Five ways to determine which are good prospects

All prospects are not created equal; some are more likely to turn into sales. To avoid wasting time, you need to weed out the poor prospects and concentrate your efforts on prospects who will yield a return on your investment of effort, money and resources.

The following five steps will help you distinguish good prospects from bad prospects:

1) Define your target market precisely. Break your market down by demographics ie geography, market, company employee size etc. This will enable you to focus on the prospects that match your target audience.

2) Assess need, budget and the prospect’s purchasing authority. Ask basic questions that will allow you to determine whether a prospect is ready, such as:

What's the timescale for this project?
Who else is involved in making the decision?
What's the budget for the product or service?
How will the decision be made?
Is your company ready to purchase if the right product or service is found?
If you decide that our product or service meets the need, what will the next step be?

3) Ask for a “yes” or "no." Conventional thought says that as long as the prospect hasn't said "no," then the sale is still possible. However, when it comes to rating prospects, get a decision, even if it's no. It’s better to find out sooner rather than later that the opportunities of closing a sale are slight.

4)  Evaluate the prospect's financial position. Creditworthy prospects are better than high-risk customers. Stable prospects are better than customers going through widespread changes. A company that is merging or downsizing may delay buying decisions.

5) Develop a sales lead scoring system. Rate prospects by a letter or number grade, based on the possibility of closing the sale. Concentrate on A or B prospects, and upgrade or downgrade the other prospects as circumstances change.

What is a "qualified sales lead"?

A qualified prospect is a sales lead and has three attributes:

1) A need - a highly-qualified prospect needs your product or service now or relatively soon. For example, if you sell widgets with an average lifespan of three years, a good prospect is one who owns a two-year-old widget, not a contact who bought a new one last year.

2) A sufficient budget - a qualified prospect has the budget to buy your product or service. Don't waste your time pursuing a contact who truly can't afford to buy what you're selling or a company that has used up its yearly budget.

3) The authority to buy - a good prospect has the authority and is prepared to take action. The simpler and more efficient their decision-making process is, the better your opportunity of closing the sale.

Prospecting is the first step in the complex selling process. A prospect is a qualified person or business contact that has the potential to buy your product or service. A prospect should not be confused with a "sales lead."

The name of a contact or business who might be a prospect is referred to as a potential sales lead. A sales lead can also be referred to as a "suspect," indicating the contact or business is suspected of being a prospect.

Once the lead has been "qualified," it becomes a prospect. In other words, a "sales lead" is a suspect, whereas a "qualified sales lead" is a prospect -- and there's a BIG difference between the two.