Stephen B. Castleberry | John F. Tanner Jr. Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. CHAPTER 6 PROSPECTING

LEARNING OBJECTIVES Why is prospecting important for effective selling? Are all sales leads good prospects? What are the characteristics of a qualified prospect? How can prospects be identified? How can social media be used? How can the organization’s promotional program be used in prospecting? 6-2

LEARNING OBJECTIVES How can an effective lead qualification and management system aid a salesperson? How can a salesperson overcome a reluctance to prospect? 6-3

PROSPECTING Locating potential customers for a product or service Finding new customers to replace those who: Switch to competitors Go bankrupt Move out of the territory Merge with noncustomers Decide to do without a product or service 6-4

CHARACTERISTICS OF A GOOD PROSPECT Sales funnel Prospect : Good candidate for making a sale Qualify the lead : Determine whether a lead is in fact a prospect Lead : Potential prospect that may or may not have what it takes to be a true prospect 6-5

EXHIBIT THE SALES FUNNEL 6-6

CHARACTERISTICS OF A GOOD PROSPECT Existence of want or need Ability to pay Authority to buy Ability to pay Availability of resources to pay 6-7

CHARACTERISTICS OF A GOOD PROSPECT Authority to buy Saves the salesperson time and effort Results in a higher percentage of closed sales Systems integrators: Have the authority to buy products and services on behalf of the delegating firm Favorable approachability Accessibility of leads 6-8

CHARACTERISTICS OF A GOOD PROSPECT Eligibility to buy Determining factors Volume Geographic location Exclusive sales territories : Particular salesperson can sell only to certain prospects House accounts: Large customers that are handled exclusively by corporate executives 6-9

CHARACTERISTICS OF A GOOD PROSPECT Other criteria Timing of the purchase Long-term customer potential Insight selling: Evaluating prospects who do not necessarily have a clear understanding of what they need but make quick decisions 6-10

OVERVIEW OF COMMON SOURCES OF LEADS SourceHow Used Satisfied customers Current and previous customers are contacted for additional business and leads Endless chainAttempt to secure at least one additional lead from each person he or she interviews NetworkingUsing personal relationships with those who are connected and cooperative to secure leads Center of influence Cultivating well-known, influential people in the territory who are willing to supply lead information Social mediaUsing online tools like LinkedIn, Facebook, and Twitter to prospect for new customers and maintain contact with existing customers 6-11

OVERVIEW OF COMMON SOURCES OF LEADS SourceHow Used Other Internet usesUsing Web sites, , bulletin boards, forums, roundtables, and newsgroups to secure leads Ads, direct mail, catalogs, and publicity Using use these forms of promotional activities to generate leads Shows, fairs, and merchandise markets Using trade shows, conventions, fairs, and merchandise markets for lead generation Webinars and seminars Using seminars and online webinars to generate leads Lists and directoriesUsing secondary data sources, which can be free or fee-based 6-12

OVERVIEW OF COMMON SOURCES OF LEADS SourceHow Used Data bases and data mining Using sophisticated data analysis software and the company’s databases to generate leads Cold callingTrying to generate leads by calling on totally unfamiliar organizations SpottersPaying someone for lead information TelemarketingUsing phone and/or telemarketing staff to generate leads Sales lettersWriting personal letters to potential leads Other sourcesUsing noncompeting salespeople, people in his or her own firm, friends, and so on to secure information 6-13

SATISFIED CUSTOMERS Customer referral value : Monetary value of the referrals and the costs to get and maintain the referrals Promoters : Loyal customers who keep buying and urge their friends and associates to do the same Referral events : Gatherings designed to allow current customers to introduce prospects to the salesperson 6-14

SATISFIED CUSTOMERS Referred lead : Lead provided by either a customer or a prospect Selling deeper : Additional sales to satisfied customers who provide leads Negative referral : Tells others about how poorly you or your product performed 6-15

ENDLESS-CHAIN METHOD Getting one additional lead from each person interviewed Works best when the source is a satisfied customer and partner 6-16

EXHIBIT EXAMPLE OF THE ENDLESS- CHAIN METHOD OF PROSPECTING 6-17

NETWORKING Utilization of personal relationships by connected and cooperating individuals for the purpose of achieving goals Establishing connections to other people and then using those networks to: Generate leads Gather information Generate sales 6-18

PRACTICAL SUGGESTIONS FOR NETWORKING Regularly call prospects and attend social events Mingle at events and learn about prospect’s business and nonbusiness interests Follow up with new contacts on a regular basis and thank people for providing leads 6-19

PRACTICAL SUGGESTIONS FOR NETWORKING Send networking contact lead information and circulate business cards Monitor networking and join Business Network International Prepare to introduce yourself in social settings 6-20

NETWORKING Center-of-influence method: Cultivating a relationship with well-known, influential people in the territory to get the names of leads Buying community: Small, informal group of people in similar positions who communicate regularly 6-21

SOCIAL MEDIA Technological component of the communication and relationship building functions of a business Leverages the network of customers and prospects to promote value co-creation Approach for using social media, should involve either a push or a pull strategy 6-22

OTHER INTERNET USES Using websites, , listservs, bulletin boards, forums, roundtables, and newsgroups to secure leads Extranets: Internet sites that are customized for specific target markets 6-23

SHOWS, FAIRS, AND MERCHANDISE MARKETS Trade shows: Short, temporary exhibitions of products by manufacturers and resellers Trade fairs: Trade shows in Europe Merchandise markets: Places where suppliers have sales offices and buyers from resellers visit to purchase merchandise 6-24

WEBINARS AND SEMINARS Webinars: Online seminars Key considerations for planning Appeal to a specialized market Invite good prospects Subject should have strong interest Go high-quality Be involved before, during, and after 6-25

LISTS AND DIRECTORIES Secondary data sources, which can be free or fee-based Uniform classification for all countries in North America, when researching using secondary sources Standard industrial classification (SIC) code North America industry classification system (NAICS) 6-26

LISTS AND DIRECTORIES Following can be purchased: Prospecting directories Lead-generating publications Mailing lists 6-27

DATABASES AND DATA MINING Databases: Contain information about: Leads Prospects Customers Data mining: Artificial intelligence and statistical tools Discovers insights hidden in the volumes of data in their databases 6-28

COLD CALLING Cold canvass method: Generating leads for new business by calling on totally unfamiliar organizations Blitz: Call all prospective businesses in a given geographical territory on a specified day 6-29

SPOTTERS Individuals provide leads for the salesperson Called bird dogs Charge fee Find out when someone is ready to make a purchase decision 6-30

TELEMARKETING Systematic and continuous program of communicating with customers and prospects via telephone Outbound telemarketing: Telephones are used to generate and then qualify leads Inbound telemarketing: uses a telephone number that leads and customers can call for additional information 6-31

BECOMING AN EXPERT Becoming recognized experts in their own field resulting in prospects seeking information from them Public speaking Speeches at industry conventions Luncheons and dinners hosted by prospects and industry representatives Writing journal articles 6-32

WRITING A SALES LETTER Consider the objective of any written communicationOpening paragraph must grab the reader’s attention Considers why the reader would and would not want to take the desired action Increase credibilitySeek commitmentUse post scriptCheck for grammar and spellings 6-33

OTHER SOURCES OF LEADS Personal observation Nonsales employees within the salesperson’s firm Government agencies Clubs Other salespeople Trade associations Volunteer activities 6-34

LEAD QUALIFICATION AND MANAGEMENT SYSTEMS Lead qualification system : Process for qualifying leads To help salespeople use their time wisely To increase the number of leads that sellers actually follow up with Prequalification : Can be purchased or created Evaluate profitability of sales resulting from lead- generating activities Lead Management System : Analyzing relative value of each lead 6-35

OVERCOMING A RELUCTANCE TO PROSPECT Reasons for reluctance Worrying about worst-case scenarios Spending too much time preparing Being overly concerned with looking successful Being fearful Feeling intimidated by people with prestige or power or feeling guilt at having a career in selling Having a compulsive need to argue, make excuses, or blame others 6-36

OVERCOMING A RELUCTANCE TO PROSPECT Identify and evaluate excuses not to call Engage in sales training and role-playing activities Prospecting contacts to be made with a supporting partner or sales manager Set specific goals for prospecting activities, considering their economic value 6-37

OVERCOMING A RELUCTANCE TO PROSPECT Stop negative self-evaluation Call on prospects to solve their needs Control your perceptions of what prospects might say Learn and apply relaxation and stress-reducing techniques Consider prospecting successes 6-38