Manage Prospects Like They're Money In The Bank
To a salesperson, there are three kinds of people in the world:1. Suspects
2. Prospects
3. Customers
Separating customers from the first two is easy: Customers write checks - suspects and prospects don't.
A prospect is someone who has a need for your product or service. A suspect is virtually everyone else. A suspect is a name on a list. The phone book, for example, is a list of suspects. A prospect is someone about whom you know enough to determine that they use what you have to sell.
If a person or company has done business with you before, you think of them as a customer. That's fine, but don't ever forget that your customers continue to have many vendor options. And never in the history of the marketplace have our "customers" had so many vendor options.
Which is why, in my strict definition of the three groups, no one is a customer until the moment they either, say "I'll take it", sign a contract, or write you a check. Even current customers revert to prospect status during a new selling process.
What I am going to tell you now is what I consider to be one of the natural laws of the marketplace:
Orders come from customers.
Customers come from prospects.
Prospects come from suspects.
Defy this law at your own peril! Write it down and tape it on your morning mirror so you don't forget it. Or you might even want to tattoo this law on the back of your hand. (If you already have a tattoo there, the inside of your forearm will work fine.)
Qualify, Qualify
Referring to a philosophy of life, one of the great 19th century writers and thinkers, Henry David Thoreau once said, "Simplify, simplify". If Thoreau had been in sales, I think he might have said, "Qualify, qualify".
Someone doesn't become a prospect until you qualify them. Before that they are just suspects. If you are spending time with suspects without qualifying them to find out if they can become prospects, you are not selling, you're visiting. Save your visits for your grandmother.
If you are trying to close a suspect before either one of you knows if you have a basis for doing business, you are wasting everybody's time, and have an excellent chance of annoying the suspect to the point where they will never do business with you.
If you are telling your manager, or yourself (if you are the management), that someone is a prospect when they are actually still a suspect, at that moment you are as much of an impediment to success for you and your company as any one of your competitors. Unless you have qualified your suspects enough to determine that they are prospects, don't fool yourself or your company into believing a sale is forthcoming.
Never place a suspect on your prospect list until you have qualified them as a prospect. How do you qualify a suspect? Effective probing, identifying needs, finding areas of dissatisfaction, and trial closes.
Prospect Management
Once you have moved a suspect into the prospect category, put them on your prospect list. You do have a prospect list, don't you? And don't forget: No suspects on the prospect list. Suspects go on the suspect list.
Your prospect list is one of the most important tools in your business. You should know it like the back of your hand (the other hand, not the one with the tattoo). You should spend time every day going over your prospect list, trying to think of ways to move your prospects further along in the selling cycle.
Practically speaking, your prospect list is just as much an asset of your company as any asset on your balance sheet. An asset is something someone paid cash to acquire. So when you consider how much cash it takes to put a salesperson in the field, qualified prospects on your prospect list are indeed an asset, and you should regard them as such.
If you don't have a prospect development form or system, develop one around these guidelines:
• Prospect's name, address and phone number
• Decision maker's name
• Time of last contact and proposed next contact
• Proposal delivery date
• Other steps, such as a demonstration, trial, etc.
• Projected close date
• Comments
• __(Your idea here)__
A well managed prospect list is not a static collection of information. It's just like the selling cycle: evolving and progressive; constantly changing. Print your prospect list on heavy stock and fill it out in pencil so you can update information as you move the prospect along in the selling cycle.
Depending on your industry's selling cycle, you should create a new prospect list often - usually once a month. On the new one, add new prospects, remove those you sold, as well as those who turned out not to be prospects after all (see "china eggs" below). Plus make general notes on your progress with each prospect.
Businesses manage employees, cash, inventory, vehicles, real estate, etc. Make sure you add prospects to your list of things to manage. By managing your prospects, you can improve your chances of not only getting the business, but of getting it sooner. Which brings us to...
Sales Forecasting
All businesses must be able to forecast where the next sales are coming from, and when. Sales forecasting helps you understand how you are going to meet your operating goals, both in terms of revenue, as well as in production and/or inventory management.
In order to forecast sales you have to know where you are in the selling cycle with each prospect. The selling cycle is the time between when you have qualified a prospect, and when they will make a purchase. Using effective probing and closing techniques, you should actually be able to determine when each prospect will be ready to take delivery, even before you know whether you're the one who's going to make that delivery.
Some selling cycles are short. In point-of-purchase retail, let's say we're selling socks, it can take only a couple of minutes to go from suspect to prospect to customer. At the other extreme, I once knew a man who sold battleships. His selling cycle could be up to 10 years.
Unless you are in P.O.P. retail, once you have qualified a suspect into a prospect, you must further qualify them into at least three time categories. For example:
• 30 Day business
• 90 Day business
• Longer
How do you do this? Ask! Or better yet, use a trial close.
You: "Ms. Jones, based on what you've told me, in order to make sure you can keep your production schedule, I will need to have my widgets on your dock by the 15th of next month. Isn't that about right?"
Ms. Jones: "Well, you're half right. I will need widgets on my dock by the 15th, alright. But whose widgets is still to be determined."
Now you know three things: Ms. Jones is a solid gold prospect, she's shopping, and she's somebody's 30 day business.
Accelerating The Selling Cycle
When the sales forecast by the sales department doesn't meet the goals of the company, adjustments are made. Usually, the sales department makes the adjustments, not the company. Therefore, it's quite common for a salesperson to be asked which prospects' selling cycle can be accelerated. This conversations can have three endings:
1. You can assume the "deer in the headlights" look. Not a good career move.
2. You can admit that you have done a poor job of qualifying your prospects, and therefore, have no idea when anyone is going to buy. Also professionally fatal.
3. Or, since you are a professional salesperson, you can talk intelligently about where each prospect is in the selling cycle, giving management a percentage for the likelihood that a prospect will do business with you. "I think I know how we can move ACME's decision up about two weeks. I would give us a 75% chance of making that happen."
Armed with this extremely valuable information, you and your company can now take steps to try to accelerate the selling cycle of selected prospects, and meet the company's goals.
Now you can see the value in qualifying prospects into time categories. You are not likely to get a 12 month prospect to do business with you in the next 30 days, but you might be able to get a 90 day prospect to do it. If you know where each prospect is in the selling cycle, you won't waste time on those who can't buy soon enough to meet your accelerated sales goals.
The China Egg
If you remove all the eggs from a hen's nest, she will quit laying. Hens lay eggs to make little chickens, not for your breakfast. For centuries farmers have put china eggs in a hen's nest to trick her into laying eggs for human consumption. The chicken can't tell a china egg from a real one, but the farmer can.
Farmers also know something else about china eggs: They will never hatch.
What does this have to do with prospect management? Some prospects are like china eggs - they will never hatch. Be careful not to sit on a china egg too long. Learn to identify the china eggs on your prospect list. China eggs will cost you valuable time and resources, and make you unproductive. When you identify a china egg, cross them off your prospect list and move on. Tell them to give you a call when they're ready to place an order.
Write this on a rock... Inventory, machinery, real estate, vehicles and prospects have one very important thing in common: All are assets you paid cash for. Managing your prospects is as important as doing maintenance on equipment, managing inventory, or collecting accounts receivable. And don't ever forget that natural law: Orders from customers; customers from prospects; prospects from suspects.
