I have seen this situation a lot recently – small businesses with what appears to be a healthy looking prospect list and who are struggling to convert them into paying clients. Even with last minute discounts for immediate orders and other inducements, their prospects are just not buying as frequently as before.
Sales cycles are extending and conversion rates (prospects to clients) have fallen. There are, of course, many possible reasons causing this effect. When asked about the likely cause, small business owners always have ready-made answers. They will claim it is down to the economy or more competition or cheaper imports or prospects cutting back on expenditure.
One cause that rarely gets mentioned is that they might actually be selling to the wrong people. To be fair, no small business owners is going to suggest this is the real cause of their problems. Equally, this will not be the underlying cause in every situation.
Of course, companies don’t set out to intentionally sell to the wrong people. It is something that just seems to happen and is mostly due to poor prospect qualification.
Selling to poorly qualified prospects is an expensive mistake. At the end of the process, you are unlikely to get a sale but will have spent the same amount of time and effort on this prospect as you would have spent on a properly qualified one. This is time you could have invested in other (real) prospect situations that had a better chance of generating income. These will be opportunities you would otherwise have ignored because you were busy elsewhere (on poorly qualified prospects).
As part of your business planning activities, you probably wrote down the criteria against which you would qualify prospects. These qualified prospects represent your ideal target market. You want all your prospects to match this qualification criteria because you know that if they do, they will find the benefits delivered by your products/services compelling and persuasive. This, in turn, means they are more likely to buy.
If you have yet to define your prospect qualification criteria, this is something you must do with some urgency. Until you clearly understand what makes an ideal prospect for your small business, you are likely to be distracted by less than ideal, but interesting, sales situations.
If you already have some clients, you should define your criteria for finding new prospects based on how you describe your best clients. Your best clients are, of course, those that generate a good profit and who benefit the most from your products/services. Define the criteria as fully as possible. You will know that any prospect matching the criteria is likely to become a long-term profitable client who will benefit significantly from their purchase. Such prospects are worthy of your undivided attention.
If you devote the majority of your selling time engaging with prospects that match your qualification criteria, your sales will increase and so will your profits. There is a need to be flexible regarding prospects that fail to meet your qualification criteria by a narrow margin. Whether or not you pursue these will ultimately depend on how many other prospects you have and your judgement on the probability of successfully winning the opportunity. Each opportunity should be assessed on its individual merits.
- Develop your prospect qualification criteria to help you avoid the investment of time and effort into sales situations you are unlikely to win.
- Apply this qualification criteria to every sales situation to ensure you are making best use of your scarce sales time and resources.
- As part of your “lost sale” review, which you should perform to understand what went wrong and what you could have done differently, double-check the prospect matched your qualification criteria.