How to determine a "qualified sales lead"?

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

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

2) An adequate budget - a qualified prospect must have 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 budget.

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

Prospecting is the first step in the complex B2B selling process. A prospect is a qualified person or business contact that has the short-term potential to buy your product or service. A prospect should not be confused with a "sales lead."

The name of a contact in a business who might be a prospect is referred to as a potential B2B sales lead. A sales lead can also be referred to as a "suspect," showing that 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, and on the other hand a "qualified sales lead" is a prospect - and there's an enormous difference between the two.

Five ways to determine good prospects

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

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

1) Define your target market very precisely. Break your market down by demographics ie geography, industry, 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 buying authority. Ask basic questions that will allow you to determine whether a prospect is ready, such as:

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

3) Ask for a “yes” or "no." Conventional wisdom 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 chances of closing a sale are slight.

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