Why Philip Tirone thinks more bankruptcy attorneys should sell “lower car payments” instead of “get a fresh start”
In this episode of Bankruptcy Law Success, I interview Philip Tirone, founder and CEO of 720 Systems Strategies.
Philip’s not a bankruptcy attorney, but he’s stumbled upon a way that bankruptcy attorneys can get more bankruptcy clients by tweaking their pitch to sell the benefits of bankruptcy (like “lower car payments”). And for the last five years, he’s been helping bankruptcy lawyers do just that.
Some of the highlights in this interview include:
- What Philip thinks you should stop selling “free consultations” and start selling the many actual benefits of bankruptcy.
- Why it took Philip 17 years to realize that client’s don’t care about higher credit scores (and what they actually care about instead).
- The exact sales script that Philip advises his bankruptcy lawyer clients to use that gets 20% more clients to sign up (while raising your fees, too).
- How you can send a series of pre-written emails to turn a list of dead leads into active bankruptcy clients.
- A little trick that Philip has seen work, to “back clients out of the corner” when they’re embarrassed to even be talking to a bankruptcy attorney.
- And a whole lot more, including secret tips-and-tricks that your clients can use to boost their credit score after a bankruptcy…
You can listen to the episode by clicking the “play” button in the audio player above, or read a full transcript below.
You can also subscribe to get an email when we release new episodes of the Bankruptcy Law Success podcast.
Bob: Hi, this is Bob Hiler of the Bankruptcy Law Success Podcast, where we introduce you to successful bankruptcy lawyers, as well as powerful ideas that can transform your bankruptcy practice. Today, I’m speaking with Philip Tirone, CEO and founder of both 720 Credit Score and now 720 Systems Strategies. He’s based in Phoenix, Arizona. Philip, welcome to the podcast.
Philip: Hey Bob, great to be here, thanks for having me.
Bob: So, in my little intro, I talk about “introducing people to successful bankruptcy lawyers,” so that’s my first question: are you a bankruptcy lawyer?
Philip: I am not a lawyer. I just help bankruptcy attorneys increase the profitability of the firm. That’s all we do.
Bob: Yeah, so you’re a “powerful idea that can transform bankruptcy practices.” So I know you’re doing that now with 720 System Strategies, so maybe you could just explain what 720 System Strategy does, in 30 seconds to a minute.
Philip: Absolutely, thank you. I mean, bottom line is, Bob, as I’ve seen it over the years, I’ve been working exclusively with bankruptcy attorneys for over five years now… And I’ve just seen over the years that the commoditization of the bankruptcy. Everyone in the business has seen it. Filings continue to go down down down down over the last five years and everyone’s selling the same thing: “free consultation,” “come in for a free consultation,” “come in for a free consultation”… What we do with 720 System Strategies is change what the offering is, so that attorneys can increase their average retain rate, increase their show up rate, and increase their average case value. And we can go into how we do that in the call, but that’s really in an essence what we do.
Bob: Yeah, let’s dive right in. I know you’ve got “720” right there in your name, 720 System Strategies, and that’s a reference to the ideal credit score. Maybe you can tell me what is the relevance of 720 as a credit score… Why is that so great?
Philip: Well, you know, I mean I was in the mortgage industry for many years and there’s something… I don’t know why Fannie Mae and Freddie Mac, the major lenders, put a reference to 720. But it’s always been there. And that’s sort of like just where I named the company. But, yes, 720 references the credit score. But what the whole point of this is that people do not… The endgame of a bankruptcy is not the bankruptcy. The endgame of a bankruptcy is not to discharge a client’s debt. The idea of bankruptcy is to get their life back to normal, a client’s life back to normal. I mean would you agree with that, Bob, with all the leads that you bring in? I mean, what are people looking for?
Bob: Yeah, so the two marketing messages I’ve seen potential clients respond to for bankruptcy lawyers are, one, improve your credit score. They all want to buy a car in a year or two, after the bankruptcy. That’s one of their big goals. But the other one is to stop creditors from harassing them.
Philip: Yeah, exactly. And then you have other people, other garnishments and all these other things that people for whatever reason people are doing it. Getting the phone to ring, right? But they want to solve that problem, of course. But what they also want to do is move on after the bankruptcy. And a lot of bankruptcy attorneys out there, they focus on the bankruptcy, the debt, we’re going to discharge your debt. We’re going to we’re going to solve your garnishment, which is important. And that’s what the first step is. But to increase your retain rate, to increase your case value, all this stuff, you’ve got to focus on the next step. And it’s funny you bring up the car payment, Bob, because the car, the next car… I’ve been in the credit improvement business for 17 years, right? We’ve had 48,000 people go through our program. And up until two years ago, I didn’t realize that connection, right? I used to think people wanted credit just because they want to improve their credit score. And I had bankruptcy attorneys who would bring people into their intake meeting and they would ask about their credit score. And we thought that they wanted the credit score because they asked about it. It turns out, through a lot of different testing, that’s not where the rubber meets the road. The rubber meets the road when you tie the credit score to their next car payment, right? And one of the things that we teach our attorneys, the really simple plug-and-play that every attorney listening to this–every bankruptcy attorney listening to this call–can test in their next intake meeting… And I’ll tell you, the eyes of the client–the eyes of 90% of the clients–will light up if you land this correctly. You just start off by saying: “Hey, tell me, Bob,” (assuming you’re the client and I’m the attorney) “do you see yourself buying another car in the next five years?”
Bob: “Yeah, I have a beater now, and it keeps on breaking down, but that’s all I can afford.”
Philip: “Well, Bob, let me share with you something you may have not considered. If you bought a car today and had a 720 credit score, according to myFICO, your interest rate is going to be around 3 percent for that car loan. However, based on my years in the bankruptcy business, if you’re calling me right now, your interest rates between–or excuse me, your credit score–is between 500 and 550. This means your interest rate on your next car won’t be 3 percent. It’s going to be between 20 and 25 percent. And on a $15,000 car, that means you’re going to pay an extra $200 to $250 extra a month, every year for as long as you have that car. You’re going to overpay $2,400 to $3,000. But it doesn’t have to be this way, Bob. I contracted with a company that helps people rebuild their credit after bankruptcy. The program is called “7 Steps to a 720 Credit Score” and their focus is simple: after bankruptcy, get my clients to a 720 credit score in 12 to 24 months after the Chapter 7 discharge or the 13 confirmation. And in order to differentiate my clients from every other bankruptcy attorney out there, I give this program to you free of charge as part of your bankruptcy.” And that’s really… When our attorneys land that, and really make the connection. Like you said, that the car… It took me years to figure that out, embarrassingly enough, but as a marketer you think you wouldn’t take me that long… But when you connect the car payment to the credit, the results are extraordinary. Ken Neely from Gilbert, Arizona raised his fees $300, his same-day retain rate went up 19 percent. Ethan Dunn from Detroit, Michigan raised his fees $400, same-day retain rate went up 11 percent. So, anyways, my point being is… This is the differentiation that I was making in the intro.
Bob: How does this tie in with car reaffirmation letters?
Philip: Yeah, so when you reaffirm a car, it doesn’t report to the bureaus. And so it has nothing to do with that. If someone does reaffirm their car, chances are they’re still going to have to buy another car in the next five years anyway. And this is just going to rebuild their credit, so that when they do buy the car, they’re not overpaying. And here’s the reality of credit. I mean, we’ve had so many people go through our program. As I said, as of last month we had 48,110 people go through our program, right? So we’ve had a lot of experience in this. It’s actually really easy to rebuild your credit after bankruptcy. And people think… I talked to a client today. He was like: “If I file bankruptcy, I’m out of luck for 10 years.” It’s not the case. I mean, we have clients that you could easily say 12 to 24 months after bankruptcy you can have a 720 credit score. And that works in a 7 or a 13. But that’s actually an underpromise set up for an overdeliver.
Bob: Oh, really?
Philip: If a client actually does the work… 720 System Strategies, we’re not a credit repair company, we’re a credit education company. We have a username and password protected portal where we give people a series of videos, right? So that they can learn what to do, and then they have our customer service department where we get live question/answer calls and all the different things that we provide them. But my point is we had a client last year who was enrolled by a bankruptcy attorney in December or January 2017. Nine months later, she hit 720. And it’s actually… It’s a lot easier to rebuild your credit when you’ve actually had a bankruptcy then if you don’t. Because we have a lot of people enrolled in the program that don’t go through bankruptcy. And it’s actually harder to rebuild their credit, because you’re dealing with the debt, you’re dealing with the collection companies reporting, and all that.
Philip: Yeah. Go ahead, I’m sorry. I can keep going on and on. I get so excited about this.
Bob: No, that’s great. One of the things that I’m a little confused by is that I can see how you can get to a 720 in a short period of time after a Chapter 7 discharges. My understanding… I’m not an expert in this, but my understanding is that for a Chapter 13, if you have a three to five year payment plan, the Chapter 13 is not going to discharge until the end of the payment plan.
Bob: So your credit really doesn’t improve after the filing of the Chapter 13, it improves after the discharge of the Chapter 13. But maybe I’m misunderstanding, could you clarify how that works?
Philip: Yeah. Well, it’s a common misconception that I hear all the time, right? That you can’t really… you can’t get to there until after the discharge. And the way the credit system works… And let me caveat here: I’m not privy to any credit rules or anything like that. I mean, I’m figuring this out on a case-by-case-by-case basis, and I learn through our clients. And frankly this is one of the reasons why we do these live question/answer calls, so I can hear the results from the clients. So many times on the calls they say: you know, I tried this technique, it didn’t work and I’m like hmmmm… It just gets me thinking. Then I start testing it on my own, with my own credit, and sometimes just learning through my client base, our lessons change. And frankly this is why we move from printing books to online, because of all the changes.
Bob: Sure, sure, sure…
Philip: I mean, we just last month changed two videos. But anyway, to your point about that 13, you are correct that you can’t rebuild the credit the same way in 13 as in a 7 , because you can’t take out new loans. But there are plenty of things that you can do to rebuild your credit around 13, or during a 13, so that you can have a 720 credit score years before the Chapter 13 is discharged.
Bob: Wow. Can you just… I don’t want you to give away your videos. . .
Philip: No no no. I can give you everything… There’s nothing I hold back, just so you know, I don’t think like that so… Ask away and I’ll give you everything I got.
Bob: Great. Well just so we can understand on a high level…
Philip: Yeah, right.
Bob: I do know as a Chapter 13 you need the trustee’s permission in order to incur new debt, right?
Philip: Mmm hmm, right.
Bob: And then at the same time, you need three or four lines of credit that are reporting positive news to really improve your credit score. That’s what I’ve heard.
Philip: You want at least three. We don’t say “more than three,” simply because the credit you get after a bankruptcy is just more expensive than other. Right? So there’s no reason to get more than three, three is all you need. So you’re saying: “Hey, I understand how you do that with a 7, how do you do that with a 13?”.
Bob: Yeah, if you don’t have those lines of credit already, how do you open those lines so that you can start reporting positive news to the credit bureaus?
Philip: Bob, great question. OK, so a few things. First of all, even if you hold over lines after a bankruptcy, you still need to establish new lines after a bankruptcy discharge or a bankruptcy confirmation. So even let’s just pretend a client had two lines from before the bankruptcy.
Philip: And they held them over. Well, that wouldn’t… That would help, I would never say “close those lines,” but I would still say you need to get three new credit lines after the bankruptcy. So that’s the first thing. Second thing is: you’re right on the trustees. You can’t establish new debt in a 13. Now there are various judges around the country that allow someone to establish that, if it’s under 500 dollars or under some number, right? But I don’t even go down that road because it’s too complicated to keep track of.
Philip: Right? Because this judge says this and this jurisdiction says this. I don’t even go there. So what we say, in a 13, is that you can’t get new credit after a… during a 13, you can’t get new credit cards and things like that, or new car loans. What you can do is do sort of like a secured card, right? Where you take 200 dollars and put it into a bank, right? It’s your money and you get… it’s sort of like a debit card that reports to the bureaus, right?
Philip: We’ve been doing this with, like I said, thousands of clients, and I’ve never had one client come back to me and say I was… I got reprimanded for doing that. So that’s that. So secured cards, and you can easily find three places to get a secured card to get three reporting.
Bob: So let me just… Just to make sure they understand , every time I started a company and we needed credit cards for employees, I remember Citibank telling me that we need to put $50,000 into a CD and then that CD would secure a $50,000 line of credit for the credit card, and then I had to personally sign for it, too. Is that essentially what it is, like securing it with cash?
Philip: Yeah, I mean, in essence. But what you’re really doing, I mean it’s much less sophisticated. What’s the person doing is going to Wells Fargo and putting 200 dollars in a savings account attached to this card.
Bob: Got it.
Philip: And that reports to the bureaus. Basically.
Philip: I mean, very very unsophisticated. But also there’s credit rebuilder programs out there, right? And this is where it’s not a loan being given. There’s no loan given, there’s no… there’s nothing like that, right? It’s a credit rebuilder program where either the person pays a monthly fee that gets processed through a bank that reports to the bureaus, or a person gets a loan at a local credit union. This is something we talked about all the time. You know, you go to your local credit union, ask for a credit rebuilder loan. They give you a “loan” for five hundred dollars loan that stays in the account, it stays in the bank, so no money is given, but it reports to the bureaus. So there’s little nuances that you can do. But more importantly, even more… I mean, before any of this is done, actually in the first lesson of the program, the very first lesson of the program is errors. Like this is the biggest issue with post-bankruptcy borrowers. OK, right? It’s the errors. I mean there are a staggering number of errors that are reported, right? And there’s different types of errors. According to a Federal Reserve Board study, 46 percent of credit cards do not report the proper credit limits to the bureaus. OK, so let’s just say you have this client who has a credit card that’s being held over, right? Well let’s just say the person has a five thousand dollar credit limit on that account.
Bob: What does “held over” mean? What is that?
Philip: Well like, for example, you don’t have to include all your credit cards in a bankruptcy. You don’t have to… But I guess this is a bad example, because in a Chapter 7 you would include it. That’s a bad example. But yes, it could happen if the person didn’t really have any debt on this credit card, for example. Let’s just pretend the client doesn’t have debt on a credit card, they filed bankruptcy but they keep this one credit card to use.
Philip: So let’s just give that example. According to a Federal Reserve Board study, 46 percent of credit cards do not report the proper credit limit. So when that person goes out, let’s just say that person charges a hundred dollars on that account. And the limit on that credit card is a thousand dollars. That credit cards should help that person’s credit. But if there’s no credit limit being reported, it will show that they’re maxed out. That hundred dollar payment… That’s a horrible… I mean that could be a 20 or 30 point impact. And these are the type of things. It’s obvious, I don’t have to say… Everyone knows the next one I’m going to say, post-discharge violations, right?
Bob: Yeah, yeah, yeah.
Philip: For a 7, or even a 13. It just doesn’t report properly. All these type of things are just… This is what really impacts credit scores. So before you can build, we got to fix all these things, right? You guys can have someone with a collection, and you can easily have three of the same collections being reported current. It happens all the time. So incidentally any one of your clients who’s listening, if you’d like free access to our credit program, you can feel free to just offer it any of your listeners, Bob, and we can just enroll you for free as just… So the client… It’s easier to understand what we teach.
Bob: Got it. Cool.
Bob: So you know one of the things that you’re discovering is you’re discovering a huge number of tradeline errors on the credit report. And the good news is that after a bankruptcy, the credit bureaus have an affirmative duty to report things accurately, otherwise you can hit them with an “unreasonable procedures” case under the FCRA and possibly have them open to an FCRA complaint that pays maybe a thousand dollars to the client and attorney’s fees to you. Is that something that you work on with your bankruptcy lawyer clients?
Philip: Yeah, with our attorney partners, if we have a bankruptcy attorney that does that… Obviously, not all of them do it, right? But when we have a bankruptcy that does that, if we have a client identified — and we get this all the time happening to us — and they contact us and they say “hey, this…” You know, whether it’s on a question/answer call or whether it’s our customer service department, and they contact us and say “look, this thing is not changing.” First thing we do is look to the attorney that referred to us. And it’s like Jeff Jones. Oh yes, he wants this FDCPA work? Boom. Here you go. This client is waiting for you. It’s your client, here you go. And obviously we don’t charge for that and it’s just part of our way to help the bank attorneys become more profitable.
Bob: Well FDCPA is a collections procedure… collections violation, but an FCRA, the obligation is with the credit bureaus and since you’re intimately involved in the credit reports, you’re going to come across a lot of FCRA violations possibly.
Philip: Yeah, yeah. Well, I mean, we come across a lot of both, actually. You know what I mean? Because you can’t collect on bankruptcy debt that was included. You know, a debt that was included in the bankruptcy, you can’t collect on.
Bob: Yeah, it’s a discharge violation.
Philip: Right. So we… You know, there’s a lot of different… It’s overlapping. You know what I find with my attorneys… My attorney that do the FCRA work are also doing the FDCPA work. You know I don’t know the nuances of those laws. It’s not my world.
Bob: Sure, sure, sure.
Philip: Right? I mean I focus on , with our credit education product.. The reason why… You know, we’re not credit repair. If someone comes to me and says “hey, how can I get his bankruptcy off my credit report?” My response is “Did you have a bankruptcy?” Because like, look, if you had a bankruptcy let’s just rebuild around it. So I don’t go down the road of the nuances of legally getting things off. I just teach how to rebuild and when a client is not getting something off that they should, I refer them back to the client, the attorney who does that work.
Philip: Yeah, yeah.
Bob: So we talked about two different appeals to the end client, and you’ve talked about you know the appeal of having a 720 credit score and how it can save you hundreds of dollars a month on your car payment. The other kind of avenue… The other reason that people do bankruptcy is because they want creditors to stop harassing them. Is there a way that a bankruptcy lawyer can use a 720 System Strategy… One of the strategies in your bundle of tricks? Is there something they can do to kind of increase the appeal to someone who just wants to get the creditor to stop calling them? You know what I mean?
Philip: Well, I mean, yeah. Oh no, absolutely. I think what we find that works… So we ghostwrote two books, right? And this is for bankruptcy attorneys, right? So we’re just the ghost writer and the attorney becomes the book [author]. One’s called “Rebuilding Your Life After Bankruptcy: It’s Easier Than You Think.” And the other one is “Success After Bankruptcy: Twelve Successful People Who’ve Rebuilt Their Lives After Bankruptcy,” right? And what we’ve learned on this is yes, these creditor calls… The advantage for us, for all of us — and truly it’s the advantage to the client, so they can start a fresh life — is by acknowledging that, that gets them to call the bankruptcy attorney, right? And once we can get inside their brain that this is a good thing… And all of this can be done today, right? Like we can stop the creditor calls today. And you can tell every creditor that calls you to call my office. I mean it’s done today, instantly. Then we can focus on what the real endgame of bankruptcy is: getting their life back to normal, right?
Bob: OK, I get it.
Philip: So we do that we do that through the free e-book download easily accessed on the client’s own web site, or basically simple things by just saying when the client calls into the office, even if they’re not ready to set an appointment, even if they’re not ready to give their name and phone number, every person should be saying: “hey, I offer free information on rebuilding… Our attorney, Attorney Jones, offers free information on rebuilding your life after bankruptcy, would you like me to send that to you?” We found that around 75 to 80 percent of people will say yes to that, right? Even if they don’t want to give their name, just really a simple ask. And what you do is… we have this other program where we send them emails. We send them from… it looks like the attorney is doing it, but basically it’s an email follow up sequence for a year, all on rebuilding your life after bankruptcy. And it’s really really simple, really low-key. And we’ve written it designed for different types of readers. So the people who want to hear the testimonial of “Yeah, I bought a home two years and two days after bankruptcy,” they listen to that. Or for the people who want to read the 150-word explanation on the first step, they can get that. Anyways, when you combine the “life after bankruptcy,” either through a book or through various e-mails, the conversion rate is off the chart. I mean, it really is. I talked to one of our clients today, she had put 94 people into the sequence over the past three months, and she generated 10 bankruptcies from those 94 people. And she did zero follow up herself. It was all because of the emails.
Bob: It’s an email autoresponder series. Are you delivering that yourself or do your clients deliver that?
Philip: Well… So that’s a good question, that’s a great question. So here’s… Originally, I gave it to my clients and I found that only four to five percent of clients would actually do it because they’re just so busy. Attorneys are so busy, especially bankruptcy attorneys, because of the number of leads that are coming in. As you know, Bob, when you deliver a call, that $35-40 call is a lead. It’s a hot lead. They’ve got to answer that phone, right? You have to answer their phone. And that’s the problem… The fundamental problem with our industry is that the leads are always coming in and you don’t know who’s the hot one that’s ready to file today, or the ones that are not emotionally ready and are going to think about it for three months, right?
Bob: Sure, sure.
Philip: So what we did is we use our enterprise-level software to basically do everything for the attorneys. We call it the automated lead follow-up program and it’s really simple. We send the emails from the attorney’s email. It looks like it’s them, right? When the client replies, it replies to the attorney and their staff. We just do all the work for them, and we customize emails. But most importantly, we’re starting with this group of 27 e-mails for a year that we know is currently converting in the marketplace. So that’s what that is.
Bob: Got it.
Philip: It’s just you know everything we do, Bob? We’re solving a problem for the client, right? That’s what we’re trying to do. And when I say the client, I mean the bankruptcy attorney.
Bob: So you kind of create a CRM that has a built in email autoresponder and you’re sending those emails automatically. And because the focus is on improving credit, even if the person files for bankruptcy, the email is still valid. You’re talking about ways of improving their credit, so you don’t even need to go back into the system and say “oh, you know, Suzie Q actually filed for bankruptcy, let’s stop sending her emails.”
Philip: Oh no. Well, actually, it’s two different sets, right? So the e-mail… What I’m talking about are for leads, these are cold leads.
Philip: As a matter of fact, I had one guy who bought Total Attorney names. I mean, he spends $5,000 a month with Total Attorneys. And with Total Attorneys, you get the name, e-mail, and phone number. And just like Nolo, LegalZoom, all these lead companies, Lead Rival… So what he did is he just went back to all his 2017 leads and just dropped them all in, right? It’s just an easy way to monetize those lists of people who are buying those leads. I mean, a lot of those people who are buying those leads from Total Attorneys or Lead Rival, they haven’t found someone like you, right? They don’t understand that there’s Total Attorneys and all these companies, they’re in business because of the markup, right? Where someone like you… I mean, when you told me what you could deliver on a cost per lead, I about fell over. I mean, I about fell over. You heard the call, when we were on the phone, you could tell how excited I was because it’s just something that… It’s because of your expertise in the bankruptcy market that you could actually do that.
Bob: Yeah, and just for the bankruptcy lawyers out there, if you have a Google AdWords campaign that’s set up well, you should be able to generate leads at a cost of around $35. Now I’m going to say that with a caveat, though Philip, because what I’ve learned is that for every 10 percent you increase your cost per lead goal, your CPA, for every 10 percent you increase it, you get 20 percent more leads. So if you increased your… If you’re willing to pay $35, then if you increase that by 20 percent — so that would be $7, if you increase that by $7 so that your target CPA is $42 dollars instead of $35. So it’s a 20 percent increase in your cost per lead, but then you’re going to get 40 percent more leads. Depending on how much unused capacity you have, that might actually be a lot more profitable. You know what I mean?
Philip: Right. Right. Right.
Bob: But you can certainly generate a lot of leads at $35. And the question for every attorney is: are you in a large enough area that you can get a lot of leads at $35. If you’re in a large metropolitan area like… We were just talking about Dallas Fort Worth offline, that’s a large area and you can get lots of leads. L.A., you can get lots of leads. I live in New York City, you can get lots of leads. But if you’re in a small town in North Dakota, you’re not going to be getting a lot of leads from AdWords, or really anything. I don’t actually know how you’d survive. You probably couldn’t be a specialist in bankruptcy if you’re in a small town in North Dakota. So you have this email follow up sequence for a year that people can use, is that part of 720 System Strategies?
Philip: Yeah, yeah. Just one of… We basically have the credit program that helps people… “Seven Steps to a 720 Credit Score” which helps people increase their case value, increases their show up rate, and things like that. We have the automated lead follow-up program that follows up on the leads. And we have the books where we’ve ghost written, and assuming the market is available, you become the author, it’s like instant authorship, right?
Bob: Got it.
Philip: It’s just… You become the author in that market and it’s subject to the market. But one thing I want to circle back with you mentioned about the value you bring… these emails bring to people, because we’re talking about rebuilding their life after bankruptcy and we’re talking about credit. So here’s a little trick that we see really working. And so picture a lead coming in, right? And they’re embarrassed about bankruptcy, and they’re embarrassed about the fact that like, oh my gosh, it’s the first attorney I’ve ever had to call and it’s a bankruptcy attorney. Well, what we’ve learned is that, to back people out of the corner, you can say something to the effect of: “Look, you may not need bankruptcy. You may just need to rebuild your credit score. As a matter of fact, I offer this program ‘7 Steps to a 720 Credit Score’ for all my bankruptcy clients, or people who don’t qualify for a 7 or a 13. Just come on in, so I can look at your paperwork and see if you qualify.”
Philip: Right? So what that does is, it backs people out of the corner, and what we’ve seen happen is people who normally wouldn’t set an appointment, set an appointment. I’m not talking that… This is not like a silver bullet, it’s not like it works every time, but there’s definitely an increase. And then the reality is that once the person is sitting with you, and you’re explaining to them the value of bankruptcy, and you can explain to them why it’s actually easier to rebuild their credit after bankruptcy, and all that stuff. Then they say “yes.” And the chances of someone not qualifying for a 7 or 13 is so low anyway. It’s just an easy way to just increase your show up rate and, once again, differentiate yourself from everybody out there serving vanilla ice cream.
Philip: So that’s just something that came to mind and I meant to bring up.
Bob: You know I did sales for seven years, and one of the books that really made sales click for me is a book called SPIN Selling. Are you familiar with that one?
Philip: You know, I’ve never heard of that.
Bob: It’s by a guy named Neil Rackham and his point is that you really need to focus on the customers’ problems and the implications of the problem. And then you need to flip it, and you need to give them a “Need-Payoff Question.” So SPIN, S-P-I-N, and each stands for a different thing: “Situation, Problem, Implication, Need Payoff.” And I was thinking about your spiel for how a 720 credit score can lower your car payments, and you could definitely slot that into the SPIN Selling approach where you could say: “do you have a car? Is it a beater? Would you like a better car?” If you were… Most people… Then you could talk about the problems of having a beater car if they have a beater car… Or if they have a $15,000 car that they’re paying a million dollars a month to the user car dealership, you can really talk about that 20 percent interest rate and what that means. And I could really see that being an important part of the sale, just getting people to really realize how these used car dealerships and their low credit scores, how it’s really hurting them. Because a lot of people are just completely missing that connection.
Philip: Oh yeah. I mean I talked to a 720 client this morning, a 720 attorney, and he’s been with us for three years, right? So I reviewed this with him and I started off by saying: “how do you bring up 720?” And he says, “I bring it up and I just…” It’s almost like an afterthought: “And by the way, when you do a bankruptcy with us, I’m going to give you this credit program that will help you rebuild your credit score.” And I said, “Michael, you’re leaving all this money on the table because you’re not making that connection,” which is exactly like you’re talking about.
Bob: Yeah. So that’s something that I would really urge bankruptcy lawyers out there to focus on. Rather than try to sell… Before you can sell someone the solution to the problem, you need to convince them that they have a problem. And so if someone is paying a lot of money a month because they have a 20 percent interest rate on their used car because they have a terrible credit rating… You have to make that connection that they’re paying all that extra money. That if they had a 720 credit score and a 3 percent interest rate, they would be paying $300 less a month.
Bob: And then once you make that connection, then you could flip it and say: “Well, then you could save all this money if you got to a 720 credit score. That’s why you should move ahead.” Well, I think that’s also going to help people actually realize… get out of that frozen indecision with bankruptcy, because if you can show them the promised land they’re going to be like “I want to go to there.”
Philip: Well, and to the point where… Yes, I agree with everything you just said. And also, as we know, bankruptcy is not the endgame for these people. It’s not the endgame. And then, second of all is… they’re going to buy another car. And chances are right now they’re paying through the nose, right? And you’re saying to them, “Look, I’m going to get you to save $200 a month on a $15,000 car. Now what we train our attorneys to do if they’re normally charging $1,500 for a bankruptcy… If you land the script I mentioned to you about the car correctly, and you land it where they can save $200-250 a month. And yes, let’s just pretend I was normally charging $1,500 for a Chapter 7 and I’m to move this to $1,695, right?
Philip: So now the attorney is going to move their income up, their fee, their case value up, move up their fee. Yes, there’s people around them that will do a bankruptcy for $1,500, $1,400, $1,300, $995, whatever it is, right? But the consumer… if it’s asked the right way, and if it lands the right way — and once again it’s not a silver bullet, it doesn’t work 100 percent the time — but for the super majority of the people, a person would rather pay $200 extra now than $200 a month for the life of their car. As a matter of fact I have some attorneys who’ve been in the 720 program, where the client has literally gone to them, chose not to use them, and they went to another company to do their bankruptcy, because they actually did it through like, it’s not pro se, I forget the name, but it’s like a legal paperwork where these people…
Bob: A legal clinic.
Philip: Yeah, petition preparers or whatever. But then they came back to my 720 attorney and said, “I want that program.” The 720 attorney said, “Great you could have it. It’s 500 dollars.” And the person paid for it, right? So anyway they went to a petition preparer to save that thousand dollars, but in their mind there’re up $500.
Bob: That’s funny.
Bob: So you’ve thrown out some numbers. I’m kind of struggling to place those numbers in the context of a practice. So you mentioned a 19 percent increase in the same-day retain rate. Like what is that off of?
Philip: So this is Ken Neely, the second largest filer in the country. And the reason why I’m bringing these people up is these people been very vocal, they’ve been on our strategy calls. They’re very vocal about their numbers. Second largest filer in the state of Arizona.
Philip: He tracks his numbers like crazy. And with regard to this, this is only “7 Steps to a 720 Credit Score,” this is only our credit program. What he did is, when he came to us, is I’m going to try incorporating your credit program into my intake. We connected it to the car payment and he said, for this month, I’m going to increase my fees $300 and just see where the cards fall. He increased his Chapter 7 $300, he went from $1,500 to $1,800, and his same-day retainer rate went up 19 percent.
Bob: But what same-day retainer rate before?
Philip: Oh, you know what, I don’t have that number. Yeah, I wish I did.
Bob: I’m just wondering like in a vague sense, is this doubling your same-day retain rate or is it increasing it by…
Philip: Well, it’s increasing it 19 percent, so it’s about a fifth, right?
Bob: Yeah. No, that’s nice.
Philip: But it’s not… But this guy, I mean this guy runs… He’s a volume filer. And if anyone would like strategy calls with him, they can contact me and I can send them stuff, because he’s very open and personal and personable and very… just a great guy. And then Ethan Dunn, so last year his practice grew 98.05%. This is 2017, it grew 98.05%. And he was ranked by the Law Firm 500 that ranks the 500 fastest law firms in the country, right? So that’s where it all comes from.
Philip: And when he started with “7 steps to a 720,” he was at $1,100 Chapter 7.
Philip: And he’s in Detroit, right? So, you know, there’re very price sensitive.
Bob: That’s a very competitive market.
Philip: Yeah, very competitive market and price sensitive. I mean, we’re talking like… So what he did, he connected the dots, right? He connected the dots for what credit will do for you for your next car. And he takes it one step farther. In the strategy call we did with him, he talks about how he brings up: “Are you considering becoming self employed? How important is that to you?” Well it’s important to have a high credit score and be self-employed, right? He just really goes much much deeper than what I told you. He took his fees from $1,100 to $1,500. And that same-day retained rate went up 11 percent.
Bob: Oh, OK.
Philip: So not as high as Ken’s, but I mean here’s the thing that I try to connect with my attorneys and I say this on many strategy calls… It’s all about profit and so many people get carried away with a number like… let’s just talk about the volume of filings or whatever, and not focus on the profitability every month. Like how much are you putting in your pocket every month. Because that really is where the rubber meets the road. And so if you’re able to increase your fees $200, $200, $400, right? And let’s just say you can do up with 50 percent of your clients. Not everybody. Because it doesn’t mean that Ken nor Ethan, they don’t cut deals… Course they cut deals! Someone comes in on social security and they’re a senior that’s never going to buy another car, let me tell you, they’re not standing firm at $1,800, right? They’re cutting that deal, because that lead is paid for. As you know, Bob…
Philip: Because you run all these AdWords campaigns. You’re paying for this lead, let’s close this lead. And this is just another arrow in the quiver for when it’s important, when the person does care about their future, is going to buy a car, is going to be self-employed. Well, let me tell you something. You’re offering something that’s not vanilla ice cream. And I mean I love the fact that you said you help… Have you tested with your AdWords campaign putting in there like “this will improve your credit score”? Like, will that drop the price of that lead?
Bob: Improving your credit score is not… The way that I think about is that getting creditors to stop calling you, that’s where you take the fire extinguisher and you put… There’s hair on fire. So you put out the fire. So in terms of AdWords, putting out the fires tends to get a much higher response rate. So the number one response that I’ve seen is from something talking about how you can stop creditor phone calls, harassing creditor phone calls.
Bob: I have not tested anything about 720 credit scores because at the moment that people are searching for “bankruptcy lawyer,” their hair is on fire and all they care about is putting out that fire.
Philip: That’s true, right.
Bob: Once their hair’s not on fire, they can totally consider the 720 credit score thing, I think that’s really good.
Philip: Well, Bob, on that note, if you have any bankruptcy clients that want to test this out… You and I both love A/B testing. I’d love to test something out. Obviously, no cost to the attorney, so we can test it out and see if it’s something where we can actually beat the control.
Philip: So, yeah, anyways…
Bob: So the… One of the things that you’re talking about is you’re talking about differentiating… You’re talking about the bankruptcy lawyer differentiating himself or herself by offering these “7 steps to a 720 Credit Score” system. But I do think there are lots of things that people can do even if they have the same offering as the next guy, just in terms of explaining the benefits of bankruptcy. I feel like bankruptcy lawyers do a terrible job of that. I say this after having listened to a 1,000+ calls in the last year and I’ll just give one example…
Philip: Not many people have done that. You’re uniquely qualified…
Bob: Well, I mean, just like how you built out that point about cars and how a 720 credit score can save you $200, $250 a month for a $15,000 car. That’s great. That’s very concrete, and material. Another one that is very similar that people don’t mention is that if you’re in a Chapter 13, if you have fifty thousand dollars in unsecured debt, if you’re not paying interest on it for five years, that’s going to be a huge savings. That’s not something that people talk about.
Philip: Yeah, absolutely.
Bob: But just making something concrete that you understand and making sure that the prospective client understands there’s a real concrete benefit to doing a Chapter 7 or Chapter 13, I think it’s really important.
Philip: No, I couldn’t agree with you more, Bob, I couldn’t agree… I have not listened to a thousand calls. I cannot claim that. But I can tell you I agree. I mean the simple question of what differentiates you from any other bankruptcy attorney. Most attorneys can’t even answer that. The answer is, well, I give better service or I’m a boutique firm, right? And that is not… When someone is tight on money, that’s not the answer they want to hear.
Bob: Yeah, they want to hear “I’m a specialist and actually bankruptcy will turn your life around and it’ll save you money. Let me explain some of the ways that I can do that. But first, of course, tell me about your situation…”
Bob: Yeah, OK, so Phil, if someone wants to work with you for 720 Systems Strategies, what’s the best way for them to get in touch with you?
Philip: So the easiest way to call me at (310) 779-3898. Or you can go to just google “720 system strategies” and you’ll see… You can put your information there or you can email me directly. And the best E-mail is philip at 720 credit score dot com. And Bob I just can’t thank you enough for the opportunity to be on your podcast. I mean, you know, I heard about you through one of my bankruptcy attorneys. And it’s just the message is getting out there, because you’re adding so much value. So I’m grateful.
Bob: Great. Well, you know, the point of the Bankruptcy Law Success podcast is not really to create new intellectual properties, as it were, but rather to take something that sounds like a great idea (like what you’re doing) and bring it to other bankruptcy attorneys out there to help them improve their practice. So thank you for joining us.
Philip: Absolutely, absolutely. We will talk to you soon.
Bob: OK great. Thanks so much. Bye bye.
Philip: Thanks, Bob.