It’s a common misconception that prospecting for new customers means opening the floodgates to new opportunities. The marketing group supposedly supplies the sales group with a long list of potential customers, which the sales reps contact en masse, hoping to generate new business. However, the success rate of such prospecting blitzes is typically quite poor, because neither the marketing group nor the sales group has determined whether the list contains real prospects who actually might buy something.
This kind of “shotgun” prospecting not only generates few sales, but also it creates major morale problems among the sales reps.
When reps working such a list encounter “prospect” after “prospect” without making a sale, it’s easy for them to start questioning their professional skills, even questioning whether the product or service they’re selling is up to snuff. The emotional grind of failure after failure is why many sales reps would rather avoid prospecting for new customers.
Ironically, prospecting can be a positive experience, but only if the marketing team and the sales team, under the leadership of sales management, begins to think about prospecting as a process of elimination rather than opening a floodgate. The key to doing this is to reduce the list of prospective customers to those most likely to be converted from suspects to prospects and ultimately to real, live customers.
Research shows that, on average, prospective customer lists have a 10 to 1 ratio of “suspects” to actual prospects, and that, on average, of those prospects, only one in three will buy. This means that the average sales rep in the average prospecting blitz will need to contact 30 “suspects” before landing a real customer. However, with better research and customer targeting, it’s possible to tune a prospect list so that the ratio of suspects to prospects is 7 to 1 or even 5 to 1. Similarly, sales research and a better understanding of a more limited target market can help increase the hit rate of the sales effort to 1 in 2, rather than the more common 1 in 3. Do the math. The lower ratio of suspects to prospects and prospects to customers means that the average sales rep need call on only 10 suspects before landing a customer.
In other words, the sales rep with a targeted list can be up to three times more productive than the sales rep with a “floodgate” list. Just as important, the higher hit rate that results from the targeted list makes it far less likely that sales reps will get discouraged. Because there are more wins, each sales rep feels more like a winner, which in turn creates more success for both the individual and the entire team.
How to Prepare for Successful Prospecting
There are six steps to prepare for a highly productive prospecting blitz:
Define your target industries. With any product there is a natural set of industries that are most likely to need that product. However, different industries are always at different points in their buying cycles and their reactions to large economic issues. Winnow down your target industries to the ones that both have money to spend and are likely to spend it on your product or services. The result should be one or two industries. If the number is greater than two, continue to eliminate industries.
Define your target job titles. With any product there is a natural buyer who is the most likely to make a purchasing decision or to have a major influence on a purchase. In many cases, these natural buyers and influencers will have specific titles and positions within organizations inside the target industry. Winnow down your target job titles so that the people with those titles are the ones who have the ability to purchase (or greatly influence the purchase of) your product or service. The result should be one to three job titles. If the number is greater than that, continue to eliminate job titles.
Create a suspect list. If you already have a list of suspects, delete everyone who is not in the target industry and/or does not have the target title. If you do not already have a list of suspects, purchase one that fits the demographic of your target industry and target job titles. The goal is to generate a limited, finely targeted list that contains a high percentage of suspects who have the potential to become real prospects.
Craft an emotional message. Put yourself in the shoes of the typical suspect on your list. Based upon your understanding of the target industries and the target job title, determine the type of problem that keeps the suspect awake at night but which your product can help solve. Craft a message that generalizes that fear in such a way that, hearing it, a suspect would be more likely to realize that he or she is a prospect. These messages will, of course, vary greatly under individual circumstances, but here are some examples of effective, emotion-focused messages: “What would happen to your clients if there were a massive, regional power shortage?” “Would your CFO be happy if you eliminate unnecessary screw attachments and saved a million dollars in manufacturing cost?” “Could your company survive, if your competitors hired us to make them more productive?”
Reality check the suspect list and the message. Call several individuals on the list to confirm that your premises are correct. Confirm that the targeted individuals inside the targeted industries are actually the people whom your salespeople should be calling and that the chosen messages are effective. If there’s a disconnect, reexamine your assumptions and return to Step 1.
Lay the groundwork. Get your carefully crafted message in front of the suspects at least two and preferably three times before actually making any prospecting sales calls. The message can be communicated via email, letter, mailer, advertisement, trade show presentation, etc., but you should never ask sales reps to make cold calls unless you’ve primed the suspects to be receptive to the calls. Laying the groundwork makes it far more likely that suspects will be at least lukewarm to sales reps when they actually call.
How to Prospect
Once you’ve completed the above steps, you’re ready to set your sales reps to work. It’s essential to continually monitor the prospecting effort to determine whether an appropriate number of suspects are converting into customers. One way to do this is to customize your CRM system to track the prospecting effort and provide daily or weekly progress reports.
Remember, your target is to have every 10 suspects generate at least one actual paying customer. If you don’t achieve this ratio, then you should consider making midcourse corrections. In most cases, the problem will lie in your list, which probably hasn’t been winnowed down far enough. Fine-tuning your target will correct the problem.
If you still don’t achieve an appropriate ratio, you’ll need to do additional research to retarget your list and to confirm that your messaging works. There also might be a problem with the way that the sales team is executing the prospecting effort. You might want to accompany some sales reps (or listen in) to determine how the prospecting hit rate might be increased.
In summary, prospecting is not a formless, brute-force activity that wears sales reps into the ground, but a well-defined process of elimination, followed by a strong messaging campaign. It is then executed by motivated sales reps who, due to the quality of the advance preparation, are able to achieve a high win rate.
Questions and Answers
Q: I’ve got a list of 2,500 potential customers. Why can’t I just call all of them?
A: You are falling into the error of thinking that volume equals sales. The true equation is that good volume equals good sales. If you go after a broad range of suspects without winnowing down the list, you’re wasting valuable sales resources.
Q: If I limit my prospecting to my target industries and job titles, won’t I miss some potential customers?
A: Of course. The problem is that, if you go outside your target, you’ll end up wading through 100 nonprospects before you find one or two customers. It’s a matter of putting your energy and resources into the areas where you’re most likely to receive the highest hit rate.
Q: What about strategic customers who aren’t in the target list?
A: Prospecting should never be dogmatic. If you’ve identified a few customers who don’t match your criteria but whom it would be valuable for your firm to have as customers, don’t hesitate to go after them. However, don’t use a list of so-called strategic customers as an excuse to reinsert large numbers of nontargeted companies into your list.
Quick Tips for Your Next Sales Meeting
1) In prospecting, preparation is as important as execution.
2) The more precise the target, the better the list of suspects.
3) When cold calling, messages that appeal to strong emotions work best.
4) Expose suspects to your message three times before calling.
5) Constantly measure the effectiveness of the prospecting effort.
6) Make corrections as necessary.
- Prosell offers a program that combines sales training and sales coaching. It is based on recognised research, which tells us that training alone has limited impact and that when supported by skilful coaching, has 74% more chance of being implemented.
- Prosell has resources to deliver these programs across Australia, covering Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra.