As you strive to grow your business, it’s easy to get caught up chasing every lead that comes your way. But all prospects are not created equal, and some are more likely than others to turn into sales.
To avoid wasting precious resources, you need to weed out the long shots and concentrate your efforts on those prospects who are likely to yield a return on your investment of time, money, and energy. Once you concentrate your energy on solid prospects, make sure to read The Importance of Sales Follow-Ups.
So, what are the key characteristics of good prospects? Simply put, a qualified prospect has three things:
- A need. A highly qualified prospect needs your product now or relatively soon. For example, if you sell widgets with an average lifespan of eight years, a good prospect is someone who owns a seven-year-old widget, not someone who bought a new one last year.
- A sufficient budget. A qualified prospect has the money to buy your product or service. Don’t waste time pursuing someone who truly can’t afford to buy what you sell; move on from the company that has already spent its yearly budget.
- The authority to buy. A strong prospect is empowered and prepared to take action. Moreover, the simpler and more streamlined their decision-making processes, the better your chances of closing a sale.
The following five techniques will help you to distinguish good prospects from bad prospects:
- Define your target market precisely. Break your market down by demographics, geography, industry, company size, budget, or other relevant criteria. This will let you focus on the prospects that closely match your target.
- Assess need, budget, and buying authority. Ask basic qualifying questions that will help you to determine whether a prospect is ready, willing, and able to buy:
- What’s your time frame for this project?
- Who else will be involved in making the decision?
- What’s your budget for this type of product?
- How will you make your decision?
- Are you ready to buy if you find the right product?
- If you determine that our service meets your needs, what will your next step be?
- Go for “no.” Conventional sales wisdom says that as long as a prospective customer hasn’t said no, the sale is still alive. But when it comes to rating prospects, you should push for a decision, even if it’s no. It is more productive to learn sooner rather than later when your odds of closing a sale are slim.
- Evaluate financial or business status. Creditworthy prospects are preferable to high-risk customers. And stable prospects are better than those in crisis or flux. A company that is merging, downsizing, or shifting its core business, for example, may be inclined to delay purchasing decisions.
- Develop a grading system. Based on the probability of closing a sale, rate prospects as hot, warm, lukewarm, or cold; or by a letter grade. Concentrate first and foremost on hot prospects, and upgrade or downgrade the others as their circumstances change.