Is Your Prospect Fake?
I’ve noticed that even among seasoned sales professionals that language can become cloudy or unclear. Even worse, sales people can convince themselves (and their sales managers) that their sales pipeline is “rosier” than it actually is. I’d like to share five factors that will help bring a heavy dose of reality to every sales person’s pipeline and help determine if their prospects are real, or if they are fake.
I find that many sales people use the terms “lead”, “prospect”, and “client” almost interchangeably. It should be obvious that these terms are NOT the same and represent very different stages a buyer passes through. Let quickly define them and then determine how to keep reality in check.
What is a Lead (or Suspect)?
A lead is nothing more than a name on a piece of paper. It could be a referral from a client or a company you saw at a tradeshow. Regardless a lead is someone you suspect might have a need for what you offer. Leads are suspects because you haven’t yet fully qualified them. Depending on the industry, sales people should have a lead (or suspect) list of 50-100 companies that they are constantly working on.
What is a prospect?
A prospect refers to someone who is a literally a “prospective” customer. Meaning they have been fully qualified to become a customer. They just need to make it official. Prospects are in that tender stage right before becoming a customer. Generally speaking they meet five important criteria:
- Shared confidential or proprietary information with the sales person.
- Shared their financial budget with the sales person.
- They are a decision maker and have shared who the decision influencers are with the sales person.
- Shared how buying decisions are made with the sales person.
- Shared when they plan on making a decision to buy with the sales person.
Generally speaking, individuals or companies that meet these five criteria are fully qualified prospects.
Depending on the industry, sales people should have 3-10 qualified prospects in their final stages at all times. In a weekly meeting with their sales people, a sales manager will often ask about the sales person’s pipeline. Unless otherwise defined, a pipeline typically refers to the number of prospects a sales person is working with. However, if a sales person isn’t working with any businesses that meet those five criteria, they will start talking very optimistically about the individuals on their lead list. That is fine, neither the sales person not the sales manager should be confused about which stage these buyers are really in.
The Five Factors
So let’s dive a bit deeper into the five factors you can use to determine if the names on your prospecting list are truly qualified prospects or just unqualified leads.
- Every prospect has shared confidential or proprietary information: A key indicator of this qualifier is found in your conversations. Confidential information shared by a prospect can include focused results the prospect wants to achieve or problems the prospect is facing. They don’t share this information with you unless they are emotionally involved. If a prospect has shared with you confidential information, what does that mean? It means they trust you! A lead has no reason to trust you, but a prospect is willing to extend trust to you, if you are worthy of it. That’s powerful! These are very good indicators that they are a prospect.
- Every prospect has shared their budget: You know you are working with a prospect if they have shared with you what they are willing to invest to reach their goals or fix their problems. Again, if a prospect shares this sort of information with you, it is an indication that they trust you. But it is also a critical indicator of whether or not you can help them. Just because someone likes what you offer doesn’t mean they have the ability to buy from you. Can they afford you? That is the real question. You must know how much is allocated, where it is coming from and how it is going to get to you.
- Every prospect is the final decision maker and has shared who the decision influencers are: A real prospect is someone who has told you who is on their team. They have told you who is responsible for signing the checks and making the final decisions. You also understand who else in the organization is impacted by your solution. Those individuals are known as decision influencers. With leads or suspects, you don’t have the fully story. You don’t really know who runs the company.
- Every prospect has shared how buying decisions are made: An indicator that you have a solid prospect is when you have a clear understanding of how buying decisions are made by the prospect or its company. Does the prospect work in committees or is there just one person that decides everything? What steps do they go through? If you know this information then you can navigate the process appropriately. When dealing with suspects and leads, this information is unclear. They either haven’t shared that information with you or you haven’t asked those questions yet.
- Every prospect has shared when they plan on making a buying decsion: I once met with a prospect and asked her, “With regards to sales training, when did you see yourself getting started with this? Is this an August thing, a September thing or an October thing?” She then informed me her company’s season ended in October and she wanted her team to be stronger before then. She wanted the training implemented as soon as possible. Soon after, we put a plan together to implement the trainings and get her team ready. At that moment I had a clear understanding of when they were making a decision.
There are differences between leads, prospects and clients. Sometimes well meaning sales people use those three terms interchangeably. Other times they try to portray unqualified leads as qualified prospects in order to keep their sales manager from looking too hard at their pipelines. It is important that sales people and their managers keep reality in check as they are discuss leads and prospects. With unclear definitions and criteria for prospects it is difficult for sales people to be responsible and accountable for their progress. So beware of sales leads masquerading as fake prospects. Put them to the test!
Terry Hansen is a popular speaker, consultant, trainer, and author on helping sales teams improve their ability to create value for their prospects and clients. He is regularly asked to train sales and management teams in strategies to find more prospects, close more sales, and increase customer loyalty through value creation strategies. You can connect with Terry on LinkedIn, or get more information by visiting www.TerryHansen.net or calling 844-205-5054.