HOW TO CREATE EFFECTIVE PROGRAMS TO IDENTIFY PROSPECTIVE CUSTOMERS (PART 1)
The greater the demand is for your company’s products, the less effort your company will need to make to find new customers. But if your company has just started to do business, or if its products are new or rely on new technologies, your company may need to invest a substantial amount of its marketing resources to identify prospective customers and to qualify their needs and concerns.
In the past, a company’s primary marketing tools were media advertising, direct mail advertising, telephone selling, trade shows, and face-to-face selling. Today, other marketing tools such as demonstration centers, catalogue selling, and the Internet, can be used to help your company achieve total marketing domination.
Step 1: Evaluate the prospective methods that your company is using to generate leads
In most selling situations, your company will need to employ both direct prospecting methods, such as advertising, direct mail, telemarketing, cold calls, and trade shows, and indirect prospecting methods, such as referrals, batter arrangements, seminars, and networking with business contacts, to identify qualified prospects.
Every company strives to use the most effective prospecting method to identify qualified prospects for their products. But the best way to identify new customers depends on a constellation of factors:
- Number of prospects in your territory
- Geographical distribution of prospects
- Type of products or services being marketed
- Your company’s market position and strategy
- Marketing budget
- Number of capabilities of sales and support personnel
- Outside marketing resources
- Competitors’ marketing strategies
- Joint marketing opportunities
Choosing a Winning Strategy
When you are deciding between investing your time and marketing resources in two different prospecting activities, such as direct mail and telemarketing, there are four questions that you should try to answer about each prospecting opportunity:
- Will the prospecting activity enable me to communicate with my targeted marketing opportunities?
- How much will the prospecting activity cost in terms of time and money?
- What is my best estimate of the number of leads that the prospecting activity will generate?
- Based on prior experience, what is the likelihood of closing the leads that are generated?
Know Your Customers
The more information you have about your customers’ purchase process, the easier it will be for you to select prospecting tools that that will enable you to communicate your marketing story as efficiently and inexpensively as possible. Your company can construct a simple decision table to help it evaluate the pros and cons of each prospecting activity that it is considering using. Then your company can use its decision table to help it select the prospecting activity that has the best chance of generating the number of qualified prospects that it will need to meet its sales objectives at the lowest cost per head.
The cost of generating a lead must be weighed against the quality of the leads generated with each prospecting activity. For example, a telemarketing lead is often much better qualified than a lead generated from an advertisement in a magazine.
The most objective way to evaluate the effectiveness of different prospecting activities is to track the number of leads that each activity generates, and then to track how many of those lead result in a new business for your company. Investigating where the most successful companies in your market are spending their marketing resources can help your company identify profitable marketing activities and avoid strategies that have not been proven themselves in your market.
The Prospecting Funnel
If the number of prospects for your product is very small, your company can spend more time qualifying each prospect than if it has a very large number of prospects to work with. For example, if your company has a very large number of prospects, it will need to qualify its prospects using a technique, such as telemarketing, that enables its salespeople to prioritize its prospects’ interests quickly and inexpensively. But if your company has very few prospects to work with, it may make some sense for its sales representatives to make one-on-one sales calls.
Prospecting techniques that have proved to be cost-effective usually continue to be a cost-effective way to generate new leads until one or more key market factors changes and impacts your customers’ purchase process. This is why magazine subscription brokers have used their “You may have won a million dollar!” direct mail campaigns to sell magazine subscriptions for the last fifty years. The formula continues to work because many people like to enter sweepstakes, wish they could get something for free, and are just as anxious to renew their subscription to TV Guide as they were two or three decades ago.
Sales Formulas and Real World Results
One of the most common mistakes that companies make is assuming that they can take a sales formula, apply it to their business, and achieve a profitable outcome. Sales formula can provide insight into how a market will respond to a marketing appeal, but every assumption about your customers’ needs and concerns must be validated and verified. Depending on your selling situation, ten qualified prospects may lead to one sale, to ten sales, or to no sale at all. The most reliable sales formula that you can use is one based on market research and sales experience.
Prioritize Your Leads
Qualification means taking action
Most companies believe that their salespeople are working with every available sales lead that they have. But according to Inquiry Systems and Analysis, although 60 percent of prospects make a purchase decision within one year, over 40 percent of prospects receive information past the time of their need or purchase decision, and over 50 percent of the leads are never followed up.
Taking the time to qualify your prospects will help your company increase its revenues by enabling your sales team to focus its efforts on your company’s best prospects.
Most companies categorize prospects on the basis of how long their sales team thinks it will take to close their business. For example, your company may prioritize the prospects that your salespeople are working into three categories: “A” (hottest/best qualified/close within one week), “B” (interested/needs work/close within one or two months), and “C” (potential sale within some time frame, such as six months or one year).
Part 2 continues in the next article
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