degree in business administration (MBA) from Olin Graduate School of Business at Babson College in Wellesley, MA. Kelly lives in Edina, MN.
RSS Feed
BankBosun Podcast | Banking Risk Management | Banking Executive Podcast


All Episodes
Now displaying: July, 2017
Jul 27, 2017

This is the 3rd and final interview of Robin Kermode, actor and author of the print and audio book, Speak: So Your Audience Will Listen. A great book. Coupled with this three-part podcast series customized for BankBosun audience, will give your great confidence in public speaking. If you listen to this series and buy his book, it will save you from having to appear naked on the stage to gain public speaking confidence…like he did. Listen to part one, if you missed it.

Kelly Coughlin is CEO of BankBosun, a management consulting firm, helping bank C-Level officers navigate risk and discover rewards.  He is the host of the syndicated audio podcast,  Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank and Merrill Lynch.  On the podcast, Kelly interviews key executives in the banking ecosystem, provide bank C-Suite officers, risk management, technology and investment ideas and solutions to help them navigate risk and discover rewards, and now your host, Kelly Coughlin.

Kelly:  I’m a big fan of Shakespeare and you mentioned that it’s effective to use the iambic pentameter which is Shakespeare’s preferred rhythm in the speech, I have never tried to write a speech using that let alone deliberate in this format.  Are you seriously recommending that we try to write our speeches like Shakespeare?

Robin: I’m certainly not, what I’m saying is that if you can find, it can be useful exercise, if you write your main points in iambic pentameter, interestingly enough, it will actually have a natural rhythm that will just flow because   iambic pentameter, which is ti-dum ti-dum ti-dum ti-dum, which is the five human heart beats.   The reason it’s worked so long is it has a natural rhythm.  So, one of the classic Henry the Fifth line is, “Now all the youths of England are on fire.”  In the rhythm of Shakespeare, which is ti-dum ti-dum ti-dum, in that rhythm, it sounds like, now all the youths of England are on fire. You can feel this, there is a momentum behind it.  It’s not always appropriate, of course.   In the book, I use a phrase that you could tell to your sales team, for example, which was in the line I came up with here to explain this was, “just care and they will want to buy from you.”  But if you say it in the rhythm of the iambic pentameter, which is tidum ti-dum ti-dum, you have, just care and they will want to buy from us.  So, if you are going to end a speech with your main point, if you just try and write it in those five human heartbeat, fondly enough, you will find it will have a natural rhythm and a natural gravitas and a natural authority, and a natural drama, just purely in the way it is constructed.

Kelly:  So you will give us a pass, we can use iambic pentameter at the beginning and the end but in-between we can get by without it.        

Robin: None of us are as good as Shakespeare, and to be honest, it wouldn’t land.

Kelly:  Okay.  I love the quote, “A speech is like a love affair. Any fool can start it but to end it requires considerable skill”  

Robin: [Laughs] that’s great, a great quote isn’t it.  If you can see a theatre play, you love the whole play, it’s been like two hours long or something, the curtain comes down at the end and the curtain gets stuck about one foot off the ground.  What you see now is the actors behind, you see their feet.  And there you can see them, you can see the body language because there is about a foot at the bottom, and you can see they begin, what do we do now? Do we go off or do we stay?  And you can see them starting to go one way or the other way.  And it leaves a very odd feeling about it and then they can’t do their bows properly so now they have to come through the side of the auditorium and, you know, in front of the curtain and all the rest of it.   So, when you go into the office the next day and you saw this theatre play last night, the curtain got stuck.  That’s what you are going to remember.  You are not going to remember two hours of great before that, you are just going to remember when it all went wrong at the end.  And similarly with the speech, you can do a really good speech and just slightly fall apart at the end and it’s just terrible.  And the reason I like the headline sandwich is that even if in your mind you think, oh, it’s all slightly going a bit pear shaped.  What you do is, you think, okay, I am just going to repeat the opening headline absolutely clearly, so, that’s why Peter is the kindest man I have ever met in my life.   No one is going to think, but you missed out a section, because they don’t even know what you plan to say. But at least you finish really really well, and I would say, finish strongly but interestingly enough, on a timeline.   Someone, a few years ago, did a wonderful survey on when the peak of great works of art, great speeches, great music, great films, great book even where they reach their emotional peak.  And most people would think that you reach your peak at 100 percent on the timeline. Interestingly enough it is about 95 percent on the timeline.  So it’s best what we are trying to sell in our product we want the audience to feel they have made the decision to buy it and we then pull back and let them feel they have make their choice.  We don’t want to end on the big sell, we want to get to about 90, 95 percent of the timeline and then just pull back a little bit so the audience go, yeah, I think we will buy this, and this is my choice to buy it.  And then, salesman, very much calmer, and they are not desperate to sell, because I think if he looks desperate to sell it will end up at 100 percent energy and 100 percent on the timeline.

Kelly:  Excellent.  I told the audience we will cover briefly some things on PowerPoint presentations.  I have a business policy now that requires more or less four things in a power point presentation.  Number one, few or no words on the slide.  Two, only images if possible.  Three, total deck less than 12 and then presentation less than 20 minutes, as we had discussed before, and then the script printed at the bottom of the PowerPoint notes.  Tell us about your PowerPoint policy generally and what you refer to as your five by five rule. 

Robin: Yeah, the five by five rule is quite common actually but basically it’s no more than five bullets per slide and then more than five words per bullet.  And I think that is the discipline, I think, is really good.  I think also, fonts are too small, quite often there are too many sections to a slide.  So, you can have graphs, series of words, you can have a chart, So, you can have a pie chart, a bar chart, a photograph.  It’s just too much on a slide.  If I was going to give one piece of advice on PowerPoint it would be each slide should have an emotion connected to it.   And the best example of this is the company I was working with in the north of England and it had a sales team of about 100 guys and they had to go out obviously and give this presentation to all their new potential customers.  One of the slides was the history of their company.  And then it went from about 1900 right through to 2017.  And it had, but each one, each one of the...well almost every single, not every single year but I mean, it felt like...certainly every five years it was something else.   It was like, you know, they moved their office to a different town or they opened an account somewhere else or they opened a branch here. And as a customer, of course, I was watching this, a potential customer, and I said look, I am going to stop you now. I said, this slide is going on for about a minute and a half and it’s really boring because it’s all about your company and I, frankly, I want to buy your products, I am not really interested in the company and where you have your offices and where you have your warehouses.  It’s not really relevant to me.  And he said, oh, we’ll cut the slide out.  And I said, no, no, no don’t cut the slide out because there is a point to the slide but you have to know the emotional results that you want every slide to have.  So every slide in your deck has to make the audience feel something, so what is this slide making the audience feel?  And he said, oh, but we are giving the history of our company.  I said, no, that’s boredom.  What do you want the audience to feel?  And one of them said trust.   I said, absolutely, spot on. The only reason you are telling us about the history of your company is so that you trust us, right?  So, I said, now you know that, I said do the slide again.  And the guy said, so, look, as you can see here, we have been going over 117 years.  We know what we are doing.  We are really established. Trust us. Click.  And he went on to the next slide.  So, it took under 10 seconds but it did the job, which is to make us feel we can trust this company.  We don’t have to go through everything necessarily, it wasn’t relevant but to see it all there was useful.  But the point of the slide was to make us feel trust.  So, I think that in every single slide I get my clients to write the emotion at the top of the slide that they want the audience to feel as a result of giving this slide. And if you do that, then the audience will care and if you don’t have the emotion connected to PowerPoint slides, that’s when they become boring and that’s when they become just information.  We don’t want information, we want to know why we are been given the information.  And if you tell them the emotion connected to each slide then your audiences will care.

Kelly:  Great stuff!  Robin that’s terrific.  I really appreciate your time.  How should people get in touch with you?  Give us your, I presume your website, email address, how would you like to do that?                                                                                                                              

Robin: Well it would be very lovely to hear from any of your listeners, of course, you can buy the book on Amazon which is, Speak: So Your Audience Will Listen.  You can contact me by the website which is zone2, that’s ZONE the number 2, and my email is  I look forward to hearing from you and hearing how you are getting on with your presentations and your speeches. 

Kelly:  Great Robin, thank you very much, cheers!

Robin: Thank you so much Kelly for having me.  I really appreciate it.

Well that concludes my three-part series with Robin Kermode. I hope you liked it. His book Speak: So Your Audience Will Listen has some further tips, tricks and practice techniques that will help you continue to upgrade your public speaking skills and confidence. Thanks for listening.

We want to thank you for listening to the syndicated audio program,  The audio content is produced and syndicated by Seth Greene, Market Domination, with the help of Kevin Boyle.  Video content is produced by the Guildmaster Studio, Keenan, Bobson Boyle. Voice introduction is me, Karim Kronfli.  The program is hosted by Kelly Coughlin.  If you like    this program, please tell us.  If you don’t please tell us how we can improve it. And now some disclaimers, Kelly is licensed with the Minnesota Board of Accountancy as a certified public accountant.  The views expressed here are solely those of Kelly Coughlin and his guest in their private capacity and do not in any way represents the views of any other agent, principal, employee, vendor or supplier.

Jul 27, 2017

This is the second of my three-part interview with Robin Kermode, actor and author or the terrific book, Speak: So Your Audience Will Listen. I love this book and the audio book that you can also order. Public speaking is something all execs have to do. And honestly, his book has done more to help me in my public speaking self-confidence than any other book or class I have read or attended. And this podcast series, especially designed for BankBosun audiences will hopefully do the same for you. And if you like it, buy his book and consider his company to help you and your team.

Kelly Coughlin is CEO of BankBosun, a management consulting firm, helping bank C-Level officers navigate risk and discover rewards.  He is the host of the syndicated audio podcast,  Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank and Merrill Lynch.  On the podcast, Kelly interviews key executives in the banking ecosystem, provide bank C-Suite officers, risk management, technology and investment ideas and solutions to help them navigate risk and discover rewards, and now your host, Kelly Coughlin.

In part one, we covered five of the seven steps, nerves, confidence, connection, voice and body language.  In part two, we will cover structure and delivery with some focus on PowerPoint type presentations.  If you listened to part one you will recall Robin overcame his fear of public speaking by once appearing totally naked on the stage.  Robin, are you on the line, and tell us where you are right now, and are you on the stage, and do you have all your clothes on now?

Robin: [Laughs] Hello Kelly.   Yes, I am in sunny London and I am fully clothed.   Although it’s audio only, I am fully clothed.

Kelly: Excellent.  So, for a minute, let’s talk about eye contact. Give us a couple tips on using eye contact to enhance the connection with an audience.   And are there different techniques for large groups or medium groups and small audiences?

Robin: Yeah, okay, eye contact is really instinct.  I maintain that if you can be authentic with a small group you can also be authentic in a large group.  Of course, it feels much more exposed, you know, when you are on a big stage, like the sort of TED talk type of thing.  I write quite a lot of articles for the newspapers and I wanted to write an article about TED talks, under the title of something like, How to Give Good TED talk without looking completely smug and overconfident and self-satisfied.  Because there is something about the style of those TED talk deliveries which have become a bit ubiquitous now.  And I think even CEOs feel they have to be a bit like that, you know, with the radio and mike around the head and everything and they have to have this very, very long pauses and very stylishly over-rehearsed deliveries, and I am not sure how authentic that is actually. I think it looks very, very rehearsed.  There are some people who can pull it off, you know, the Steve Jobs type of approach when he was launching a new Apple product.  There was a big buzz around that, you know, but I think for a CEO to come and do that it just looks a bit odd, I think, you know, in our internal conference environment.  But what we want to do is, we want to connect with everyone.  And the way we connect with them is to make sure that we look at them.  You can’t look at everyone but you can look individually at people.   Now, in a large hall, of course, you can’t see their eyes because you can maybe see the first five, ten rows but you can’t see beyond that very clearly. So, the trick is to look as if you are looking at one person, which means you choose a spot in an auditorium. You maybe look at somebody, maybe three rows back.   You look straight at them in the eye and then maybe you look about 40 rows back at a slightly different point as if you are looking at somebody.  And what it does is, by choosing different areas of the room it looks like you are talking specifically to an individual person.  So, if you look at about 20 people around the area you are looking at toward the back of the hall they will all think you are looking directly at them because of the angle of the width of the projection.  I worked at how to do eye contact when I went to see Hamlet a few years ago at the national theater in London.  And I was sitting on the front row, I was very lucky to be sitting bang on the front row, and the actor playing Hamlet was about to do the famous speech, To Be or Not to Be.  I’m sitting down in the front row and there is a long pause and Hamlet came right down to the front of the stage, I mean, I could almost touch him, I was that close, and it is 1700 people behind me, big auditorium, and Hamlet’s there looking up and I am so close to him thinking this is... what a wonderful chance to see this famous actor playing Hamlet so close up.  And then he suddenly looked straight down at me and said, “To Be or Not to Be.” It was sort of electric, that was amazing because he was doing it to me, and then he carried on, and he said, “That’s the question.”  And I met a friend of mine afterwards and I said, it’s amazing, he is doing the whole play to me.  And she said, he is not doing the whole play to you because I’m sitting in the dress circle and he is doing the whole play to me.  And of course, he didn’t do the whole play to me but that’s what it felt like.  He only did two lines to me and he did two lines to my friend in the dress circle but both of us said he did the whole play to us.  So, the secret of eye contact is to have one thought with one person and one thought with another.  And in a large hall you have one thought with one area of the auditorium and another thought with another area.  As long as you connect with everyone, at some point they will feel they have been with you, they have actually connected with you.  What a lot of people do is they sweep the room with their eyes.  They sweep from back side, left to right and up to down. They are almost defocusing, they are not really focusing on anyone in particular.  But much better, I think, to come out to an audience and look at a particular spot in the audience and say, good evening, and then look at another spot and say, really nice to see you, as opposed to, good evening, nice to see you, in a sort of scatter gun way, right across everybody.  In the audience, we want to feel special.  We want to feel the speaker is actually, at some point, talking to us, and that’s the way to do it.

Kelly: That’s excellent.  Since you mention TED talks, I am a fan of the TED talks 20 minute presenting and then 40 minutes listening versus the traditional business presentation of 40 minutes talking and then 15 minutes Q &A.  Do you like that idea?

Robin: I totally agree with that.

Kelly: Any tips or tricks, once you have opened it up for Q &A, how to get it going, how to get that first question asked?

Robin: I think one of the things is to have a prepared question.  I think one of the hardest things to do, actually, is to ask a question from the audience.  It’s much easier to be on a panel on stage than it is being in the audience asking a question.   Because often what happens is, you think of a question and then by the time the microphone is passed down the line to you and previous questions finished, partly, they possibly answered the question in some way anyway or you can’t quite remember what you had said so the nerves kick in, and so I think it’s quite difficult.  So, I always have a question up my sleeve. Maybe the moderator would say, you know, do we have any questions? And if there isn’t one straightaway, I’d say, excuse me, but I was talking to someone earlier, just before this, and they asked me, of course they didn’t, that didn’t happen but what I am doing is I am posing a question that they might well want to ask or the people have asked in the  past. I’ll frame it as if I was talking to somebody just before and that makes the feeling that it is much more collegiate and then that normally starts the ball rolling.

Kelly: So, you pose that question and then you answer it yourself.  Okay, I got it.

Robin: I actually answer myself, yeah, yeah.   The other thing I have done before is, any question is a great question.  “That’s a great question” sets it off in that way.

Kelly: Yeah, I think Socrates or one of these guys said, Confucius said, “He who asks a question is a fool for a minute.  He who never asks a question is a fool all his life.”

Robin: You know, you’ll regret it as well, you know.   You would also think, I wish I had asked that person.  I applaud people for asking questions because I think it takes a lot of bottle when you are in an audience.  You know, when you are on stage with the microphone you have much more power than you do when you are in the audience.  I really feel it for people asking questions and I am very very grateful when they do.  And I always thank them afterwards, I go up to them afterwards and thank them for asking the questions. 

Kelly: Okay, I want to get to a couple of the really kind of mechanical things that aren’t that exciting but I think they’ll be helpful.  Tell us your thoughts on standing and what to do with our hands.

Robin: Okay.   So, you have basically got about five choices with what to do with your hands.  You’ve got hands behind your back, which is a bit military.  You’ve got hands down by your side, which is an interesting one.  So, if you stand there open very much, open body language, you know, with your hands standing by your side, it’s what actors call actors neutral.  And the reason that actors do it, the next time you go to see a theater play watch out for it.  Actors do it because it’s very very easy for the audience to go between the two characters having a conversation on stage.  Because physically they are quite still but mentally and emotionally it’s quite cut off and quite fiery.  Physically they might be quite still and in life very very few people do it.  The people who carried off best normally are world leaders making big pronouncements on the world stage, and they quite often do it, and they look very very open but it’s quite hard to do.  And often it looks a bit grand, I think, in many situations.  Some people like it but I would say it’s quite hard.  And hands in pocket, obviously, is just a cultural thing but also on an animal level you don’t show your hands it’s the sign of hiding something, maybe nerves or a gun or whatever but I think the ones that most professional speakers use, most politicians, most TV presenters.   I have my hands held lightly together around the line of my belt, so just below the belly button.  And the reason that works is that’s your emotional center so you feel protected in that position but it looks open. Obviously, if you cross your arms you look closed but this looks open in that position.  I use my hands a lot so my hands are moving around all the time but when they finish, whatever the move is, then like a magnet they are drawn together level with the belt.

Kelly: Excellent, and feet are shoulder width apart. 

Robin: Yeah, hip width apart is the best way.   And the reason feet even weight is good because it tends to make your spine straight, and if your spine is straight your ribs will breathe better and so you have more air.   You look more centered but also actually physically you are more centered.  And if they’re too wide it looks inappropriately, you know, like a wild west cowboy, just got off your horse.

Kelly: You talk about five types of body language, four variations of closed which are aggressive, defensive, nervous and bored, I don’t want to spend any time on those, I want us to focus on the one version that you recommend is open and interested.  Talk about that and include smiling in that, because I think that’s part of the key part of body language that makes one open and interesting.

Robin: It is.  The closed ones, obviously, are, you know, crossing your hands and rubbing your face and shifting the weight and the yawning and all that sort of stuff.  But the open interesting body language, this is where we meet somebody who genuinely looks like they want to connect with us.  They will probably have a reasonably firm handshake, but not too firm.  They will have good eye contact; they won’t be embarrassed to hold our eye contact so they will actually look us in the eye.  They will have a confidence stance but they will have a low center of gravity if they get it right.   Their gestures will be quite relaxed but smiling is instinct because it changes the sound of our voice as much as anything else.  And the other thing about smiling is, it’s easier than frowning because actually it takes 42 muscles to frown and 17 to smile.  So, it’s far fewer muscles to smile.  I do voiceovers for TV commercials and stadium events and things and if you have a little twinkle in your eye it changes the sound of your voice, literally changes the sound of your voice.  If you have a cheesy grin, like sort of a cheesy toothpaste commercial salesman, that will tighten your voice, and you can feel it tightening your throat if you try it. But just a little twinkle in the eye, absolutely softens the voice and changes the voice a bit.  And of course, we can tell on a gut level, even if we are not experience in this, we can tell whether someone’s smile is genuine or not.   And the answer is, does the smile reach the eyes?  You can tell when someone’s eyes are really smiling.  And actually, if you want to spot an insincere smile, you want to spot a sincere smile, you look at someone’s eyelid.  You look at the outside corners of the top eyelid, and when you are genuinely smiling that comes down, and it’s almost impossible to fake that one.  So, if you want to see if somebody is really smiling look at the top outside corner of their top eyelid.

Kelly: Interesting.  Let’s get to the last question I have in this part one segment on presentations, is presenting while sitting down. What are your thoughts on that?

Robin: Well, presenting when sitting down requires energy.  It’s hard because you want to look relaxed and calm.  There are basically two ways to sitting, actually, in a meeting if you are presenting.  The best way actually is to sit forward on your chair.  It is to push your chair slightly further back than you would think away from the table and sit on the front edge of the chair and have both feet flat on the ground.  I was coaching a lady the other day who is the CEO of a big company and she was trying to raise 100 million or whatever for her company and we were rehearsing her pitch to the financial institutions.  And after about 15 minutes of this rehearsal pitch she started coughing and so she asked for some water and I just looked under the table and I just said to her, okay, could you just put both feet on the ground, because what she had been doing was having her feet crossed, so they weren’t flat on the ground they were crossed.   And I said, just try that, and interestingly enough, once you put both feet flat on the ground she didn’t cough for another forty minutes.  So, what that does, by having both feet flat on the ground and sit forward on your chair, both feet flat on the ground, it tends to make your spine a little bit more straighter and it brings your voice more forward, and you get more air out and therefore you don’t tend to hurt your throat.  The second way of sitting is what I call the high-status CEO position which is sitting further back in the chair, often with your legs crossed, maybe with weight on one arm.   So, it’s quite a sort of senior politician TV interview type position.  And I see a lot of CEOs do that at boards, they sit slightly away from the table, giving themselves quite high status. It can work, and it just depends on the situation, but those are basically the two ways of sitting when you are presenting ourselves.

Kelly: Exactly.   So, to summarize, I’ve got, number one, feet are hip with the part.  Number two, thighs or buttocks clenched.  Number three, hands held together close to the stomach. Number four, speak from the gut.  And then five, smile.                                                                                                                                                                                                                                            

Robin: Definitely.

Kelly:  You indicated in your book that there are three essential questions that needed to be asked and answered in your talk, what are they and why are they important?

Robin: Okay, well the first one is, why are you giving this talk?  And it seems a very obvious question, why are you giving this talk? The reason I have to ask people this often is, I sit, I would say maybe two or three times a week, in an audience listening to a talk and I think, I am not quite sure why that speaker who is giving the talk. They are giving me lots of information but I am not quite sure what they want out of it.  So, I think the speaker always needs to know what is their reason for giving the talk and what do they want successful talk look like to them at the end of it.  What are they trying to do?  And there are basically two types of talk.   Of course, there is a talk to sell or to motivate.  And those are basically the only two types of talks.  So, even family talks like at a wedding or even a eulogy at a   funeral, they are ultimately motivational talks, otherwise they are sales.  And sales talk will always require an ask at the end of it. You are giving this talk so that the audience thinks differently, behave differently, buys your product, does something differently.  So, those are selling and motivating talks.   We need to be very clear what we are trying to do.  I was coaching a guy recently and he has got a big company and he was going to give a speech to two and a half thousand employees and I said to him, okay, so before you rehearse your speech with me, what are the reason you are giving this talk? Why are you giving this talk?  And he said, well, I am sort of giving an update.  I said, do you know what, with greatest respect, nobody wants an update.  Why are you really giving this talk?  And he said, well, you know, I have got various things to say.  I said, no, no, we’re not really clear what the point is.  I said, but I tell you what, can I make a bet with you?  I am in the UK so I said, I took out a 10-pound note and I put it on the table and I said, I put 10 pounds down so I am going to make you a bet.  And I am not really a betting man but I’ll make you a bet.  About three minutes into our talk I bet you will say something like, so I suppose the real point is.   And he said, yes.  And I said, fantastic, thank you, I’ll take your money.  I said, can we start with the real point?  So, it is so much better for him to stand up there and go, I suppose the real point is this.  If that’s the question that the audience wants answering, then of course you are home and dry.  So, it’s about, why are you giving this talk?  And the second one is, why should the audience care?  And that’s the bit we just did up top there.  Why should the audience care?  You have got to get into the audience’s head, they have given up their time, they have given up 40 minutes of their time or whatever an hour of their time to come and hear you speak so what value are you going to add? Why are you giving them some information?  Why is that relevant to them? And if we construct the talk from that point of view, being aware also of why we are giving it but ultimately, why they should care.  And then the final question is, what are you really saying?  What are you really saying?  So, we are clear, why do we want to give it, we care with the audience, what’s the benefit they can get from it, and what are we really saying.  And I think if you can say it in one or two sentences then you are really clear.  If you can’t say it in one or two sentences, you don’t really know what your speech is about.  I wonder if I could share something incredibly personal.  It might be interesting.

Kelly: Yes.

Robin: My father died recently. We have five children in the family, and my sister said, could she speak at the funeral? I said of course you can.  I said, you know, how long are you going to speak for?  She said, well I thought about it, I am going to speak for about 14 minutes.  And I said, Okay.  I said, that’s quite long, and also there are five of us. So, I said, you know, do you think you can cut it down at all?  And she said, well, it’s quite hard, isn’t it, and I have got lots of things to say about my father. So, are you going to speak?  And I said, yes.  She said, well, how long are you going to speak for?  And I said, well, I thought about it very carefully and I am going to speak for exactly 60 seconds. And she said, well, you can’t say everything you want to say about your father in 60 seconds.  You can’t do that.  I said, you can but it’s harder than 14 minutes because you have to know what you are really saying.  And I ended up my 60 seconds, I spoke a little and then at the end I said, but what I really want to say ultimately is just six words, thank you for being my father, and I sat down.   That was the essence of my message.  So that’s what I was really saying.  I could have given lots of anecdotes and talked about lots of things and said how kind he was but ultimately, that’s what I wanted to say.  And it took me funny enough to write that 60 seconds it took me two days. And it sounds odd but it takes longer to write a 60 second speech that it does to write a 14 minute one.

Kelly:  That’s wonderful, wonderful, thank you very much for sharing that.  In these three questions, these three essential questions, why am I giving this?  Why should the audience care? And then what’s the third one?

Robin: The third one is, what are you really saying?  And that’s what we just covered there.   What are you really saying?

Kelly:  In a nutshell, what are you going to say?  Okay. Should that be introduced at the beginning?  Because it leads to one of your early points of, know how to start a presentation.

Robin: Well, I think so.  I think all audience’s attention, well, we all know, audience’s attention spans are shortened.  I love it when a speaker comes on and ask a provocative question or somehow nails it right at the beginning.  And I use something call the headline sandwich which you may well be familiar with under a different name but I call it the headline sandwich which means you start your talk with your headline and you give your talk and at the end you hit the headline again. So, for example, a friend of mine who was asked to speak at a wedding, he was the best-man and he said, could you give me some tips?  And I said, yes.  And I said, before you even start thinking about humor or anything, tell me about your friend who is getting married.  And he got a little bit emotional about this friend and he said, Oh, Peter.  And he said, Pete, he is probably the kindest man I have ever met in my life.  And I said, but you have written your speech there, really.  You have written your speech.  So, at the wedding he stood up and he said, Peter is probably the kindest man I have ever met in my life.  Let me tell you why.  And then he added a couple of anecdotes as to why that was the case and then he ended up by saying, so, can we now drink a toast to one of the kindest man you will ever meet.  And it works in almost every situation.  It works in eulogies, it works at weddings, it works in business speaking. 

Kelly: Tell us why ethos, logos and pathos have been so important all these years.  They are kind of never changing and why are they still so important.

Robin: Ethos, logos and pathos, in that order, so, it is trust, persuade, motivate.  And they have to come in that order, interestingly.  So, ethos is about building rapport and credibility. So, building trust, in a sense.  So, in other words, trust me I know what I am talking about.  Then there is the logos which is the logical argument.  So, the audience can follow your argument very clearly.  And then pathos is then engaging with them on an emotional level, on an empathetic level. So, we can inspire and motivate.  So, we want to say, you can trust me.  These are my credentials. My persuasion is this.  This is my argument and then now I am now going to emotionally motivate you.  It is a wonderful expression from the 60s advertising guru which is, sell the sizzle, not the sausage.  It’s about selling the excitement of the product not just the product itself.  But you don’t want to sell the emotional stuff before you have done the logic because then if it doesn’t work.  So, we need to go, okay, I’m a car salesman, I mean, I obviously know about cars.  This is a logical reason why this is a good car for you based on what you have told me.  And these are now the emotional reasons why I think you really love this car.  You go in that order and it tends to work. And the same way the speech as well.

Kelly: Excellent.  You have introduced the five classic starts of a speech, what are they?

Robin: Okay, the five classic starts, the most common one, actually, is the benefit, and that’s what sales people do, which is, I’m going to tell you how you can make more money. Here’s a great product for these reasons.    This is the benefit to you.  So, benefit is a classic one, and be very clear what benefit is.  The second one, people in talks do, it is, somewhat, radio stations do it.  It is what they call the tease.   So, you say, I am going to tell you how you can double your money in the next 10 minutes, but first of all, I am going to do something else.  So, you tease them with something that’s coming out, that’s the tease.  The question is the other one which is, it can be the same as benefit, it’s just in a question form. So, it can be, grabbing the audience’s attention, you know, who here wants to double their money in the next 10 minutes, just that.  Who here wants to look after their retirement planning better? I do a talk on charisma, one of my talks is the opening question which is, can you teach charisma?  Very simple question but what it does is, it absolutely frames the talk.  Can you teach it or is it something that you are born with?  Right up front and the audience know exactly what is there.  The shock is the other one.  And this is quite often used internally in business meetings where you say, if we don’t do this, we are toast.  If we don’t change our behavior we are going to lose all our customers.  There is a real call to action in the shock.  And then this is what politicians love, which is what’s called the three-way opening, you give three things, but actually you talk about things you say you are not going to but actually you do.  Tell you about the current state of the world’s economy.  I could tell you how ill-prepared we are about our retirement planning but instead what I am actually going to tell you about is how you could do this.  They get three points in one but actually they are only really talking about one but they get the others in at the same time.  

Kelly: So, I sell consulting services to a community and regional bank so would a classic start be something like this, if I pose it as a question, can a sleepy community bank compete effectively with big brokers and big banks and achieve double digit growth rate, or would it be how can?

Robin:  Good point.  The answer to that, it depends on your audience. Both of those questions are great because they are questions that the audience would actually be interested in hearing the answers to.   What’s tempting for people when they are selling their services or their products is, you say, we are the best. There was a wonderful advertising campaign in the 60s for lawn seed.   Their original campaign ran the best lawn seed in the world, and interestingly enough, they didn’t sell very much lawn seed because the audience doesn’t want lawn seed.  What the audience wants is a good lawn.  So, they changed the campaign to the best lawns in the world.  So, customers don’t want lawn seed, what they want is a lovely lawn.  What a customer doesn’t want is your services or my services, they don’t want the services, what they want is the outcome which is, we want to be a more effective team. We want to communicate better. We want to increase our margins, whatever services you are selling.  They are not actually interested in your services.  They are interested in what your services can do for them, which is why your question was in the right way, which is, how can a small bank do this or can a small bank do this?  It doesn’t really matter which way you do it but it’s’s the relevance to the audience that’s important.  And I think if you get the first question relevant to the audience that’s when you get them, but normally, when I see speakers they make the first sentence about themselves and that is where it goes wrong, right from the first sentence.


Kelly: That concludes part 2 of my interview with Robin Kermode, actor and author of Speak: So Your Audience Will Listen. In part 3 we will cover some guidelines on Powerpoint type presentations and why a speech is like a love affair. Any fool can start one. But to end it requires considerable skill.

We want to thank you for listening to the syndicated audio program,  The audio content is produced and syndicated by Seth Greene, Market Domination, with the help of Kevin Boyle.  Video content is produced by the Guildmaster Studio, Keenan, Bobson Boyle. Voice introduction is me, Karim Kronfli.  The program is hosted by Kelly Coughlin.  If you like    this program, please tell us.  If you don’t please tell us how we can improve it. And now some disclaimers, Kelly is licensed with the Minnesota Board of Accountancy as a certified public accountant.  The views expressed here are solely those of Kelly Coughlin and his guest in their private capacity and do not in any way represents the views of any other agent, principal, employee, vendor or supplier.

Jul 27, 2017

There are always three speeches for everyone that you give.  The one you practiced, the one you actually gave and the one you wish you gave, Dale Carnegie.

Kelly Coughlin is CEO of BankBosun, a management consulting firm, helping bank C-Level officers navigate risk and discover rewards.  He is the host of the syndicated audio podcast,  Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank and Merrill Lynch.  On the podcast, Kelly interviews key executives in the banking ecosystem, provide bank C-Suite officers, risk management, technology and investment ideas and solutions to help them navigate risk and discover rewards, and now your host, Kelly Coughlin.

Greetings, this is Kelly Coughlin, CEO of BankBosun, helping bank C- suite execs navigate risks and discover reward in a sea of threats and opportunities.  You know, I don’t think there is any bank executive that is exempt from giving some sort of public presentation on a recurring basis, whether it’s small groups, medium sized or large audiences, whether it’s motivating staff to be productive, informing your Board of your financial results, persuading the big commercial loan or wealth management prospect to trust you, your bank and your people.  As much as we all wish we could have competed in the NFL or NHL and use our athletic skill to compete, we executives use our brains, words and voice to compete. And if we are terrible at it and hate it, it’s a curse but if we like it and are good at it, it’s a huge benefit. My goal is to help you love it, or at least not hate it. And that leads me to two somewhat opposing quotes.  The first, from Dionysius of Halicarnassus who taught rhetoric, that speech in Greece during the reign of Caesar Augustus, and the second quote from Mark Twain, I think you all know him.  First, Dionysius, “Let thy speech be better than silence or be silent.” I’m going to repeat that, “Let thy speech be better than silence or be silent.”  And then Mark Twain said, “There are only two types of speakers in the world, one, the nervous, and, two, liars.”  I don’t think I need to restate that.  These two quotes plus my intro lay the foundation for the importance of good public speaking.  Everyone is nervous, every exec must do it and you best be good at it, if you want to compete and win. I recently read a great book awhile back titled, Speak: So, Your Audience Will Listen - 7 Steps to Confident and Authentic Public Speaking.  I also listen to the audio book.  I suggest you all get both the audio book and the written book.  The author is Robin Kermode.  I encourage all of you to sign up on his website at zone2, that’s the number two,,  Robin is also a professional actor.  Interestingly, he overcame his public speaking fear, one time, by appearing totally nude on a stage in England.  One word comes to my mind, shrinkage.  In his book Robin refers to the Greeks in Aristotle, the Romans in the Cicero, and the Irish with Joyce and Yeats. My four daughters will attest that the Greeks, Romans and Irish are my three favorite topics and Joyce and Yates are my two favorite writers.  In fact, Robin even referenced my favorite poems by Yeats, The Stolen Child.   And since this might be the only time I can use that poem in business I’m going to use it now.  

“To and fro we leap

and chase the frothy bubbles,

whilst the world is full of troubles,

is anxious in its sleep. 

Come away, O human child!

To the waters and the wild,

with a faery, hand in hand,

for the world’s more full of weeping

than you can understand.”


So there it is, after 25 years in business I finally was able to use Yeats.  So, when I read a book whose author used Yeats in The Stolen Child and appeared naked on the stage to overcome his fear in public speaking, I decided I need to speak with that man.  So, with that in mind, I hope I have Robin on the phone.  Robin, are you there?

Robin:  I am right here. As long as you can hear me Kelly, I can hear you great.

Kelly:  I can hear you terrific.  So, how are you doing today?

Robin: Very good indeed.  It’s a lovely sunny day here in London so all is good.

Kelly: Great.  So, Robin, really! Naked on the stage to overcome fear of public speaking?  Never use that as the opening to introduce yourself, give us a brief bio with a keen focus on your unique tactics to overcome fear of public speaking.

Robin: [Laughs] Well, this is a slight misconception there.  I wasn’t appearing nude on a western stage to overcome my fear of public speaking. I had to appear nude on a western stage because that was contractual as part of the show that I was staring in at the time, but it was interesting what it does when you stand there being that vulnerable.  And, obviously, all the men listening and probably the women listening as well could understand, you couldn’t feel more exposed if you tried.  And I felt that once I had done that that nothing, in terms of standing up in front of an audience doing anything, really, is going to be that difficult.  I talked to a lot of people who had done it before and they came up with various suggestions, put it that way, as to how to feel comfortable, some of which worked and some of it didn’t.  In the end I decided that the best thing to do was actually just to be there because ultimately, you are who you are and most of the people in the audience you are seeing there, you know, are saying, thank God it’s not me up there.  That got me through that one but I got into the public speaking arena about 15 years ago when a friend of mine who is a CEO said, would you help me on my big AGM speech?  I said, of course.  I said, run it by me.  So, I helped him and afterwards he said, this is really useful stuff.  And I said, but I am only teaching you things that actors know instinctively.  He said, yes but you seem to have an ability to be able to explain to somebody who is not a performer how to hold an audience and how to connect with an audience.  So, for the last 15 years I have been coaching, the last probably five years, I suppose, I have been working with senior CEOs and Boards across the world and with senior politicians and things.  I was on Virgin radio recently in London, I was talking about body language, and particularly in relation to Trump, actually just before the election, and they said, So, Robin, you work with these politicians, what is it you teach them? I said, well, of course, if I am allowed to say it on air, I teach them not to be a dick.  And by that what I mean is, I teach them to be authentic.  In other words, is the person that we are hearing or listening to or seeing on stage, if we met them afterwards would they be exactly the same or would they be slightly different?  And if they are being exactly the same then there is an authenticity and a congruence into what they are doing and what they are saying. 

Kelly: Great, that’s terrific.  The first question I have relates to nerves.  Robin in your book you talk about the body signals that appear before many people give a talk, dry mouth, shaking, fast heart beat, and you describe that many of these signals are related to the seven flight responses to threats and fears the body goes through.  Tell us about the top five internal fears and five external fears and then your top tip of the day related to dealing with those.

Robin: Okay, well nerves affect our body, as you say, on a fight or flight basis.  The body feels under attack and the subconscious brain is saying run, because you can’t run because you have to give the talk.  And so what the brain does is it prepares you to run, and obviously then, it sends adrenaline through the blood and oxygen to the legs and the arms so that you can run.  But that takes the blood away from your head. It tends to make your eyes a bit starey and a dry mouth, as you say and the normal shaking in all the list of things. Now, I will be very surprised if anyone says they don’t have any nerves at all.  And actually, a little nerve can be quite good actually because they can help to focus you.  But as you alluded to there, the common internal fears are, fear of forgetting our words.  So obviously, that is the fear of completely blanking out.  And partly, that’s because the blood is being sent to the legs and the arms so that you can run, which means you have less blood in your head. So, that’s partly why when we are at job interviews or in pressured situations it seems to go blank.  The fear of being judged is another.  There is a fear of large audiences for some people.  Some people say they are fine around the board room table if they can see everybody but once they get to a point where they can’t actually focus on people’s eyes it feels like one mass.  There is also a fear of panicking. If it happened last time there is a fear that well, maybe, it’s going to happen again.   So, I think that if people have had a bad experience, I think that sometimes stays with them.  Then there is also the fear of looking nervous, so if we feel that we are shaking or we are showing any nerves by blushing or our voice is slightly cracking, all the things that happen when we fight or flight responses, then I think people worry that people will be able to see the nerves.  So, we don’t look quite as in control, quite as much as a leader as we would like to look.  And then there are, obviously, external affairs that really are outside of our control, things like, the importance of the outcome of the speech, the size of the audience, even the venue.  Is it somewhere that you know or is it is a venue you don’t know at all? And that’s another fear.  There is also the fear of how the audience will react.  And if we see one person yawing off and we think everybody is bored and so we start speeding up.  If I see somebody is yawing in the audience I tend to think, well, they probably had a late night or maybe they had a new born baby or something.  If I see 30 people yawning I probably think it’s too hot and the room maybe all set out for lunch, and I would think if I see everybody yawning then I would change my plan.

Kelly: External affairs are really externally triggered but they are all internally real.

Robin: Yeah, absolutely.  Yeah.  And obviously, you know, we have fear of something going wrong and all these things.  And then  if you plan something meticulously and then the...for example, I was working with a friend of mine on his wedding speech last year and we wrote this wonderful speech, it was was really beautiful and it was exactly what he wanted in a wedding speech. It had all the right balance of humor and pathos and emotion and everything, and love, as you would expect.  On the day, unfortunately, on the evening, he hadn’t checked out the lights so that he wasn’t able to read the speech  because the light wasn’t there and so he slightly went to pieces because this perfect speech that he had practiced didn’t go quite as he expect.  And then, of course, the panic takes over on the night, you know.  And I always say to people, check out the space beforehand.  Check out how long it takes you from the side of the stage to the podium, the size of the auditorium, what it looks like when you are there, does the microphone work, do the lights work, all these sort of things.    

Kelly: Give us your top tip of the day to deal with these.

Robin: Okay, ultimately, the fight or flight response is basically saying run.  Now obviously, as we have established, we can’t run.  This is going to sound very off but I promise you, it works, and I have given this to so many politicians and I can see them doing this.  It is physically impossible to shake if you squeeze your buttocks or your thighs.  I don’t mean squeeze them with your hands, obviously, I mean clenching.  So, clench the muscles.  And there is a science behind this, the reason it works is the muscles have been told to move, the big muscle Group, the buttocks and the thighs.  If you contract the muscles, the brain says, hah, okay, you are doing what I want you to do, which is to run, so it stops producing adrenaline. Now, if it stops producing adrenaline, of course, the whole cycle tends to stop.  You don’t shake anymore.  The reason we shake is that the muscles are overloaded with oxygen and they are not doing what you want them to do but if you actually contract them all that tension is used up and you stop shaking.  So, it’s physically impossible to shake.  You also by squeezing the big muscle groups there, you squeeze blood back up to the brain so you have much less chance of going blank.  And one other thing it does as well, which I am very keen on, this is how we can look confident and how confident people look.  There is confidence in charisma and there is confidence in arrogance, and there is a fine line between confidence and arrogance.  People think that confidence is a possibly slightly old fashioned, you know, shoulders back, head up, walk into the room, you know, talk deep, talk strong, this type of thing.  And that is, of course, it’s a confident way of behaving.  It’s not necessarily the best way to connect with an audience or to make an audience feel special, and that’s where charisma comes in.  So, confidence, ultimately, is about you and charisma is about the audience, is about what they feel about you.  Charisma is about making the audience feel special.  And the definition of charisma is actually gift of grace.  So, it’s actually about making other people feel special.  And if you think of the people that we would call charismatic, like Obama or Clinton, all of the wealthy famous people who they are most, you know, charismatic people are, they would probably come up with those two actually. I have never met Bill Clinton but friends of mine you have said that he makes you feel incredibly special when you are with him.  And I am sure Mandela did the same, I am sure these wonderfully charismatic people, they have a way of making you feel very very special.  In a way that they don’t have to make it about them, they are so confident in who they are themselves they don’t have to make it about them.  I was working with the CEO of one of the big four supermarkets in the UK recently and the head of HR phone me up and said, Can we have a pre-meeting?  And I said, to what outcome?  And she said, well, we need to decide what you are going to do and then you will have time to do it.   You have only got this guy for two hours, he is very busy.   And I said, okay, then I will meet him and I will decide then what I am going to do with him.  And she said but by the time you have decided what to do there will be no time to do it.   And I said, how long do you think it’s going to take me to work out what I am going to do?  And she said, well, probably 40 minutes or 45 minutes maybe by the time you have a chat with him, which only leaves you to stay for an hour.  I said, it will only take me exactly eight seconds to work out what the problem is.  And that’s the amount of time it takes for somebody to walk into the door, cross the room, shake your hand and sit down. And the issues normally are how comfortable somebody is in their own skin.  If we want to look comfortable in our own skin, that’s how we look confident.  If we feel we are trying too hard, we are trying to make a point, we are trying to justify, these are people who want to look confident, at least the wannabes, the  really confident people are just confident in their own skin. One of the simplest ways to look confident in your own skin when you don’t feel it, weirdly, is to squeeze your buttocks or your thighs because it lowers your center of gravity.  And I worked out a few years ago that really confident people have a low center of gravity.  When I first meet someone I look at a couple of things, but one of the first things I look at is where is their center of gravity because that will tell me how comfortable they are.  And so the center of gravity should be in the lower gut, that’s below the belly button, in the lower gut.  And if people have a center of gravity there they look comfortable in their own skin and they will therefore look more confident.  What they then have to do is to structure their message in such a way that they make it about the audience and then make the audience feel incredibly special, and that’s where charisma comes in.

Kelly: That kind of connects to authenticity, an interesting concept, being your authentic true self in private is easy for all of us, I would say, but being ourselves in public or in a business environment where we are either informing or selling or motivating or persuading or creating controversy, and it goes through the main reasons to be speaking, that’s a whole different ball game. I would assume you are going to advise us all to be our authentic self all the time but how do we do that when our authentic self isn’t always to be informing, selling, motivating etc., to people we don’t know very well or who don’t know us very well?  Isn’t the absence of that relationship causing this inauthentic self to rear its ugly head?

Robin: It’s possible, it can be, Kelly, but sometimes it is simple as actually not quite knowing what your authentic self is. And that sounds like one third of the suggestions, which I don’t like in particular with clients, but there is something about finding your own voice and I think when people find their own voice suddenly they can connect to their own authenticity and they suddenly feel like they believe what they are saying. I mean, they might believe it but they actually...they can hear themselves saying something in a particular way.  And it has to do with where their voice is placed, interesting enough now.

Kelly:  You don’t mean literal voice, do you?  Find your own literal voice?

Robin:  And I do actually mean the literal voice, yeah.  I mean it’s where the voice is coming from.  It’s not about having a perfect accent.  It’s not about anything like that, it’s about the tamber of the voice and where the voice is placed.  We were taught, as young actors, if you want an audience to believe you, whatever you are saying, you have to speak from your emotional center.  And the emotional center is the same place as I referred to earlier, which is the center of gravity which is actually your core.  So, anything like yoga, martial arts, pilates, all that stuff, comes from a strong core, your lower gut, below the belly button, and if your thoughts come from there, if you can speak from your lower gut, so very relaxed, with an open throat and it sounds like you believe what you are saying. And interestingly enough, people’s nerve tend to disappear when they find they speak from their emotional center.  Most people speak from their throat, which is what I call the power point voice.  And if I could show you the difference now, so this voice here is fairly relaxed voice. I’m speaking..Obviously, the throat is making the sound because the air goes over the vocal chords like a reed on a clarinet but the power comes from lower down, from the gut.  And actually the emotions come from the gut there.  So, the throat itself is not actually manufacturing the sound, it’s just allowing the sound to come out. If I manufacture the sound on my throat like that, that’s the sound that is now emotionally disconnected because I am now speaking on my throat. And most people when they present speak in this tone here, which is a slightly teacher sound and most people will say, if they are looking at the power point screen, they would say, so if you could look at the screen, if you look at the bottom left hand side of the screen, and this now is rather a tight controlling sound.  It’s not anywhere like the sound that is authentic.  So, I would say to people, if you can speak to your children like this then you can speak to your customers like this, you can speak to your clients like this. This sound is much less controlling.  Audiences don’t want to be controlled, they might want to be led but they don’t want to be controlled.  And I think it starts, for me, with where people’s voices are placed. I do quite a lot of exercises in the book around this and obviously when I am working with clients one-to-one I would work very much on, first of all, on where their voice is.  And I think if you get the voice right actually people start to feel much less nervous because they can hear that their voice sounds authentic and it sounds real, and that’s what we are after.

Kelly: Yeah, I will put a plug in for your book.  I think you have some really good tips and exercises to go through that we obviously can’t go over here.  One of the thoughts that you have is on this concept of the connection, you talked about the three zones of communication and you maintained that all of us, speaker and audiences, each have their own zone one and two and then there is this zone three, tell us about these three zones and why is it important for a speaker to be aware of their zone one and two, and I suppose, when they enter into this zone three that I think we don’t want people to go in, correct?

Robin: I think that’s correct, yeah.  I mean, it’s a very simple concept I came up with a few years ago.   My wife said to me, she is a CEO, and I used to come back to her after getting to initial meetings to get new clients when I was starting up as a coach, and as an actor you imagine you have an agent do these things for you and I suddenly had to learn a new skill. And I would come back to her at the end of these meetings and I would say, you know, it’s really interesting because some meetings go well and some meetings don’t go well.  And I can’t quite seem to shift some of them.  And I couldn’t work it out and eventually I came up with this concept of the three zones of communication, very very simple but it has absolutely changed my life.  And since coming up with this, which was about 15 years ago, I promise you I have not had one bad meeting in that time, simply by using this very very simple technique.  So, if you can imagine that you have three circles around your body, the closest circle around your body is your zone one,  This is your personal space where you choose not to connect with someone else.  Zone is a slightly wider zone.  This is where you choose to connect with somebody. Now, these zones of course are metaphorical, they don’t exist but it’s like an image in your head.  Am I actually trying consciously not to connect with somebody or am I trying to connect with them?  So, in a shop scenario, the easiest example is, you know, you go into a clothes shop and the salesman then goes into zone two to connect with the customer and says, you know, can I help you?  And the customer probably says, Actually, I just want to browse.  I want to look around, leave me alone.  What they are saying is, they want to stay in zone one.  In other words, I don’t want to connect with you at this moment.  So, a good salesman, of course, physically backs away at that point and then say, oh no, no problem, I’ll be over here, give me a shout if you want me, and that type of thing, but they pull away.  In other words, they are not pressurizing the zone one person.  And I think that this is one of the fundamental mistakes that speakers make.  They try to push too hard with an audience that’s not ready to connect with them.  So, there are stages to how you win an audience around.  When I was a young actor doing stage plays in London, if on a wet Friday night when the audience weren’t particularly responsive on a comedy, and it’s very obvious on a comedy, if you don’t get your laughs you can see it’s not working, the intention is to go louder and faster because you’ll think, I’m going to wake this audience up.  But actually it’s the worst thing you can do. And what you have to do with those zone one audience who are choosing, for whatever reason, not connecting with you, and they are allowed to, you have to take your pace down and your energy level down and basically make it more real and allow them to come to you. So, that’s the zone one.  So, in the shop scenario, the salesman says, can I help you?   And the customer says, no, leave me alone.  That’s what they do.  If the customer says, yeah, I’m looking for a blue jacket in size whatever then the salesman knows that they are in zone two because they chose to connect with them.  So, when the customer zone two and the salesman zone two is overlapped then, of course, that’s where we want to be.  So, ideally, when we are talking to people we want to get them to choose to connect with us.  But there is a zone three, and the zone three is a wider zone.  And the zone three is basically where you invade their space.  So, the customer’s zone one is actually the same as the salesman zone three.  So, the salesman that says, Can I help you, and the customer says, No, leave me alone, and the salesman then invades the space and says, no, no, come on, try this jacket on now.  It’s quite annoying when that happens because you said very clearly, I want just to be left alone, and they don’t; they invade your space.  So, that’s the zone three.  The reason this is useful in your public speaking or presenting it is that you have got an audience and there will be a mixture of zone one, twos and threes.  So, there are some people in the audience who for whatever reason are there but they are not particularly connected with you yet.  There are the zone two people who are up for it and they are sitting on the front of their seats and you know they are interested.  And then you have the zone three people who think they know it all.  They are the ones who are going, why?  I didn’t really know why I am here because I know the stuff anyway.  This is...who is this, who is this moppet?  So, there is a bit of that.    What we have to do is we have got to encourage all of them to come to zone two but we have to treat them differently.  The zone one people, we have to take our energy down a little bit. The zone two people are easy because we have a little bit of banter with them, it’s fine, and I would suggest, with the zone three people, a guy who was coaching, he phoned me up actually,  and I won’t do it too loud on the microphone, but he had a very very loud voice, and I answered the phone and I said, “Hello” and I happened to be in zone two, and zone two is a calm open space and, you know, I answer my telephone, of course it is my business friend and I said, “Hello” and he said, “Is that Robin?” And so I said yes, and he said, I promised you, these are the exact words he used, he said, “The thing is Robin, I am an entrepreneur, I just sold my business for 45 million pounds. I have 45 million pounds in the bank.  And he said, I want to go on the speaking circuit because the world needs to know how much money I have made.  So I said, okay, well we could look at the message around that maybe, but we booked him in the session and he came in and he was so loud, his handshake was over firm, he was sort of trying to dominate the whole situation.  This is classic zone three controlling behavior. Now, my job, of course, is to try to get him into zone two.  I had to try to encourage him into zone two, you can’t push anyone.  And I thought, why this man who has, apparently, 45 million pounds in the bank, why does he feel the need to tell me that he is selling his [inaudible – 21:21] and control the meeting in this room.  Why does he need to do that?  So I thought, well, he is probably doing this because he needs some sort of affirmation from me.  It’s rather like a seven year old child who said to their parents, you know, look at me mama, I’m diving up the diving board, you know, it’s the same thing. And he said look at me, look how successful I am.  So I thought, I better just basically go, wow!  But I thought, what’s the cleverest way to go after this particular man?  And I suddenly, without thinking about it, these words came out of my mouth, and actually it worked.  So he said, the thing is Robin, he said, you know, I’m putting all this money in the bank, I’m selling my [inaudible – 21:48], and I am I’m going to leave my phone on the whole time, and I am running this meeting.  And I said, oh my God!  I said, I’m sitting here with James Bond.  And he said, yeah, and then he said, the thing is Robin, I am a bit nervous about making a speech.  So you could see the psychology, it’s very clear.  He thinks I am a very important man, and he said,  but I don’t really like to ask for help but I have to ask for help with this man because I feel I need some help but I  am only going to ask for help when he knows that I am really important.  And I went, oh my God, you are really important!  So he went, okay, now you know that, now I’ll show you some vulnerability.  So the psychology is very simple but basically, if I meet zone three people I flatter them.  I was at dinner the other night and there was a man who was going on and on about himself, I mean real zone three behavior, and after a while, I thought, I wonder how I could flatter this man to try to encourage him into two.  This man was short, fat and bald.  He didn’t look like James Bond, he looked like a sort of Bond Villain, so he is talking and I stopped him mid sentence and I said, I said to him,  I’m sorry to interrupt, but has anyone ever said it, you have got a bit of a look of James Bond about you?  He said, you have seen the real me, haven’t you?   Now, the interesting thing is, zone three people have no level of self irony.  If you flatter a zone one person they will hate it.  If you flatter a zone two person you are going to get some banter back. If you flatter a zone three person in the right way they will always take it.  When we have a mixed audience we have to make sure we have a mixture of flattery, a mixture of taking the energy down a little bit so we don’t frighten the horses with the zone one people and a little bit of banter with the zone two people.   So we have that mixture of that.  And if I am at  a business meeting around say a board room table with maybe half a dozen people, I look around and I think, okay, the zone one man there, there is a zone two lady there, a couple of zone three is over there, and I make sure a little bit of flatter goes towards the threes, a little bit of gentleness goes towards the ones, I won’t sort of eyeball them too much but I will maybe finish an idea with them but I won’t hold their eye contact too long to frighten them.  And the zone two people I will probably have a little bit more banter a bit with.  And that way you can help encourage everyone in the meeting to come into their zone two.  And if you can get everyone into zone two, including the whole of your audience, you are home and dry. 

Kelly: Is empathy and trying to move people to equal status, is that what you are doing there?

Robin: It is part of that.  I said to my kids the other day, look, I said, they are in their, you know, late teens, so I said, if you go through life making other people feel special, life is so easy.  I said, but if you go through life saying, look at me, I am important, they just want you to fall on the banana skin.   That’s what it is about, a bit of empathy, a bit of kindness, a bit of noticing other people, will get you a long way. And I always think, with an audience for example, one of the flattering ways with the zone three audience is, if you are going to explain a concept, there are some people in the audience who may know that concept and there are some who possibly don’t. I would favor a phrase like, of course, as you know, and then you go on to tell them anyway.   So the ones who do know are flattered that you have told them that you know and the ones who don’t know are pleased that you have told them. So you somehow get all levels on that but if you stand there and you say, I have seen speakers stand in front of quite an important audience and, you know, say things like, you probably don’t know this but.   And I thought, you have just alienated half the audience who did know that.  It’s much better to say, of course, as you know, and flatter the audience into assuming that they might know, even if they don’t.  So I think equal status is very very important and I think that also comes with tone of voice.  I sit quite often watching speakers with my wife and she finds it quite annoying but a speaker would actually come one stage and they will literally say, Good evening or whatever the time of day is.  From those two words I would go, oh no, it’s going to be terrible or I’m going to go, this is going to be good.  And I can tell from the first two words how it is.  And in those two words it has to do with where their voice is placed, where their status is or how much charisma they have.  In other words, are they saying genuinely good evening or are they actually concerned that I am there?  It’s what I call, how you show up. It’s literally what you bring to the table, what you walk on with.  And audiences, even if they are not qualified or specialized in reading body language, on a gut level they will know I like this person or I don’t or I trust this person.  And that’s what we are trying to do and that’s what I work with with clients, it is to get them to a point where they are comfortable in their own skin and they come across with equal status and they speak from their emotional center with authenticity.

Kelly: Okay, I want to explore this empathy and equal status just a bit more.  Tell me if I have this right, empathy requires us to at least acknowledge and recognize that we have people in zone one and zone three. Zone two we are fine with. And then we have these different tactics that helps us try to get them moved from zone one and three to zone two to bring them to equal status with us.

Robin: That’s absolutely true.  And we have to get them to choose to do that.  You can’t hurt anyone.  You can’t push them, they have to choose to do that.  If they got themselves into zone three, and often, by the way, they are not bad people it’s often nerves that make people into zone three.  So when these networking events that many people say they don’t like they walk into a room full of people with badges on and  glasses of wine and they go, it’s a whole room of people I don’t know and I somehow have to make an impression.  The reason those networking events don’t work is you have got an entire room of zone threes. Everyone has become zone three.  They aren’t necessarily bad people, they’ve just gotten themselves in this position where they think to hand out cards and make contact and whatever.   I walk into a networking room now and I look at the room and I think, okay, here is a lot of very un-centered people who are not really very comfortable with being in this place so if I can go in and make, say, five people this evening feel really comfortable then in a sense I have done my job and I have probably connected with them.  So I will basically go up to someone and I will say, if they are in zone three, I will find something that I can flatter them about and maybe, for example, it might be something like if I discovered they are a CEO of a company or they are an entrepreneur, I would say, you know you are incredible young to have done that, it’s amazing, you know.  So, whatever it might be, whatever is appropriate, I will say something, I’ll say, what is it, with the word love in the second sentence, always.  I’ll say, what is it you love about being an entrepreneur?  What is it you love about starting your own company?  And by putting in the word love there, what happen is, their voice changes immediately and they would say, do you know, actually, and whatever their answer is.  And suddenly then I am having a normal conversation as opposed to, of course, networking conversation, because what we are doing is, we are having a proper conversation.  The implication is, I could see being in zone three, not being very comfortable in zone three, when you are with me I am so impressed, you don’t have to impress me anymore we can just have a normal conversation, and it’s so relaxing for them because very few people do that.   What most people do is, they join them in zone three so you have a zone three person saying, I am important. And the other person who is also at the networking event feels they should big themselves up and at the same time say, yes, well it’s very good, so I am quite important too, you know.  And it’s a bit like these conversations where you see somebody has got a sun tan and then you say, oh, you just come back from holiday and they say, yes, I have just come back from the Bahamas or somewhere.   And they say, alright, we just came back from Jamaica or whatever.  And what they are doing is, they are not really asking you questions about their holiday, they are almost looking for an excuse to get their holiday and to make themselves feel important. But I think if we fight that urge and we just go, wow, it’s amazing. So, you know, you would laugh about the Bahamas.  Suddenly you can have a proper conversation with these people and then they choose to join you in zone two.  So it’s about noticing them ultimately in the zone three.  Now, you are going to ask about the zone one, what we want to do with the zone one is just literally, it’s not frightening the horses, it’s treating them like somebody in a shop who is saying I just want to browse. So what you do is, you tease them with the carrot.  So, I’ll maybe have a thought and  I’ll finish my thought on them, actually, I turn to them,  right, towards the end of the thought and I’ll have eye contact with them, just on the end of it, so it lands and then I’ll move away.  I’m not waiting long enough for a response, so they don’t feel under attack but they do feel included, and gradually they will come to join you.  You can’t ignore them because that doesn’t work and you don’t want to eyeball them too much.   So you can probably hold eye contact longer with the zone two person because they will probably be smiling away, you know.  And often, I don’t know if you have had this Kelly, but when you are giving a talk it’s very easy to give an entire talk to three people because towards the front of the hall you can find three very open faces who are nodding and smiling and you think, oh, they are nice, I will come back to them.  I’m feeling a little bit vulnerable, so I get back to these nice people.  And I used to think these are people that are loving it but I have shortly now discovered that those people are just people pleasers so they love everyone.  But I don’t spend my time with those people, I think, okay, I want to try and win around the zone ones and the zone twos and then I’ll know actually.

Kelly: Great, exactly.   Great stuff!  Robin that’s terrific.  I really appreciate your time.  How should people get in touch with you? Give us your, I presume your website, email address, how would you like to do that?

Robin: Well it would be very lovely to hear from any of your listeners, of course, you can buy the book on Amazon which is, Speak: So Your Audience Will Listen.  You can contact me by the website which is zone2, that’s z o n e the number 2, and my email is  I look forward to hearing from you and hearing how you are getting on with your presentations and your speeches. 

Kelly: Great Robin, thank you very much, cheers!

Robin: Thank you so much Kelly for having me.  I really appreciate it.

Kelly: Well, that concludes part 1 of my interview with Robin Kermode.  I strongly encourage you to get his printed book and the audio book entitled Speak So Your Audience Will Listen: 7 Steps To Confident and Authentic Public Speaking.  They are terrific.  In a week, we will have part two of my interview with Robin and we will discuss things like where to put your hands, how to stand, the importance of smiling, and a really interesting five-step checklist you need to do before each of your presentations, to up your game in public speaking.  Thanks for listening.

We want to thank you for listening to the syndicated audio program,  The audio content is produced and syndicated by Seth Greene, Market Domination, with the help of Kevin Boyle.  Video content is produced by the Guildmaster Studio, Keenan, Bobson Boyle. Voice introduction is me, Karim Kronfli.  The program is hosted by Kelly Coughlin.  If you like    this program, please tell us.  If you don’t please tell us how we can improve it. And now some disclaimers, Kelly is licensed with the Minnesota Board of Accountancy as a certified public accountant.  The views expressed here are solely those of Kelly Coughlin and his guest in their private capacity and do not in any way represents the views of any other agent, principal, employee, vendor or supplier.

Jul 10, 2017

Title:  Understanding Hidden Risks in Insurance Companies and Impact on BOLI Asset.

Prepare yourself for your bank owned life insurance (BOLI) annual review with a better understanding of insurance company "General Account" portfolio hidden risks. 

Attendee and Guest: Kelly Coughlin, CEO, BankBosun; David Merkel, CEO, Aleph Investments, CFA and Actuary                                       
Date:         July 10, 2017

There are only two things as complicated as insurance accounting. And I have no idea what they are. Andrew Tobias, The Invisible Bankers


Kelly Coughlin is a CPA and CEO of BankBosun, a management consulting firm helping bank C Level Officers navigate risk and discover reward. He is the host of the syndicated audio podcast, Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank, and Merrill Lynch. On the podcast Kelly interviews key executives in the banking ecosystem to provide bank C suite officers, risk management, technology, and investment ideas and solutions to help them navigate risks and discover rewards. And now your host, Kelly Coughlin.


Greetings, this is Kelly Coughlin, CPA, CEO and program host of BankBosun, helping C-Suite executives manage risk and discover reward in a sea of threats and opportunities.  One of the classic risk management strategies is to use insurance to manage the risk of loss in many assets, whether it be a home, a car, a health, life, a revenue stream, a cyber hack, offloading the risk through a third party who assumes that risk and pay a fee, a premium, to do that has been employed for hundreds of years. 

The first case of life insurance actually began in Philadelphia, providing a death benefit to the surviving widows of poor Presbyterian ministers in the 18th century.  Today, life insurance is utilized by banks to manage the loss of key management, and as an alternative asset class to municipal bonds and mortgage backed securities.  It’s called Bank-Owned Life Insurance or BOLI and it’s used by over 3600 banks that hold over $160 billion in assets.  

As part of their annual report to the Board, and frequently regulators, the consultant involved in placing the BOLI asset with the bank with all the financial update on the insurance company or companies that hold the asset.  And to get a famous plug but a fully disclosed plug I do independent   consulting work with Equias Alliance, one of the best in the business for placing and monitoring the BOLI market.  Most of the BOLI assets are placed in the general account portfolio of the bank which means the bank’s assets are held on the balance sheet of the insurance company, somewhat like a loan to the insurance company.  And like any loan to a company, you want to look at the ability of the borrower to pay it back along with the expected interests. 

So one of the things we do is look at the value of the insurance company.  We frequently look to third party rating agencies to provide some sort of analyses on this, but I thought it would be interesting to have someone that has actually done this work as part of their career. David Merkel, CEO and CFA of Aleph Investments who has a BA and a MA in political economy from the prestigious Johns Hopkins University, was a senior analyst with Hovde Capital, a hedge fund, and he was chief economist and director of research for Finacorp.  And David is an inactive fellow in the society of Actuaries.  I have David on the phone, who is going to talk to us about valuation of life insurance companies.

Kelly:                            David, are you on the line there?

David:                           I am here, okay.

Kelly:                            Thank you for joining us.

David:                           Happy to join you.

Kelly:                           Give us a little bit of personal background.

David:                           Okay, I’m based in Ellicott City, Maryland, which is just outside Baltimore.  My wife and I decided to try for something big and we were able to have three children and we adopted five more.  The kids have a lot of fun, in my opinion.  It has had its challenges, it has had its successes and failures but in general I loved doing it.

Kelly:                            Great, congratulations on that.  Life insurance companies, at their core, are basically investment companies.   Is that a fair statement?

David:                           Yes, and that’s become more true as the years have gone along When I was a young actuary, the society of actuaries syllabus tended to work on a level saying, analyze the policies that you write. And they gave us all sorts of ways to do that, but they didn’t talk much about investments.  But the company I worked for, initially, Pacific Standard, which was the largest consultancy of the 1980s.  And since you have never heard of Pacific Standards, you know that the 1980s were pretty kind to life insurers that grew up a part of Junk bonds of Michael Milken.

The game changed and since that time virtually every insurance company that has failed has failed because of their asset policy.  I think there has been a grand total of one that has failed for other reasons, and make that two, AIG and its derivative counter parties, that was another thing.  But a lot of the failures there was apt an investing policy too.  

I actually wrote a paper that was picked up by the special inspector general, the TARP on AIG to point out the aspects of the failure that was due to the securities lending agreements inside the life insurance companies.   I spoke?? to Wall Street Journal and the New York Times and it had actually even got read by Warren Buffet who supposedly thought it was a good paper. But assets are the main factor of what makes insurance companies fail, that’s the long and short of it.  That is why we should analyze it more.

Kelly:                            It seems to me, insurance companies are more like mutual funds so I would kind of like to start with that as kind of the baseline. Other than not being a completely separate legal entity, which a mutual fund is, how does a general asset portfolio resemble or differ from a mutual fund other than the fact that an insurance company has a mortality risk expense that’s kind of built into that?  If you take the mortality risk expense out of there, doesn’t it resemble a mutual fund in that sense?

David:                           The main difference between a mutual fund and an insurance company in the way that you invest with them, because I have invested for both of them, is that with a mutual fund, you don’t have a balance sheet.  Your mutual fund holders can come and go as they please and everything is valued at par.  With a life insurance company, you have liabilities that are relatively sticky, at least many of them are sticky.  

And one of the key aspects of trying to ascertain the riskiness of a life insurance company is in understanding how much of the portfolio of liabilities can run, i.e. there is no surrender charge, and there aren’t that many consequences for leaving and measure that against how much do you have in assets that can be rapidly liquidated.   Because, again, it is risk based liquidity that is really the thing that you try to look at, in terms of the asset portfolio, to understand what is the true risk of a run on the company, and it does vary from company to company.

Kelly:                            And we’re talking about bank owned life insurance general asset portfolios, what are the types of liabilities that should cause concern, or at least tension, of a banker who is holding a GA portfolio.

David:                           Yeah, there are some liabilities that life insurers write that are not under-writable.  In some cases, the insured knows more than the insurance company.  The best recent example of that is long term care, in the sense that long term care policies have consistently lost money for insurance companies.  And so you have to be weary of a company that writes too much long term care. I mean, generally if even as one of the bigger writers has gotten out of it that life is left writing business, that’s been one really ugly liability.

Kelly:                            Where can they find that on the balance sheet?

David:                           You would have to actually begin looking at the statutory statements to find out how much is long term care.

Kelly:                            There has got to be an asset and a corresponding liability related to that, correct?

David:                           It’s going to be, I guess, it’s another thing that’s written in the General Account.  I know that the rating agencies will write up and describe how much of the business that a company has would be in long term care, if it is a material amount.  Things that are a little more fuzzy these days though are the things where we don’t have either good ways of hedging or good ways of actuarially coming up with reserves.  And those things are things like Universal Life, Secondary Guarantees, Term Life policies that are ultra long, that might go over the whole of someone’s life, that end up being lapse supported, and the reserving for those just does not work.  We don’t have good models for that.

Kelly:                            Now, you are listing out the liabilities that should get attention, right, long term care, universal life with secondary guarantees?

David:                          I should mention that variable life and annuities that have secondary guarantees as well because there is no good way to hedge those and if there is no good way to hedge them there is no good way to price them either. There is no good actuarial basis that you can say, this is what it is worth and this is how we can invest to make sure that we are always going to have enough to pay our claims. That is probably the biggest single thing in the life insurance industry today.  

If it stays small, I guess you don’t have to worry much but if it becomes a really big part of an insurance company, the secondary guarantees, then you have to begin to ask questions. And there are examples of companies that when they realize that they sold the secondary guarantee on an annuity, just as an example, a variable annuity, where it has some sort of income benefit, accumulation benefit, death benefit or withdrawal benefit. 

When Cigna was originally writing the reinsurance for all the people who were doing the guaranteed minimum death benefits in the 90s, Cigna eventually ended up taking something like a $4 billion dollar hit because they did not understand what they were doing and how open ended the claims would be.  With the Hartford, they were one of the biggest writers of these guarantees and had to scale it back dramatically. 

They were going to people to buy out the liabilities because as they began to try to estimate what they might be worth because there is no actual way to truly know what they are worth.  They were paying 110, 120, and in some cases 130 percent of the contract value to get out.  And what I told the people who approach me, I said, the odds are, they are only giving you about half the premium you deserve.  And so long term guarantees that involve investment risks mixed with other actuarial risks like debt or longevity are impossible to price.  There is no good mathematical way to do it and all the reserving methods that are done on a statutory or a GAAP basis are inadequate.  This is not a happy thing to think about what I say to people, after I say this, is just make sure it’s not a large part of the General Account of the company.

Kelly:                           What’s a large part, 10 percent?

David:                           I would simply say, make sure that your company is below average with respect to it, versus the whole industry, because you don’t want to be in one of the companies, that is one of the early ones to blow up on something like those.

Kelly:                            Do you have any bench mark numbers on those three categories combined or separately what a kind of average is?

David:                           And one thing you have to realize, one of the secondary guarantees is that the actual contract value of the accumulated value of the variable life and variable annuities and variable universal life is in the Separate Account, however, all the secondary guarantees are in the General Account.  This is one case where you have to really consider that the Separate Account do have an impact on the General Account, the degree that they have written business that has secondary guarantees. 

Those are the types of liabilities that make me suspicious of a company but until the stock market falls hard most of these aren’t going to have any punch but if it’s down 40 or 50 percent and it stays there for a while, like after the great depression, you will once again find that the life insurance companies will have harder times.  The ones that were launching variable business with the secondary guarantees.  That’s the biggest one, and maybe other secondary guarantees, the little interest rate guarantees, are relatively small.  The ones with the equity components are the big ones. 

For the most part, if you get away from those, the ordinary life insurance and annuities that are written by insurance companies are easy liabilities to hedge and value.  That should be 80 to 90 percent of the total liabilities of the General Account.  But again, it’s a good question to ask and see who your consultants are.   

Kelly:                            In your mind, how did we go about determining whether a life insurance management team is (a) competent and (b) conservative?

David:                          Okay, well starting with competent, the main thing is that they try to manage risk on the front end.  And the example that I give is, some companies that write disability business will do significant underwriting on the front end before they write a policy but will not for every claim.  But then the others who will write every policy and then basically force people, sue them to get the payment.

But the good companies that are competent do the risk management on the front end.  And that applies to every aspect of writing a policy, whether it’s their investment policy, all the things that go into that.  They are careful in choosing the lines of business that they go into.  They are disciplined when it comes to doing mergers and acquisitions. 

The really good companies will do small acquisitions and they will do it to gain competencies, synergies, new markets of distribution methods rather than doing big scale acquisitions.  Large scale acquisitions have a large probability of failure and tend to be far more expensive than you might think when it comes to the total integration of it. 

Competent managements tend to be good in using their excess capital whether it’s returning it to shareholders in a flow and disciplined way through dividends and buy-backs or to mutual policy holders through the dividend scale.  Because, again, these places don’t just exist for themselves, they do have clients that they have to satisfy who are owners, whether mutual or stock.  They will be careful in the way that they do send money back and how they use free cash for growth. 

Now, as for conservatives, here are a couple things that I think about.  They put profits ahead of growth and they are willing to grow more slowly when conditions are bad.  They will try to grow free surplus so that they have more options in front of them rather than all those who consume their free surplus and be running as tightly as they can against the risk based capital levels.  Conservative management, when you hear that they have adjustments they tend to be positive non-recurring adjustments. 

They tend to be disciplined in reserving and in their credit analyses.  The Companies that are taking a lot of risk in their assets are the ones that are always constraining that liquidity during their phase of the cycle.  One other thing about the conservative management team is that even during the bull phase of the cycle they tend to grow a little slower than other companies.  They pick their response and they are looking for profitable growth ahead of just growing to gain market share.  They are not controlled by their marketers, they are controlled by businessmen

Kelly:                            What types of investments do these insurance portfolio managers invest in that are different from, say, a fixed income mutual fund?  Do they tend to buy a lot of private securities, is that it? Is that accurate?

David:                           They do have more private securities.  And private securities are not necessarily worst and often they’ll have better covenant of protection.  It depends what they want to do. So, for example, some will have their own mortgage origination arms.  Some will engage in doing credit tenant leases.  Those aren’t bad asset classes and those can be done quite conservatively.  It’s a question of what your stress on credit quality is.

One of the questions that I pose is, where do they look for returns greater than triple B corporate bonds?  You take a look at a life insurance company’s portfolio, most of its public corporate and public mortgage backed and things like that, and that’s enough to get you to a certain level then maybe the last 10 percent of the portfolio has to be invest in somewhere.  And there might be common stocks, and a lot of it will be in junk bonds, depending upon the company, and some will originate their own assets.  The most traditional one is commercial mortgages; do you have a good credit discipline or not?   And that, at least, you can track overtime because your mortgage losses are disclosed in the statutory statements of the life insurance company. 

Those are tracked pretty carefully, ever since the mortgage defaults of the 1990s.  The question I would pose is, every company tries to earn above average returns at some point, where are they doing it and why do they think they have expertise there?  Since the insurance industry actually came through the crises better than the banks you might want to ask how did they do   1999 -2003.  That was a much worst period.

Kelly:                            Do insurance companies tend to lump all of their general asset portfolios into one consolidated portfolio or do they segregate it by the underlying product type that brought in the assets?

David:                           Okay, we typically notionally do that.  It will be one big account, as far as the investment department will be doing to manage, however, the actuaries will come along and say, “These assets provide the income for this segment of liabilities.  These assets provide the assets for this segment of liabilities.”

And then they will try to match and then they will go back to the investment department and say, Okay, here is what we need for each individual line of business and here is what we have.  Here are the tweaks we need in order to have something that’s good for the company as a whole in order to match up against our models for what assets are needed for each liability stream.

Kelly:                            If one of those, let’s just call them products, sub accounts, over-performed, let’s say the BOLI over-performed and then the universal life secured guaranteed underperformed, will they transfer some returns from the BOLI over to the universal life to lend them, so consequently, BOLI gives up its extra juice it got, how would that work?

David:                          As I said, the segments are notional, they are just one big general account and it’s the way that the actuaries then try to figure out, what is the true profitability of each line.  It is something that is an internal calculation but the credit results are going to be spread across that general account portfolio.  They will probably have the same credit quality across each of the segments but what vary is what the length of the assets purchased for each notional segment.

Kelly:                            The other long-term risk that one needs to think about?

David:                           These long-term risks that is not getting talked about enough is what happens if interest rates stay low.  Because what’s happening at many insurance companies is that they bought long bonds and they thought it would be good enough to hedge all that they were doing. 

Many of the annuities that they wrote in the 1980s, ‘90s, maybe even into the early 2000s, they carried long term guarantees that were sometimes as high as 6 percent per year forever.  To have a stream like that for the remaining amount of annuities or life insurance is pretty considerable down at those guarantee rates and right now long bonds, long corporates, it’s pretty difficult on a conservative portfolio when you strip off the expenses for a life insurance company to have with things that can meet those long term guarantees. 

And it gets a little worst every year as bonds mature on the life insurance portfolios.  That’s the biggest challenge that virtually every life insurance companies are going through right now.  Because if you look at the expected flow of liability cash flows versus the expectable on asset cash flows, even if you have the rough interest rate sensitivity of the match, you are going to have more liability flows then more asset flows and then more liability flows.

As these portfolios age, the real risks come if interest rates stay low.  The optimal scenario for life insurers, that should it ever happen, is that interest rates rise slowly.    If interest rates rise slowly, life insurers do wonderfully.  That would be the ideal scenario for virtually every life insurer.  When they do their interest rate test for their asset level liability management, typically these days, the worst scenario is, interest rates drop and stay down.  And the best one is, interest rates slowly rise.

Kelly:                            Any quick dirty simple mathematic measures one can look at to determine long term credit quality of a life insurance company?

David:                           Yeah, one thing, not mathematical, just to start is that mutual companies tend to think longer term and tend not to make the best of what that company make.  They tend to be better off through really long-term obligations, but do they maintain a high ratio of surplus to risk based capital?  Now if you are looking for where you can find that, if you look in the blue book, that is the annual statement from the statutory statements of the life insurance companies.  Those are published on the five-year historical pages.   Aside from that there is no place publicly that they are published, unless you go to the rating agencies. 

Now, rating agencies aren’t horrible, in fact, they are usually quite good.  They failed in the early 1990s regarding guaranteed investment contracts.  When the rating agencies tend to fail over time is when they deal with new things.  Once something has been through a failure cycle the rating agencies are pretty good at analyzing.  So, when you think of them on corporate credit they are usually pretty good but they were horrible though with structured corporate credit because they have never been through that. So when the financial crises they got floored. 

Other things to look for, look for a slow rate of growth over time.  You don’t want them shrinking.  You don’t want them staying flat but you don’t want them running really quickly.  Conservative management teams grow slowly and they are happy enough with it and they try to get more profitability out of what they are doing.  Also, see if they lose money more rarely on a GAAP basis, they should make money in bad times.  That’s the sign of a conservative management team.   And if they have surprises they should be positive ones. 

You want to see that they are better than their competitors. Over time, because conditions change I don’t give an absolute set of numbers for this, but you want them to be better than the average of their industry in these areas.  But the one thing that I learned as an actuary who had to be at both ends for credit analyst and a portfolio manager for equities where I was analyzing insurance companies, it was that the most important things though, aside from a few basic mathematical calculations, is to try to understand the management team.  And again, are they conservative, are they competent? 

That would take you a lot further, particularly for long run judgments.   And since you are thinking long run and since we are talking life policies, you should ask whether they have a culture that will maintain itself after the existing management team.  Do they tend to reproduce managers that continue to be competent and conservative?  I think often that the mutual companies tend to be better at that because they have no one else to report to.  They don’t have to put out quarterly earnings, except to the state regulators. 

And the companies that blew up, often life insurance companies often last 30-40 years, were the rapid growers.  They had aggressive management teams, I worked for such companies, AIG was one of those.  Always grow grow grow and take chances to do it, you know, you would never hear about the little dirty secrets inside most companies like AIG, just as an example, but in the early 90s my boss and I found five reserving errors that were greater than $100M each, and one was a billion, and these never came through the gap statements because AIG found a way to basically find sufficiency in their assets to cover it over.  In general, the companies that are better managed tend to be moderate growers.  They are trying to grow but they are not trying to grow faster than anyone else.    

Kelly:                            You mentioned leverage, talk about that.

David:                          This comes in two forms.  The more common form is if you are a stock company you are borrowing money at your holding company.  The more that a company borrows at its holding company level, in general, the more aggressive they are going to be as a management team.  The lesser way is if you are writing guaranteed investment contracts and other types of short term business.  To the degree that you are doing that, that’s a form of leverage because that means that you are...and especially if you are writing anything like a floating rate contract that can be terminated within, say, seven days, those are the sort of things that if they get written you have to be really good at managing your liquidity as a company because you have big payouts that are happening in the short run.  With most other life insurance or annuity portfolio that doesn’t happen.

Kelly:                            Great.  The underwriting process, you distinguish between initial front end, heavy duty, due diligence and acceptance versus accept anybody but then be real tight with the payouts, how can one distinguish between those two?

David:                           Basically, it’s by reputation or you can...if you are looking for something that’s actual data, in the annual statement of every life insurance company there is a schedule as per denied claims.   A good company has relatively few denied claims. It is the companies that have pages and pages of denied claims that you have to go, “what are these guys doing?”

Kelly:                            Right.  Well, David that’s all I have.  I appreciate your time, and do you have one of your favorite quotes that you operate by, your business life or personal life?

David:                           Here we go.

Kelly:                            Say it slowly.

David:                          It is appointed to men once to die and after that the judgment, so live your life in the sight of God and not because men are looking over your shoulder.

Kelly:                            Oh, very good that’s a nice one.   David, that’s perfect, thank you very much for your time.


We want to thank you for listening to the syndicated audio program, The audio content is produced by Kelly Coughlin, Chief Executive Officer of BankBosun, LLC; and syndicated by Seth Greene, Market Domination LLC, with the help of Kevin Boyle. Video content is produced by The Guildmaster Studio, Keenan Bobson Boyle. The voice introduction is me, Karim Kronfli. The program is hosted by Kelly Coughlin. If you like this program, please tell us. If you don’t, please tell us how we can improve it. Now, some disclaimers. Kelly is licensed with the Minnesota State Board of Accountancy as a Certified Public Accountant. The views expressed here are solely those of Kelly Coughlin and his guests in their private capacity and do not in any other way represent the views of any other agent, principal, employer, employee, vendor or supplier.

Jul 3, 2017

Bank Marketing Ideas in One Page by Alan Dib, Best Selling Author

Introduction: False facts are highly injurious to the progress of science, for they often endure long; but false views, if supported by some evidence, do little harm, for everyone takes a salutary pleasure in proving their falseness.  And when this is done one path towards error is closed and the road to truth is often at the same time opened, Charles Darwin.

Kelly Coughlin is CEO of BankBosun, a management consulting firm helping bank C-Level officers navigate risk and discover rewards.  He is the host of the syndicated audio podcast,  Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank and Merrill Lynch.  On the podcast, Kelly interviews key executives in the banking  ecosystem, provide bank C-Suite officers,  risk management, technology and investment ideas and solutions to help them navigate risk and discover rewards, and now your host, Kelly Coughlin.

Kelly: Greetings, this is Kelly Coughlin, CPA, CEO of BankBosun, helping bank C- suite officers navigate risks and discover reward in a sea of threats and opportunities. 

One of my favorite quotes of all times is attributed to Pablo Picasso “Good artists copy; great artists steal.”  There is no better example of the quote I selected for this opening from Charles Darwin. He distinguishes between false facts versus false views. And there is no better example in the business world demonstrating the importance of distinguishing between false facts and views versus true facts and views than in the marketing world.  That is the world of client acquisition, client retention and revenue creation. 

Today is an outright theft from the experience I have learned from others and their success and failures and through my own successes, and more from my own failures over my 25 years of experience in competing for revenues.

Why revenues?  Well, I have been in the workforce for 25 plus years as director of risks, a consultant, a CEO and CPA and of all the technically challenging   brain burning problems I have had to face in my career, by far, I can honestly say, the most challenging and frankly interesting part of the business world is marketing and revenue creation or as Alex Baldwin said in Glengarry  Glen Ross, Getting them to sign on the line which is dotted.

Let’s consider the business plan.  I have personally looked at hundreds of business plans and I have been responsible for authoring at least a dozen.  A boat load of time is spent on the big picture things like, macro environment, management bios, competition, risk disclosure and financial projections, oh yes, those beautiful, wonderful financial projections.

The problem with the business plan in general and the problem with financial projections in specific is, tons of work is spent on those things that are fairly predictable and controllable that really don’t determine the success or failure of the business.  And not enough time is spent on the single greatest factor that determines the success or failure of the business plan. Revenue.

Why?  Management history, competition, expenses, let’s face it.  Labor costs, cost of goods, occupancy costs, sales costs etc, they are all fairly easy to project and predict and so those get more than adequate attention.  But revenues, the dreaded revenue projection, I think of the quote by sixth century Chinese poet, Lao Tzu.  I don’t know if that was Sun Tzu’s father or something, but anyway, Lao Tzu said, those who have knowledge don’t predict, and those who predict don’t have knowledge. In the business plan, focus is put on those things that they can predict and those things that they can’t predict, well, let’s just say, it doesn’t get adequate attention. 

It’s the revenue side that is the most challenging and perplexing.  And most business models and plans failed not because they missed their expense projections, they failed because of their revenue projections. They fail because they didn’t adequately and accurately project and predict how they are going to get customers in the door or drop their goods in the online shopping cart and purchase.

I recently came across a book titled The One Page Marketing Plan.  I listened to it first on audio book, driving from Kansas City to Minneapolis, and then I purchased it in hard copy.  I strongly encourage you to do either, listen or read or both.  The book is divided up into three sections, for the three phases in a sale cycle.  The Before Phase -  you are dealing with prospects, and the goal is to get them to know you and generate some interest in you.  The During Phase - you are now dealing with a lead and the goal is to get them to like you and buy from you for the first time.  And finally, the After Phase - you are dealing with a customer and the goal is to get them to trust you, buy from you regularly and refer a new business to you. 

It’s that simple.  The book covers things like, the 80/20 rule and its derivative, 64/4 rule which I hadn’t heard, or put another way, why 96 percent of the stuff you do is a waste of time; how or why marketing is the biggest point of leverage in your business.

The main thing I took from this book is the absolute importance to put attention and resource into marketing tactics, not just marketing strategy.  I love the Sun Tzu’s quote, “Strategy without tactics is the long road to victory.  Tactics without strategy is the noise before defeat.”  This book does a brilliant job   of focusing the importance of tactics. 

The author of this book is Allan Dib, and I reached out to Allan  to see if he would be willing to do a three-part podcast series with me, and he said yes, where we can deep dive into these three phases of customer acquisition and retention. He too shares my commitment to helping small and medium size banks compete and win, and is willing to do whatever he can to help.  I suggest you go to his website, www.1 (That’s the number one) 1PMP (Patrick Mary Patrick).com and get on his mailing list.  He really does put some good stuff out there. 

The really cool part about Allan is, he lives in Australia, and most of us know that, well, Australia was settled by a bunch of convicts from the British, especially Irish, I believe, and so Allan is joining us from his prison cell in Botany Bay where he and his sixth generations have been serving out multi generation prison sentences for not paying their rent to a British landlord.   Allan, are you there, and how is the reception in your center block dwelling?

Allan:              {Laughs] No, It’s so good, I am out on parole, so...

Kelly:               So you are out on parole, excellent, nice!  Just to be clear, Allan is not serving a prison sentence.  Well, Allan thank you very much for joining us.  I appreciate it.  Could we get right into it?

Allan:              Let’s do it.

Kelly:               Okay.  I like your definition of marketing and the circus, tell me about that.

Allan:              This was one that I had come across and I might have read it, right out of a book but it basically gives you a good bird’s eye view of what marketing is, because if you ask 10 people what marketing is you’ll get  likely 10 different answers, you know. Some will say it’s branding.  Some will say it’s advertising.  Some will say any number of different things. 

So I came across a really good simple jargon free definition of marketing.  If the circus is coming to town and you paint a sign that says, Circus Coming To The Showground Saturday, that’s advertising.  If you put the sign on the back of an elephant and walk into town, that’s promotion.  If the elephant walks through the Mayor’s flower bed and the local newspaper writes a story about it, that’s publicity, and if you get the Mayor to laugh about it that’s public relations.  If the town’s citizens go to the circus and you show the many entertainment booth, explain how much fun they will have spending money at the booth, answer their questions and ultimately they’ll spend lots at the circus, that’s sales,  and if you plan the whole thing, that’s marketing.

So basically, marketing is the planning of everything that takes a customer from not knowing you to becoming a customer and a raving fan.

Kelly:               And each of those items that you mentioned are tactics within that marketing strategy, correct?

Allan:              Absolutely!

Kelly:               You talk about why most business marketing fails, then you focused on large companies versus small companies, let’s talk about large company marketing and branding versus the smaller company marketing and branding.

Allan:              Sure, that’s a good one.  It’s interesting that I have seen this mistake made many many times and it’s a way that small businesses basically lose a lot of money when it comes to their marketing.  But basically, have a look at one of the large bigger competitors in their industry, they could be in any industry, banking for example, and they look at what some of the large companies in their industry are doing in terms of marketing and advertising. 

And very often it’s just sort of brand building kind of stuff.  “Okay, well if my big successful competitor is doing this then I should do this as well” That’s where they sort of mix up the causation.  So, why this is so erroneous is because large companies have a very different agenda when it comes to their advertising and their marketing than smaller companies. 

So large companies, they have a very very different agenda and they have very different goals to small businesses.  So, for example, a few other things that they want to achieve when it comes to their marketing and advertising is pleasing the board of directors, pleasing shareholders, satisfying their superiors biases, satisfying existing clients preconceptions, winning advertising and creative rewards and then getting buy in from various committees and stakeholders. 

And then somewhere down the bottom is making a return or a profit, whereas for a small business, the only thing that matters is making a return or a profit on their advertising.  So it’s just like if I was in the real estate development business and I looked at some of my bigger competitors, I had a look at high rise developers like, let’s say Donald Trump or someone like that, were doing.  They build massive multi-storey buildings and if I was to use the same strategy and tactics as them I couldn’t afford to do that because I am a small developer and it doesn’t work if you do that on a small scale. 

I mean, you have to build the whole hundred floors for it to be a successful office building development, whereas as a small business, you maybe can afford to build half a dozen dwellings or so.  You can’t build one hundred floors with six hundred units or six hundred offices.  So you must understand that strategy and tactics change with scale. 

So if you are working on a larger scale, then yeah, you can afford to do branding and all these sort of exercises which may take years and may take millions of dollars to execute properly.  But if you are working with a budget that is tens of thousands of dollars you have to have a very different tactic and strategy to get a return.

Kelly:               Would it be a fair statement to say that branding and direct response marketing are kind of the opposite extremes of a marketing tactic?

Allan:              Yeah, I would say that, although they do intersect.  With direct response marketing the whole point of it is to get a response, first of all, and to also get a return on investment.  For example, you want to spend $10,000 on a campaign and then you are able to measure it very well and you are able to say, look, we got 300 responses and on average we sold $1,000 each.  And so you are able to quantify the exact money spent, the exact level of response and the exact return on investment. 

Whereas with branding, you sort of just want to get your name out there, you want to get a bit of awareness and then you help that down to attract that result in more sales.  And again, like I said, making more sales may not even be your ultimate goal with branding, it may be just getting the name out there so  investors can see  and  you’re out in the market place so that your boss has his superior and his superiors have their biases and preconceptions satisfied.  Whereas, I tell small businesses the best sort of branding for a small businesses is sales.  If you sell your product, that is the best form of branding for a small business, because realistically, branding is what happens after the sale, not before the sale.  A lot of people think branding is kind of a thing that happens before the sale, it’s really something that happens after the sale.  It’s when they experience your product and service and then they are able to connect with your business.

Kelly:               Okay, so is it a fair statement to say that at a minimum 80 percent of the marketing budget should be spent on direct response marketing and very little on this branding, mass marketing thing?

Allan:              Certainly, for small businesses.  And as I mentioned, strategy changes with scale so if you are a business who is doing maybe one hundred million plus, maybe branding is appropriate.  If you are operating on a smaller scale, and if you have got a marketing budget that’s not within the millions of dollars, and if you need to get results that’s not a few years away then certainly it’s wise to consider direct response marketing.

Kelly:               You have mentioned that targeting everyone with your product or services is a terrible idea.  Why is excluding certain customers actually a good thing and why does being all things to all people lead to marketing failure?

Allan:              Yeah, now that’s a great question.  So, it’s funny [inaudible -13:46] market is and very often, I would say, everyone, you know, they just don’t want to exclude anyone and they want the widest sort of audience.  On the face of it, it doesn’t make sense because, you know, you want as many people as possible working with your business.  You may have a business that realistically can work with anyone but that’s a very typical newbie marketing mistake, for a few reasons. 

First of all, it’s very expensive to target a very large group of people, everything to everyone.  So you need to do basically, again, mass media marketing which small businesses is not only a waste of time because they just don’t have the budget and the fire power to get their message out broad enough to make a return.  So that’s one of the reasons why it’s a real mistake for small businesses.

The second reason is because it’s a principle in direct response marketing where you want the response to your ad to be, someone says, hey, that’s for me.  They want to read an ad and it will be highly relevant to them because we are all exposed to so many advertising messages each day that our brain would go crazy if it paid attention to all of them. So our brain actively scans for things only if they are relevant to us and brings our attention to that.  So if you make it too general it’s just going to get left behind by the person’s brain.  So that you will want to read an ad and say, hey, that is for me. 

And, you know, you think about it, in life, so if you have injured your knee, do you want to go to just a general doctor or would you want to go to a knee specialist?  In fact you have seen, say an ad for a knee specialist, when you have injured your knee, I mean , that is the perfect most relevant message at that time so that is going to get a much better response than, hey, we are a doctor, we do everything.

Kelly:               I like how you recommended, identifying your ideal customer and you even go so far as to creating an avatar or like a virtual representation of that customer.  Why is that important?

Allan:              It’s very important because when you are crafting your message you want the message to be extremely relevant to your target market.  Now, if you are a part of your target market, so let’s say for example you are creating an advertising campaign for   plumbers, and you are a plumber, okay, well you understand the mindset of a plumber and you understand some of the challenges that you are having in the industry and so on and so forth, but if you are outside of your target market, so let’s say you are targeting lawyers and you happen not to be a lawyer then getting an understanding of the target market is absolutely critical and it’s the first thing you should be doing before crafting any kind of advertising campaign. 

You do research into the industry, research into their mindset, what’s keeping them up at 3:00 a.m., you know?  Is it the fact that their billable hours are now reduced from what they were a few years ago?  Is it that there is increased competition?  What are the things that they are discussing at industry conferences?  What are the things that they are concerned about?  What are the threats coming up in their industry?  So, if you can get into their mind and then craft a message that has happened to them then that’s going to be much much more relevant and will get a far far bigger response than something just general and vague.

Kelly:               So as part of that you came up with this personal fulfillment value to market place and profitability as being key to defining your target mix, as key to defining your target market.  You call it the PVP Index, explain that to us.

Allan:              I usually tell them that there is essentially three factors you want to consider when selecting your target market.  And when I say each of us selecting a target market, we are talking about that from an advertising and marketing prospective.  It doesn’t mean that if someone outside of your target market approaches you and says, can I buy from you, that you say no. Of course, you can take other business outside of your target market but here we are talking about when you are building your marketing campaign and your marketing strategy, you need to have at the top of mind, very tight target market, and what are the best ways to define your target market. 

Because this is a place where a lot of people get stuck and confused and where they don’t know who they should be targeting.  It is three factors, so we call them as an acronym, PVP.  So “P” stands for Personal fulfillment, “V” stands for value to the market place, and “P” for profitability.

                        So, if we go to “P” - So “P” is the personal fulfillment part so P, people who you   enjoy working with, you know.   If there is a target market that you hate working with and there is another target that you love working with, well, the obvious thing is to be working with the people that you love working with. I mean, no one wants to do a job that they absolutely hate.  Personal fulfillment is certainly a big factor.  It’s not the only factor.

The next one is value to the marketplace. So, how much does this marketplace segment value your work. For example, if you were selling consulting services. So, for a business that relies on your type of consulting to make a profit, they value that extremely highly, whereas if you were targeting a very small business customer or someone who doesn’t really need your services then they place a low value on your work. So, you want to target someone who is willing and able to pay you the appropriate amount for your work.

And lastly is Profitability. So that’s basically how much profit do you make from that target segment, because sometimes, I mean, revenue is obviously not the same as profit.  And it’s critical to remember, it’s not about the turnover but it’s about the leftover. So sometimes, you know, I’ll find clients they maybe do a lot of revenue with a particular type of client that when you net, because of the high cost of servicing or the high cost of goods or whatever there is very little profit in the deal.  So, these are three factors I encourage people to consider when considering their target market - personal fulfillment, value to the market place and profitability.

Kelly:               You know, the personal fulfillment and the profitability, the two “P’s” seem to be fairly easy to kind of value or measure.  The tricky one in my mind is the “V” the value to the market, the “V” and the PVP.  I mean, how much does the market value your product or services and how do you do that other than put it out there and see if they will pay for it.  Because that’s kind of what you are asking, it is, how much you will pay for this, how much do you value it at?  Is it 10 bucks an hour or is it 200 an hour?

Allan:              Yeah, absolutely.  And part of everything that we do in the marketing prices, there is an element of test and measure. I mean, there is a research element so you may well go out in the marketplace and ask, look, with my type of product or service what would you be willing to pay?  And surveys are great, but very often people give misleading information in surveys so there does need to be an element of test and measure. 

So, what I recommend is do a campaign to a target market that you think might be ideal and let the market, say, test small and then if you find you are on    a winner you increase that and if you find that it fell flat, which often it does, you cut that.  So you don’t go all in on one sort of gamble, it’s exactly like you would within an investment.  You might part of your portfolio in that type of investment and see how it goes and if you are doing well then you might increase that leverage you have in that investment or if it’s not growing then you might cut that. 

Kelly:               You mentioned that companies needed to define their USP, their unique selling proposition, which needs to answer, why should they buy the product and why should they buy it from you and not your nearest competition.  These are the questions that should have clear and concise and quantifiable answers. 

Now, in financial services, which is where the banking world resides, products and services can in many ways be a commodity type product.  In part of your book you mentioned that customer service and quality of products are really not features and benefits you can attach to your product to get differentiation because these are experienced after a purchase, so what can a bank, by example, do to get some sort of differentiation in an environment where it’s somewhat commoditized?

Allan:              Yeah, I get that question a lot, and like I say in the book, there’s really nothing new under the sun.  I mean, before Apple came along there were computers and before Google came along there were search engines and all of that sort of stuff.  So, there really is nothing new under the sun but we are not saying about coming up with a unique selling proposition. I am not saying invent something brand new that’s never ever been done on planet earth. It’s just a matter of being slightly different.  

And that can be in the way that you pack your product, that can be in the way that you price the product, it can be in the way that you deliver the product.  So, I give an example in the book, there is almost nothing like a bigger commodity than coffee.  So, you can get coffee for a dollar and you can pay five or six dollars for a coffee.  And it’s funny, like, I have seen coffee shops that they just plop it in a paper cup and just give it to you for a dollar and then there is one that do things like coffee art and things like that and, you know, have all sorts of options and features and all of that and they charge five or six dollars for a coffee.

So very often, not necessarily the core service that you, you know, are creating that’s unique, but it’s the way it is packaged or delivered or supported and all of that.  And the reason why I say good service and good quality is not a unique service proposition because these things are just expected.  I mean, for you to be competent and deliver good quality service and good quality support and all of that, those are things that are just basic and expected.  In marketing, we are really trying to say, how can we attract people in this place.  So, of course we want to retain them and make them very happy customers, and we do that after the fact   but for the fact we need to have a way of attracting them.

Kelly:               Having a live customer service person could be a part of a USP, correct?

Allan:              Absolutely, absolutely, I mean, if your industry is full of people who do things in an automated way or in a way that customers don’t like and you are able to differentiate yourself in a way and service customers in a way that they prefer then, absolutely,  but to differentiate and a potential to be a USP.

Kelly:               That’s what we have community banks that are residing in these local communities that are competing against the big banks that aren’t residing in these communities, having bricks and mortar of a live person, for instance, that they could talk to and not just a 1800 telephone line to reach the banker.  I think that’s a pretty significant USP.

Allan:              I agree.

Kelly:               Okay, I am going to challenge you with a couple of things here. You mentioned five major motivators of human buying behavior, fear, love, greed, guilt and pride.  Now here is your challenge.  Can you render any off the cup ideas on how a banker could use each of these?  How could they utilize fear in capturing clients?

Allan:              I think fear would be an easy one to motivate people and fear of loss especially is a huge motivator when it comes to motivating people.  People are more motivated by fear of loss than the possibility of gain.  So, if you are saying, look, invest with us and we have a special investment program where we limit the amount of loss that you are able to get or we guarantee that you won’t lose on a particular investment.  I mean, that’s a big motivator and that’s a way that you can use fear in your marketing strategy.

Kelly:               Okay, love.

Allan:              Love, so that’s a big driver as well.  And what’s one of the reasons that you may want to create investments and make a secure nest egg for the future and maybe love for your children and your family, make sure that they are taken care of.  You could use that as a motivator to sell insurance policy, life insurance for example, to make sure that your loved ones are taken care of should the worst happen.

Kelly:               Okay, good one, greed.

Allan:              Well, that’s an obvious one with financial products as well. So, being able to show the client what they have to gain.  The whole make money kind of industry is all revolving around the feeling of greed.

Kelly:               Okay, guilt.

Allan:              Guilt, for example, almost the opposite of the love ones.  So can you take care of your love ones, are they able to be taken care of should the worst happen to you or are you protected in case of a loss of an income.

Kelly:               Alright, final, pride.

Allan:              Pride, that’s a huge motivator for a lot of people and one of the reasons why a lot of people want to be successful and do well financially is because they want to feel proud of themselves and feel proud of what they have accomplished. If you can show someone that they will be able to be proud of their accomplishments, I mean, that’s a huge motivator.

Kelly:               Alright, I want you to finish with, talk about the 80/20 and the 64/4 rule which I love this thing.

Allan:              Sure, I mean, a lot of people are aware of the 80/20 rule.  And it basically comes from an Italian economist name Vilfredo Pareto, and often it’s called the Pareto principle.  And that’s nothing new to a lot of people, but basically, it’s an amazing rule that holds true for almost anything.  You know, for example, 80 percent of a company’s profit often comes from 20 percent of its customers, you know, 80 percent of road traffic accidents is often caused by 20 percent of drivers.  Interestingly, this economist observed that 80 percent of wealth is actually owned by 20 percent of people.

And it’s interesting, in the research for this book I looked at wealth distribution at chart and, in fact, despite new technology, despite everything that’s happened in the last 100 years this rule still pretty much holds true. So right now, if we look at 80 percent of the world’s wealth it’s pretty much owned by 20 percent of people.  So that’s the 80/20 rule and it’s funny that the 80/20 rule can actually be applied to itself.  So, if we take 80 percent of 80 and 20 percent of 20 we actually end up with the 64/4 rule.  

And again, I looked into the wealth distribution chart and sure enough if you look at, 64 percent of the world’s wealth is actually held by 4 percent of the world’s people.  So basically, put another way, 64 percent of your fix comes from 4 percent of your causes.  So about 96 percent of the stuff you do comparatively just doesn’t move to the middle, it’s almost a waste of time.  It’s the 4 percent that you have done has resulted in 64 percent or more of your results.  And this is where I encourage people to focus heavily at marketing, so because marketing is the 4 percent of things that you do in your business that   can have a dramatic result, that’s the 64 percent plus result in your business.

Kelly:               And to be more specific, a direct response marketing is where you think the resources and attention should be spent, correct?

Allan:              Absolutely.

Kelly:               That’s terrific.  Allan, I really enjoyed that. We’ll set up part two of the podcast to cover the During phase.  What’s the best way for listeners to get in contact with you?

Allan:              To touch base on my website which is  You can sign up for my mailing list and you will get a lot of free articles and good advice there.

Kelly:     , I’ll get that posted in the show notes as well.  Okay, that’s it.

Allan:              Thanks Kelly.

Kelly:               Thank you Allan.

We want to thank you for listening to the syndicated audio program,  The audio content is produced and syndicated by Seth Greene, Market Domination, with the help of Kevin Boyle.  Video content is produced by the Guildmaster Studio, Keenan, Bobson Boyle. Voice introduction is me, Karim Kronfli.  The program s hosted by Kelly Coughlin.  If you like this program please tell us.  If you don’t please tell us how we can improve it. And now some disclaimers.  Kelly is licensed with the Minnesota Board of Accountancy as a certified public accountant.  The views expressed here are solely those of Kelly Coughlin and his guest in their private capacity and do not in any way represents the views of any other agent, principal, employee, vendor or supplier.