Prospecting 101: What It Is, What It Isn't, and How to Get Started
"Prospecting – find the man with the problem." — Benjamin Friedman
And we can't agree more!
Prospecting is the stepping stone of a sales process that focuses on identifying prospects, AKA potential customers. It is the method of developing a repository of credible leads and communicating with them in hopes of turning prospects into customers.
In Prospecting 101, we'll discuss what is prospecting and how to get started to maximize conversion rates for your business. Let's dive in.
What is Prospecting in Sales? A Brief Definition
In simple words, prospecting is the strategic process of identifying prospective buyers and communicating with them to generate sales. Sales reps prospect by engaging with qualified leads to move them through the sales funnel.
Jill Konrath, the legendary sales expert, put it this way — "Prospecting – finding the right people, at the right time, with the right message, and engaging with them personally – is the key to sales success."
Usually, sales prospecting happens through one-to-one outbound activities. For example, a B2B SDR (sales development representative) sends an email or a direct message via LinkedIn, and for B2C businesses, it's often making cold calls to qualified leads.
Prospecting is a short-term customer acquisition approach that aims to:
- Identify potential buyers who fit a company's ideal customer profile.
- Build qualified leads pipeline.
- Initiate a relationship and build trust among potential customers.
- Increase brand awareness and market share.
- Expand the customer base and drive revenue growth.
- Maintain a competitive edge by staying ahead of industry trends and customer needs.
Who Exactly is a Prospect? Difference Between Leads and Prospects
By now, you must be thinking, who is a prospect anyway? And what is the difference between prospects and leads?
Leads and prospects are both potential customers, and the terms are often used interchangeably. However, there are a few key differences.
1. Level of Qualification
A lead shows some level of interest in a company's offerings by providing their contact information through a website opt-in form or other lead gen methods. In comparison, a prospect fits a company's ideal customer profile (ICP) but has not yet expressed interest or engagement with the company's product or service.
Both leads and prospects are crucial for sales pipeline building of potential customers, but prospects usually have a higher conversion rate as they already align with the company's ICP.
2. Level of Engagement
This is another key difference between leads and prospects. Usually, a lead requests to be contacted by the company. So there's no engagement other than providing their contact information.
On the other hand, prospects may have already communicated with an SDR, initiating a possibility for two-way communication.
It means when leads are gathered and communicated through sales reps, they become prospects.
A customer is a prospect that spent money on your offerings.
What is the Importance of Quality Prospecting?
Prospecting involves a lot more difficulties than generating leads. Without a clear understanding of who your target audience is and a lack of well-researched buyer personas, it's hard to see results through prospecting.
When done right, prospecting can help you with the following:
1. Improved Targeting
Successful prospecting offers full control over lead sources and lead collection, enabling you to decide which platforms and sources to target. Moreover, it helps in qualifying leads with the highest potential lifetime value based on the ICP and buyer personas.
2. Higher Conversions
With targeted prospecting comes higher conversion rates. If you can pick leads carefully, even cold outbound leads can generate higher conversions than warm leads. Pay attention to your targeting – focus on quality over quantity for building mailing lists. .
3. Increased ROI
Did you know almost 40% of SDRs believe that optimized lead generation is crucial for highly-targeted prospecting? Strategic prospecting with the use of an affordable and high-quality prospecting tool, you can increase your company's ROI.
4. Faster Replacement of Churned Customers
Customer churn is a natural phenomenon for any business. However, it's important to grow the customer base constantly to make up for it. Prospecting helps you to fill the sales funnel with a consistent flow of leads to compensate for the churn and grow the customer base.
Effective Prospecting Methods for B2B and B2C Companies in 2023
There are numerous sales prospecting methods to identify new prospects or warm up cold leads. Some of the most popular and effective ones are:
1. Cold Call: Often termed as sales calls, cold calling is one of the most effective prospecting channels for B2C conversations through phone calls with potential customers.
2. Cold Email: Sales email, popularly known as cold email, is the best prospecting channel for B2B outbound prospecting, with an average open rate of 44%.
3. Direct Mail: Although it seems similar to cold emailing, direct mail is used to send catalogs, flyers, postcards, etc., to turn potential customers into becoming revenue-generating customers.
4. LinkedIn Groups: Mostly used for building brand awareness, LinkedIn groups also help in establishing sales managers and sales professionals as authority figures in specific industries and engaging with existing members to get new customers.
5. Facebook Groups: The operation of Facebook groups is similar to LinkedIn groups. Although most Facebook groups have strict policies against branding and promotion, if you offer value and establish yourself as an expert, these groups are great for acquiring leads.
6. Automated Voicemail Messages: These calls are auto-generated voicemail messages to try to get the receiver to take actions such as visiting a website, booking a demo call, etc.
7. Inbound Prospecting: This method attracts potential customers through SEO, content marketing, and other means of inbound marketing campaigns.
8. Referrals: Referrals are an excellent way of obtaining leads from business partners, satisfied current customers, and other sources.
A Step-By-Step Guide for Effective Sales Prospecting
1. Define the ICP
Business organizations with a well-researched ideal customer profile generate 68% higher account win rates. An ICP gives you an idea of whether the lead your sales team is reaching is likely to buy the product (or service) or not.
Carry out market research, keep a close eye on your competitors, and based on existing customer data, create an ICP that gives you a better understanding of your prospects. Make sure you rephrase and update your ICP every quarter to stay up to date
2. Do Your Research
Once you create the ICP of your company, now is the time to delve into researching your prospects. Finding out relevant information about your prospects' pain points and buying intentions better will help you connect with them effectively.
You can conduct your research through LinkedIn data to make sure your prospects meet the criteria of the ICP. For example, check if the prospects are already using your competitor's service or use behavioral targeting to increase conversions.
3. Understand Prospect's Company Structure
This is one of the most important yet underrated tactics for B2B prospecting. If you want to close a deal successfully in a B2B space, you need to reach out to different levels of people in the same company to increase the chances of conversions.
So, it's extremely important to understand the different layers in a prospecting company and who reports to whom. For example, you can first contact junior or middle management to get a comprehensive idea of their pain points so you can tailor your sales pitch for key decision-makers, usually sales leaders.
This formula is used mostly in enterprise selling but can be used for medium-scale businesses as well.
4. Set Clear Goals
Having a defined sales goal helps you prepare for the crucial steps to achieve the metric. A defined goal doesn't always have to be closing a deal; it can be scheduling a 10-minute call or booking a sales meeting.
Suppose you are reaching a cold prospect; your goal should be to carry on conversations to build trust in your company rather than pushing for closing the deal. So, set clear goals of what you want to achieve by prospecting to upscale the entire sales cycle.
5. Find Your Prospects' Pain Points
It's important to understand your prospects' pain points during a discovery call. Ask questions and note down the problems they are looking for solutions to. You may also ask if they are seeing any noticeable change in their metrics and how they think they can change it.
The key to winning over a prospect over a discovery call is to listen. You may subtly present the sales pitch but don't be pushy.
This way, you understand your prospects' pain points and pitch in your solutions to drive sales.
6. Use Sales Triggers
Sales triggers are situations that give you opportunities to contact prospects, such as funding for a company or a prospect's promotion, mergers & acquisitions, etc. The
trick to using sales triggers is to identify the right opportunities.
So, how do you do it?
Manually tracking your prospects to find sales triggers is time-consuming and not scalable. So, we suggest you use a sales prospecting tool with event sales triggers to find out the right opportunities.
Once you do, you can communicate with prospects better, drive sales, and increase conversion rates down the funnel.
7. Focus on Personal Branding
Interestingly, sales reps with personal brands close 78% more sales than their peers. In the new age digital world, your prospects are scattered among various social media platforms.
So if you are not on those platforms, you are missing out on prospective customers. In an interesting Rainsalestraining.com study, it's stated that 82% of customers check out companies on lead-sourcing platforms like LinkedIn before replying.
Start by creating social media profiles on platforms where your prospects are and engage with them with useful content and newsletters. You can create a solid brand image by sharing valuable content. And once you build authority, you can pitch your prospects with your service/product.
8. Integrate All the Departments
This is a foolproof strategy for prospecting large organizations. You have to talk to many different leads from different departments, such as engineering, sales, legal, etc.
The trick to selling to a large organization is to get them approved of your offer even before the demo call or product demonstration.
You might be thinking, how can you do it?
Well, research every department you are reaching out to and create personalized outreach pitches for each of the departments based on your ICP and buyer personas. You can also customize cold email templates with little customization.
9. Evaluate Your Feedback
Although last, this is a very important step in the sales prospecting process because it gives you an idea of which tactics offer you the best results (meeting bookings, conversions, and other KPIs).
It will help you analyze your mistakes, optimize your prospecting efforts, and redefine your ICP based on your findings.
How to Measure the Success of Prospecting?
Sales prospecting metrics for sales reps change based on the company's intention and the primary goal of prospecting. Here are some KPIs for measuring your outbound prospecting success:
- Activity Metrics: Dials per day, time on the phone, emails per day, etc.
- Result-Centric Metrics: Number of SQLs generated, number of meetings booked, number of AE meetings booked, etc.
Effective Prospecting for Sales Reps: Key Takeaways
- Define your target audience: Identify the characteristics of your prospects, such as their industry, job title, location, budget, etc.
- Use multiple channels: Don't rely on just one communication channel for prospecting. Use a mix of email, social media, phone, and in-person meetings.
- Personalize your outreach: Avoid generic, mass emails and messages. Take the time to research your prospects and tailor your outreach to their specific needs.
- Leverage social media channels: Use LinkedIn and other social media platforms (Twitter, Facebook, Instagram, etc.) to connect with prospects, share content, and build relationships.
- Follow up consistently and know when to stop: Don't give up after one follow-up email. According to a Brevet study, 80% of successful sales require at least five follow up. It is also important to know when you need to stop pushing and give up.
- Offer real value: Provide value by sharing industry insights, helpful resources, or educational content. This can help establish your expertise and build trust among potential clients.
- Listen actively: While connecting with prospects, listen carefully to their needs and challenges. This will help you tailor your pitch and position your offering as a solution to their problems.
- Measure your success: Track your prospecting activities and measure your success over time. This will help you identify what's working and where you need to improve.
As you can understand, prospecting is the most crucial and toughest component of sales success. Sales prospecting techniques involve identifying and engaging with potential customers and gradually building relationships that can lead to conversions. While prospecting can seem daunting, following the above-mentioned sales prospecting tips, you can improve the efficiency and effectiveness of your prospecting efforts.
Who are called prospects?
In sales terms, prospects are potential customers who have not made a purchase but are most likely to do so in the future.
What are the types of prospecting?
There are several types of prospecting for B2B and B2C industries, such as cold calling, cold emailing, referral prospecting, sales presentation, direct mail, social media prospecting, inbound leads prospecting, networking, etc.
Sattwik is a Digital Marketing professional at SmartLead. He is a dedicated content writer who focuses on juggling words to bring out meaningful content. He is experienced in well-researched and SEO-optimized content creation, content editing, and copywriting for various businesses throughout the globe. His expertise in SEO, SMM, and SMO with a touch of creativity helps businesses grow and maximize their credibility and sales.