What is a Prospect?
A prospect is an expected buyer who is qualified with the certain criteria drafted by the business firm. A prospect can be an individual person as well as an organization.
Prospects are the qualified potential customers who have the capacity of buying products you offer and have a real need for the product while fitting with the mentioned criteria.
Business firms consider potential customers as prospects just they have met certain criteria as they do not have show interest. Rather it is believed that the prospect that meets the firm’s required criteria already has an interest in such types of products or services.
Most of the firms have predetermined criteria to identify the best-fit customers for the products or services they are selling. The criteria may differ between business firms but some often remain the same such as demography, geography, psychographics, size of the company, behavioral elements, etc.
Identifying a sales prospect i.e. prospecting is the first step of the selling process. After the prospect is identified further steps of the selling process are beginning to do.
Prospect Vs. Lead
Leads and prospects are two marketing terms that are usually found using interchangeably. Before understanding the difference between leads and prospects, let’s understand what is a lead?
Leads also are the potential customers who have shown their interest in your firm’s products but they are not qualified with the criteria of the firm.
A lead may involve activities such as visiting the website or store, subscribing for the newsletters, filling out forms on websites to request a product demonstration, signing up for a new account or free trial, etc.
Leads are unqualified contacts, they still do not have contact with the sales reps. Leads are pre-step to be prospects. Until unless leads do not fit one or more of the mentioned criteria to be a prospect, they remained at unqualified contacts.
Sales teams of the firm are responsible for identifying and qualifying which one is a prospect and which one is a lead. When the sales team finds the lead has met the criteria, they qualify the lead into a prospect.
Now, let’s differentiate…
Since by the definition, leads and prospects are already differentiated. They can also be differentiated by the following points,
Level of Qualification
Businesses are open to all potential customers. This opens a door for a variety of leads to enter a business house. All the leads may not fit the criteria of the firm. Whereas, prospects are already believed as the best fit to the firm’s outlined criteria. Hence, leads are unqualified and prospects are qualified.
Level of Engagement
A lead has just arrived at a website and requested to be contacted. He has not made a contact with the sales teams of the firm. Whereas, a prospect is already contacted the sales team of the firm about his interest in the products.
Leads are just finding the product’s specifications ownself and prospects are involved in the interaction to know about the firm’s offer.
Communication Level
Since a lead is involved in finding products features and benefits alone and has not been contacted yet with the sales team, is one-way communication whereas a prospect has been made an interaction with the sales team, is two-way communication.
In addition, a lead only gets knowledge of the firm and its products from the general business addresses whereas a prospect gets personalized information from the sales representative of the firm.
Position in the Sales Funnel
As you can see in the above picture, the leads are on the top of the sales funnel, prospects are in the middle and customers are at the bottom.
Since leads are unqualified contacts, after meeting the criteria it will be turned to on prospects. And, the prospect will be turned to on customers as it is qualified to be a sales opportunity.
Hence, it is differentiated…
Although the lead and prospects are differed by their definition, the fact to remember is that in the selling activities the goal is the same. That, in the sales process the prospect and lead both should be nurtured until they become customers and be ready to buy your offerings.
Characteristics of a Good Prospect
It is obvious that all the prospects may not be good or best fit to the firm’s mentioned criteria. Also, it depends upon the ability of the salespersons to identify between the good and bad prospects.
While qualifying the good prospects some salespeople may commit mistakes. This means salespeople should possess the capacity to separate the prospects from suspects and qualified prospects from the available prospects.
They should invest their time and efforts in making sales presentations to qualified prospects. However, distinguishing suspects, prospects, and qualified prospects also differ on the basis of types of selling, nature of the products/services, types of products, profit per sale, etc.
Therefore, how to qualify prospects? How to know the prospect is good or bad or is suspect? To get an answer to this question, the following 5 aspects should be carefully studied and analyzed for good prospects.
Prospect’s Real Need For Product
It is natural that most of the sales are made on the basis of the real need for the products/services. The real need satisfaction of a prospect may include his/her functional need satisfaction as well as intangible/ungratified need satisfaction.
For example, the functional need satisfaction in using a car is to reach the prospect’s destination in time, but ungratified need satisfaction is the feeling of prestige the prospect enjoys using the car.
Therefore, as a salesperson, you must always remember the maxim, “Sell a product to the customer in a way that the product does not come back but the customer does”.
You should always determine whether the prospects have basic needs or intangible/ungratified needs for buying a product or service. This can be determined by personal interviews with the prospects.
Ability To Pay
One of the most important factors to separate a prospect from the suspect is the ability of an individual/organization (buyers) to buy a product. The testing of such ability requires evaluating the financial status of the individual or organization.
In other words, purchasing power and spending habits mostly depend upon the amount of money an individual, a family, a firm has to pay for a product or service. So, the real income of an individual, family, firm plays a significant role in determining the ability to pay.
Example,
Say an individual’s monthly salary is Rs. 5000. After general expenditure he saves Rs. 1500. Thus his yearly savings is Rs. 1500 x 12 —- Rs. 18000. Imagine that he wants to use solar power for various purposes. The expenditure for various solar power units costs Rs. 1,20,000. In this situation, he has to wait for more than six years to get what he wants. And even then, it is not certain that he will be able to buy because the cost of the service may increase in the future. In contrast, if a person saves Rs. 1,30,000 per year, he/she can buy the facility immediately.
Authority to Buy
In spite of being capable of buying, an individual, or a firm may not have the authority to buy. In many cases, decisions to buy are made at home jointly by the family members but authority to buy is given to one member.
Similarly, in some cases, most of the decision-making members go together and use their collective buying authority at the buying spot. The former situation is common in respect to low involvement goods purchase, whereas the latter situation is common in respect to high involvement goods.
In the case of a firm buying goods/ services, generally, there is a channel of authority across various stages. The purchase officer has to get a purchase order from the sales vice-president and or marketing vice-president. Then he/ she has to assign an individual or a group of people from the purchasing department and given the authority to buy.
But whether an individual or a group of people come representing the firm, salespeople should determine whether they have the authority to buy or not. The reason behind it is that the salespeople want to make the maximum use of their time and effort. In other words, they want to sell efficiently and effectively. Unless an individual or a firm possesses the authority to buy, he/she cannot be regarded as a prospect.
Favourability of Approach
An individual or a firm that needs products/services possesses the ability to pay and has authority to buy, yet he/ it may not get a chance to approach the sales authority of the selling firm due to various channels through which a purchase order has to pass for the final decision.
However, approaching the prospect would be favorable depending upon the nature of the product, service, and the size of the order that the individual and the firm want to get filled.
Example…
An individual/ a firm wishing to meet the chairman of a promising bank for getting large loan grant order may not make a favorable approach and hence, he/she will not get favors. Similarly, a raw graduate wishing to meet the chief executive for getting a job may not make a favorable approach, so he/she misses the chance of getting executives favors. Unless he/she gets such an approach s/he can not be a good prospect.
Eligibility To Buy
In some kind of selling eligibility (qualification) of an individual proves to be the determining factor to make him/her a genuine prospect. For sending a candidate abroad under a particular scholarship, physical fitness certified by an authorized doctor is required besides the candidate’s educational qualifications.
Similarly, an individual seeking life insurance may be rejected on health grounds in spite of other requirements being fulfilled. A medical representative may have a distinctive educational background, may write attractively, speak fluently, if he or she is unable to describe the products/services to the doctors, his/her eligibility for the job will not be accepted. Such eligibility also applies to selling activities.