Prospecting - the first step in Advanced Successful Selling.
Once you know your target market, the very first step is prospecting. There are so many types of prospecting - a good sales letter, a brochure hand outs, direct mail, cold calling, networking, eyeballing, newspaper advertising, notice boards ... the list goes on. Some of the above activities work better, some don't work as one would hope. Wouldn't you
How would you know where to start? I suggest starting from the beginning - what is the objective of prospecting? My answer is - to generate leads. Isn't it true that you may spend $1000 and generate 10 leads or 100 or even 1000 leads. Have you ever heard saying, that the fastest way to waste your marketing dollars is to advertise? What is the difference between spending $1000 and generating 10 leads and 100 or 1000 leads? - Marketing Knowledge.
If you are not prospecting - STOP READING NOW! Because following won't be of your interest! This article is only for someone who:
a. Wants to understand why prospecting is important in the sales process.
b. Is interested in lead generation for his/her business.
While thinking about prospecting budget, I'd urge you to consider two factors:
I. The lifetime value of your potential customer. For instance:
- if your customers will buy from you twice a year (A);
- each sale will generate $50 profit (B);
- they will be your customers for 5 years (C),
Their lifetime value to your business will be (A) x (B) x (C) = $500.
Would you agree that it is worth spending $50 to acquire and retain this client?
Now consider your prospecting budget in conjunction with conversion ratio.
Let's say that you have spent $1000 and generated 10 leads. Out of 10 only 2 bought your product or service.
Drop-drop.... oh, what is it? - Haven't you guessed it yet - these are your budget tears dropping out of your bank statement. "Don't cry", you say," advertising is the best way to waste my money. The best advertising there is - word of mouth... I'd rather sit and wait when the enquiries will roll in and hopefully I will convert them into sales".
25 years later... I'm 64 and it is the time to retire ( I actually was going to retire much earlier at 45, but this is another story!), hopefully I can sell the business for a decent amount of money. "Ms. Accountant, what is the value of my business?" - "Well, how many customers do you have" - "Hmmm... during 20 years waiting for the <word of mouth> to work I can proudly report that I have acquired 239 customers who stayed with me that long".
- "Ok then", your accountant goes, "Let's consider your yearly turnover multiplied by 2 years, plus sum of depreciated assets".... calculates depreciation, clank-clank, "hmmmm, what else... ah that - THE GOOD WILL", clank-clank, "here we go: $55,000"
Oh no!!! Shock, desperation. "That was the result of my entire life!".
You know, to me it is not even funny - Imagine yourself being 70 and with no money to support the lifestyle you are accustomed to. Not only that - you've been paying that mortgage your entire working life. Shall we get that dusty clank-clank-da-calculator? Do you think that you've paid 3 times more then your house worth over period of 25 years? Ya bettcha.
Now let's travel from that grim future back to bright NOW. Here we have a chance to change it.
Would generating 1000 leads on $1000 budget tickle you fancy? Do you believe that it is possible to generate 1000 leads without spending a single $1? The difference is what? Marketing knowledge!
If you sell jet fighters, it is ok to spend $10,000 or even $50,000 to generate a single but very qualified lead somewhere in Africa. But if you sell widgets worth $10 each, how much could you afford to spend to acquire the lead? You see, the prospecting budget has to be relevant to what the profit on your jet fighter might be.
Recently, while speaking to my customer Gareth, who is in the automotive industry, I have uncovered his reluctance to spend on prospecting. He refused to consider the lifetime value of his customers. He wanted to see instant return on his advertising [prospecting] dollars. Who believes that this is realistic? Cross me out in that list.
It took me a while, working through different strategies with him, to convince him in necessity, of prospecting. As the result - he's on the way to acquire more leads then ever before at the fraction of the cost.
II. Your conversion ratio - this is the number of prospects converted to buying customers
Acquiring the leads is a very first step. From the very moment, when they first called you or you have approached them, they become your prospects. Now you need to have a system to convert them from prospects to customers. As we progress through the sales process, I will cover this process in more details.
Let me ask you this question: Would you concentrate on prospecting the people, who actually want to buy your services or products? Or are you happy to spend money on promoting your business name or brand? Do you think that I, as a customer, care what your business's name is?
Let me be honest with you - highly unlikely! My [lead's] inflamed brain is cluttered with messages that I don't want from all sorts of "prospectors". Guess what I have now - immunity to advertising and prospecting.
"Good evening Sir, our company conducting short research of consum..." - SLAM! - goes down the phone.
Knock-knock - wide rubber smile at the door - "Good morning Ma'am, we'd like to offer you revolutionary..." - KABOOM! said the closing door.
"Can I offer you fr..." - NO THANK YOU! - you voting with your back.
Whew-whew - direct mail letters hitting the polished sides of your rubbish bin. I think you've got the idea by now.
How would you make your advertising and prospecting stand out? The answer is again - Marketing Knowledge!
Do you think Steve Tindall does his own accounts? No - he hires the best specialists in the area. Does Graeme Hart hire the best legal people to look after his affairs - you bet he does!
The message is simple: leverage your knowledge and you will be David [that beat Goliath] of your business. If you don't know this story - read it here. NOTE: I have no affiliation with any church and this letter has nothing to do with any religion but ethical and spiritual marketing.
If you’d like to learn more on how to apply these strategies - go here now.
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