Improve Sales Prospecting Results Through Customer Profiling

Sales prospecting is certainly a numbers and timing game, but none of us has an unlimited supply of time. Use your prospecting time more effectively by prequalifying your targets based upon specific business criteria.

Understanding and pre qualifying your target customers and/or new projects based upon key characteristics common amongst your most profitable customers/projects will help you to maximize the effectiveness of your sales prospecting efforts. By systematically eliminating ‘bad’ targets, you will have fewer false starts and more time to focus on closing the attractive deals.

Targeting Lifetime Customer Value

Understanding Lifetime Customer Value (or LTCV) is an excellent starting point for profiling your prospects. The Lifetime Customer Value of a customer is the potential value of the business captured over the lifetime of your relationship with any given customer. Value is typically defined as net profit, but it may be easier to first profile based upon gross profit. You should understand typical LTCVs for certain markets, submarkets, or other categorization parameters within your current customer list so that you can rank prioritize prospects based upon LTCV.

Before you initiate your prospecting plan, narrow down your list from the total universe of potential customers/projects to those with the characteristics of your most desirable ones. Depending upon the targeted timeframe of your prospecting initiative, this may be based upon LTCV or it may be based upon shorter term objectives. The closer the match that a target has to your targeted characteristics, the more likely the prospect or project will meet the objectives of the prospecting initiative.

This is particularly true of a prospect’s value system. If you and your organization are highly innovative with bleeding edge high value solutions, then you may not want to waste your precious prospecting time chasing after stodgy conservative prospects who may be inclined to seek out low price suppliers. Such a prospect may not be desirable either long term or short term, depending upon your overall business objectives.

Disqualify Your Prospects to Save Time and Money

‘Qualifying’ means to rule the prospect ‘in’ whereas, ‘disqualifying’ means to rule the prospect ‘out’. Disqualifying is quicker, since you can generally apply a relatively objective screen against the “no go” characteristics. For example, municipalities are typically required to perform open-bidding and accept lowest price. If your organization is not interested in chasing low-bid work, then you might rule out all municipalities from your target list.

A prospect or project may appear to be qualified if not appropriately scrutinized, but in the end may become disqualified only after a great deal of effort has been put forth in developing and proposing a solution. This process - which typically results from an informal or non-existent opportunity screening process - can cause a huge drain on sales resources and significantly damage ROS results.

So, before you launch your prospecting plan or target a new project with an existing customer, make sure that you clearly understand your own organization’s ’sweet spot’ as well as the characteristics of the project that should represent a ‘no go’ situation.

Some examples of characteristics to look at are:

• Number of bidders expected
• Quality of competitors
• Strategic customer?
• Timing of project
• Scope / product mix
• Project Duration / urgency
• Project Risk level
• Customer Relationship / leverage
• Prospect’s or project’s alignment with your business strategy
• Complication of proposal
• New work to customer (way outside of the box for them?)
• Geographical factors
• Strategic competitors involved?
• Understanding of prospect’s internal buying process
• Who are the competitors?
• Internal politics
• Uniqueness of offering / ability to differentiate
• How much time salesman has to drive the sales cycle
• Timing of customer decision
• Is the budget approved?
• Probability of winning the project
• Availability of resources for the project

This listing is not meant to be comprehensive or conclusive. Effective profiling is a complex process that is different for every organization, market, and economic situation. Sales RaceHorses can help you and your organization to develop specific screening criteria and processes for your unique situation.