© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Prospecting  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 the organization’s promotional program be used in prospecting?  How can an effective lead qualification and management system aid a salesperson?  How can a salesperson overcome a reluctance to prospect? Some questions answered in this chapter are: 7-2 CHAPTER 6 McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Many experts believe it is the most important activity a salesperson does The world is constantly changing More important in some fields than in others No salesperson can ignore leads, even in a position requiring less emphasis on new contacts 7-3 The Importance of Prospecting McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. FERRIS WHEEL CONCEPT: Sources of customer attrition Needs change due to technology One-time need for product Death of customer Customer moves Acquisitions & mergers New buyer buys from other source Business failure Relationship deteriorates

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. 7-5 Relationship Between the Steps in the Selling Process and the Designation of the “Buyer” McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Does a want or need exist? –Customers buy to satisfy practical needs as well as intangible needs Does the lead have the ability to pay? –A client is not a real prospect without resources to pay for the product –Ability to pay includes both cash and credit Does the lead have the authority to buy? –Knowing who has purchasing authority saves the salesperson time and effort and results in a higher percentage of closed sales 7-6 Characteristics of a Good Prospect McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Can the lead be approached favorably? –Possibility of getting an interview –Chances of making a sale –Ex: newbie with financial services firm trying to sell investment services to Donald Trump Is the lead eligible to buy? –Can the lead’s demand volume meet sellers minimum order. –Status – are they the type of customer the salesperson is allowed to sell to (ie. Retailer vs wholesaler) –Sales territories – exclusive territories, house accounts 7-7 Characteristics of a Good Prospect (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Prospect is good if: …has the need to purchase your product …has the ability to purchase your product …has the authority to purchase your product

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. How and Where to Obtain Prospects – Satisfied Customers Current and previous customers are contacted for additional business and leads The most effective source for leads To maximize usefulness: Make a list of potential references from among most satisfied customers Decide how each customer can help Ask for the names of leads and the specific type of help needed Keep in touch 7-9 McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved How and Where to Obtain Prospects – Satisfied Customers (continued) McGraw-Hill/Irwin Negative referral Customer who tells others about how poorly you or your product performed. Selling deeper Additional sales to satisfied customers who provide leads. Referral events Gatherings designed to allow current customers to introduce prospects to the salesperson, to generate leads.

© 2007 The McGraw-Hill Companies, Inc. All rights reserved Example: Endless-Chain Method McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Endless chain –Salesperson attempts to secure at least one additional lead from each person he or she interviews –Referred lead Networking –Salesperson uses personal relationships with those who are connected and cooperative to secure leads –Suggestions: Call at least two people per day and go to at least one networking event every week Spend most of your initial conversation with a new contact talking about his or her business and learn about the person’s nonbusiness interests Follow up with your new contact on a regular basis 7-12 How and Where to Obtain Prospects (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. NETWORKING Meet as many people as you can Tell the person what you do Do not do business while networking Offer your business card Edit contacts and follow up S-1 of 1

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Center of influence –Sales person cultivates well-known, influential people in the territory who are willing to supply lead information –Buying community –May never buy The Internet –Salesperson uses websites, , listservers, bulletin boards, forums, roundtables, and newsgroups to secure leads Ads, direct mail, catalogs, and publicity –Salespeople use these forms of promotional activities to generate leads –Postcard pack 7-14 How and Where to Obtain Prospects (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. How and Where to Obtain Prospects (continued) Shows, fairs, and merchandise markets –Salespeople use these venues for lead generation –At many tradeshows all attendees are customers –Timely follow-up of leads is critical if sales follow a show Seminars –Salespeople use seminars for prospects to generate leads –Appeal to a specialized market –Invite good prospects –Go high-quality –Be involved before, during, and after Lists and directories –Salespeople use secondary data sources, which can be free or fee-based –SICs and NAICS –Purchasing lists 7-15 McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Data mining and CRM systems –Salespeople use sophisticated data analysis software and the company’s CRM system to generate leads –Interactive databases Cold calling –Salesperson tries to generate leads by calling on totally unfamiliar organizations (in-person not on the phone) –A blitz Spotters –Salesperson pays someone for lead information –Also called bird dogs 7-16 How and Where to Obtain Prospects (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. How and Where to Obtain Prospects (continued) Telemarketing –Salesperson uses phone and/or telemarketing staff to generate leads –Outbound vs. inbound telemarketing Sales letters –Salesperson writes personal letters to potential leads –Follow up with a telephone call –Include promotional items Other sources of leads –Salesperson uses noncompeting salespeople, people in his or her own firm, friends, and so on, to secure information –Government agencies 7-17 McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Prequalification Analyzing lead value Evaluating profitability of sales resulting from lead-generating activities 7-18 Lead Qualification and Management Systems McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Reasons for reluctance: –Spending too much time preparing –Being overly concerned with looking successful –Being fearful of: Making group presentations Appearing too pushy Losing friends or family approval Using the phone for prospecting 7-19 Overcoming a Reluctance to Prospect McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. –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 7-20 Overcoming a Reluctance to Prospect (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Helpful activities: –Identify and evaluate excuses not to call –Engage in sales training and role-playing activities –Make prospecting contacts with a supporting partner or sales manager –Set specific goals for all of your prospecting activity –Realize the economic value of most prospecting activities 7-21 Overcoming a Reluctance to Prospect (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Helpful activities (continued): –Stop negative self-evaluation from ruling your behavior –Remember that you are calling on prospects to solve their needs –Control your perceptions of what prospects might say about you, your company, or your products –Learn and apply relaxation and stress-reducing techniques –Recount your own prospecting successes, or those of others 7-22 Overcoming a Reluctance to Prospect (continued) McGraw-Hill/Irwin

© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Locating prospective customers is the first step in the sales process. Not all sales leads qualify as good prospects. Many methods can be used to locate prospects. –The best source is a satisfied customer. Effective prospecting requires a strong plan that hinges on developing a lead qualification and management system and overcoming reluctance to prospect Summary McGraw-Hill/Irwin