Transcript Chapter 6 in text

CHAPTER 6
PROSPECTING
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.
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?
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LEARNING OBJECTIVES
• How can an effective lead qualification and
management system aid a salesperson?
• How can a salesperson overcome a reluctance to
prospect?
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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
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CHARACTERISTICS OF A GOOD PROSPECT
Lead: Potential prospect that may or may not have
what it takes to be a true prospect
Qualify the lead: Determine whether a lead is in
fact a prospect
Prospect: Good candidate for making a sale
Sales funnel
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EXHIBIT 6.1 - THE SALES FUNNEL
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CHARACTERISTICS OF A GOOD PROSPECT
• Existence of want or need
• Ability to pay
• Authority to buy
• Ability to pay
• Availability of resources to pay
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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
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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
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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
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OVERVIEW OF COMMON
SOURCES OF LEADS
Source
How Used
Satisfied
customers
Current and previous customers are contacted for
additional business and leads
Endless chain
Attempt to secure at least one additional lead from
each person he or she interviews
Networking
Using 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 media
Using online tools like LinkedIn, Facebook, and Twitter
to prospect for new customers and maintain contact
with existing customers
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OVERVIEW OF COMMON
SOURCES OF LEADS
Source
How Used
Other Internet uses
Using Web sites, e-mail, 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 directories
Using secondary data sources, which can be free
or fee-based
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OVERVIEW OF COMMON
SOURCES OF LEADS
Source
How Used
Data bases and
data mining
Using sophisticated data analysis software and the
company’s databases to generate leads
Cold calling
Trying to generate leads by calling on totally unfamiliar
organizations
Spotters
Paying someone for lead information
Telemarketing
Using phone and/or telemarketing staff to generate
leads
Sales letters
Writing personal letters to potential leads
Other sources
Using noncompeting salespeople, people in his or her
own firm, friends, and so on to secure information
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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
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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
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ENDLESS-CHAIN METHOD
• Getting one additional lead from each person
interviewed
• Works best when the source is a satisfied customer and
partner
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EXHIBIT 6.3 - EXAMPLE OF THE ENDLESSCHAIN METHOD OF PROSPECTING
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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
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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
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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
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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
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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
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OTHER INTERNET USES
• Using websites, e-mail, listservs, bulletin boards,
forums, roundtables, and newsgroups to secure leads
• Extranets: Internet sites that are customized for specific
target markets
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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
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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
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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)
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LISTS AND DIRECTORIES
• Following can be purchased:
• Prospecting directories
• Lead-generating publications
• Mailing lists
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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
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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
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SPOTTERS
• Individuals provide leads for the salesperson
• Called bird dogs
• Charge fee
• Find out when someone is ready to make a purchase
decision
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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
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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
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WRITING A SALES LETTER
Consider the objective of any written communication
Opening paragraph must grab the reader’s attention
Considers why the reader would and would not want to take the
desired action
Increase credibility
Seek commitment
Use post script
Check for grammar and spellings
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OTHER SOURCES OF LEADS
• Personal observation
• Nonsales employees within the salesperson’s firm
• Government agencies
• Clubs
• Other salespeople
• Trade associations
• Volunteer activities
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LEAD QUALIFICATION AND
MANAGEMENT SYSTEMS
Lead qualification system: Process for
qualifying leads
Prequalification: Can be purchased or
created
• To help salespeople use their time wisely
• To increase the number of leads that sellers actually
follow up with
Lead Management System: Analyzing
relative value of each lead
• Evaluate profitability of sales resulting from leadgenerating activities
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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
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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
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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
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