November, 2010

Qualifying Prospects

I've been writing the chapter in my book that deals with the sales process. Sales is, or should be, a process. It’s about establishing an authentic relationship with the prospect, demonstrating your value and building trust.

One of the biggest mistakes service business owners make is trying to close the deal during the first phone call or other initial point of contact. While it can happen, it’s unusual. When a prospect doesn’t know you from Adam’s cat, selling and closing during the first point of contact is pretty tough. It’s similar to going to a new mechanic for an auto repair when you don’t know too much about the workings of the internal combustion engine. Odds are, you’re thinking, “Hmmm ... is this guy on the level or is he going to give me a snow job?” Likewise, prospects want the reassurance of knowing whom they’re dealing with on their project.

But before the sales process can begin, you must first qualify the suspect as truly being a prospect for your business. Suspects are those folks who you think may need your services. Prospects, on the other hand, have made the cut and appear to be a good fit for your business.

I have a client who was writing loads of proposals, but not closing any deals. After we talked, it was apparent that his problem wasn’t closing, it was qualifying. He’d take on whatever jingled the inbox or phone. He’d write a lengthy proposal that took a fair amount of time ... time he could have used to build relationships with prospect who might actually buy from him. Now he’s carefully qualifying prospects and weeding out the tire-kickers and other who will never be a good fit for his business.

So, how does one go about qualifying? Ask a lot of questions. These questions can vary from business to business, but here are a few typical ones:

Do they need what you provide?
This is especially important to find out when you’re trolling for prospects. When you’re building a list of contacts, do some homework to see if they actually do need what you’re buying and/or have bought it in the past. They may need it, in your opinion, but don’t know they do. When that’s the case, the sales process will be longer. You’ll need time to educate them show why they need what you’re selling.

Do you have experience in the industry?
Ideally, you’ve carved out a niche for yourself in an industry and learned its ins and outs. If you’re developing a new niche, or the suspect is asking to do work in an unfamiliar industry, there’s going to be a learning curve. Can you take that learning time away from paying gigs? Can you build those hours into the project budget? If not, you may want to walk away and focus on what you know.

Have you done this type of work before or will you need to invest in training, buy software or other tools?
There are times when we’re asked to do something we’ve never done before. Like the previous question, can you recoup the expenses involved with getting up-to-speed? If it’s an opportunity to learn a new skill or offer a new service where there’s a rich market, it might be worth the investment. However, if you can’t get at least a portion of your investment, it might be wise to say no.

Can they pay for it?
You can ask around to gauge a particular suspect’s ability to pay. Often services businesses share an audience with other complementary services. For example, graphic designers often share an audience with photographers and writers. Some of those may have worked with the suspect before.

But, perhaps an even better question is, “Will they pay for it?” Suspects who aren’t willing to share numbers can be a red flag. It may mean that they’re seeing your service as an “off the shelf” commodity. Others may say they don’t have a budget for the project. Toss out a few numbers to test the waters. You’ll likely hear, “Wow, that’s way more than I thought.” All of a sudden, they have a budget.

Do they have a realistic budget?
If they have a budget in mind, is it a realistic one? If they’re looking for a logo for a buck and a quarter, walk away. Lowball clients are notorious for not only being cheap but also for being high maintenance.

Do they provide the opportunity for repeat business?
Is there an opportunity to build a relationship and generate additional projects? Or, is it a one-off gig? Growing your business around one-time projects means you’ll be spending much more time on marketing and selling. It’s better to focus on those suspects and prospects who can offer a steady stream of work.

Have they worked with a business like yours before? If so, who?
If they haven’t, will it be worth your time training them? If it looks like they’ll be providing a steady stream of work in the future, it might be. But, if not, you might want to let some other poor soul train them. Also, ask them why they aren’t using their previous supplier.

Can you get trade & credit references?
Whenever possible, get trade references. As mentioned above, these can come from complementary service providers. Try to learn how easy or difficult they are to work with and if they pay on time. You might also investing in a Dun & Bradstreet report. This becomes especially important for projects where the dollars and stakes are higher.

Is the prospect the final decision-maker?
This one happens all the time. You work to build a relationship with a certain contact, only to find out that they need to run approvals and such by their boss, committee or others. The contact wants to feel important by positioning themselves as the decision maker. There’s a simple solution to this problem. Ask them, “Who, beside yourself, will be responsible for making project approvals?” This lets your contact save face while getting your the needed information.

Does there appear to be a good personality fit?
You'll be spending a lot of time with this person and it helps if you can get along easily. Beyond this, what does your gut tell you? Gut feelings are often correct. So, if a suspect gives you all the right answers, but still gives you the heebie jeebies, it might be time to walk away.

Look for all reasons why you shouldn't work with the prospect. This may sound counterproductive, but will keep you safe.

Do you qualify your suspects? If some what are your qualifying questions? Post your comments on my blog and we can all learn from each other.

Until next month ...

All the best,
Neil