Make prospecting a powerful tool by mixing activities, developing a system

by Cathy Atkins

September 22,2007

If you are in a for-profit business, then you are dependent on sales. If your business is floundering, it's either an expense problem or a revenue problem. Cutting expenses, although a necessary measure when your cost-per-sale is out of hand, is otherwise a defensive reaction to an emotional state … the state of fear. A healthier approach to building revenue is to give serious consideration to how you go about revenue development … a.k.a. sales. Prospecting is the lifeblood of sales.

Prospecting activities bring new prospects into the sales cycle. However, people may not achieve their maximum sales revenue because they do not have an effective prospecting plan or a mix of behaviors. Develop a prospecting system. What mix of activities, both active and passive, will give you the best ROI based on your target audience? A revenue development plan is made of planned behaviors performed consistently and proactively. There are two types of prospecting behaviors: hunting and farming. Hunting is the search for brand-new prospective customers that expands your market share. Farming is defined as an expansion of a current client relationship or broadening the scope of business with existing customers.

Farming is certainly the most cost-effective way to expand your revenue base. It affords businesses an opportunity to increase customer retention and profitability at a minimal cost. It's easy, however, to overlook this vital relationship and to focus too much on new business. Provided you do a good job of customer service, many customers would spend more money with you if they knew about your additional product or service lines. Having clients who could benefit from an additional product or service but who aren't doing so is the equivalent of leaving money on the table. Begin by tracking your churn ratio or customer turnover. Remember that it costs more to get a new customer than to retain and upsell an existing one.

The second type of prospecting is hunting. It should occupy the bulk of your sales efforts. There are two types of "hunting" behaviors: active and passive. Each type of activity has an important place in the mix.

Passive prospecting involves waiting for someone else to react. You do not have as much control over the results of passive prospecting. These behaviors include advertising: i.e radio, newspaper, television, sponsorships, direct mail, brochures, circulars, table tents, etc. When you don't have the time or knowledge to do it effectively yourself, I recommend using a reputable advertising agency. What you spend for the agency will more than be made up for in consistency of message, professionalism and targetability. You can substantially minimize wasted efforts. The biggest mistake businesses make with passive prospecting is using it exclusively and expecting it to get the job done for you. An appropriate blend of active and passive prospecting will only serve to increase the efficacy of both media.

Active prospecting activities are those over which you have control. Examples include cold calls — either on the phone or in person — networking meetings, trade shows and conferences, strategic alliance partnerships, free talks or seminars, referrals, and following up on leads from advertising. A good prospecting plan contains a variety of focused activities. The biggest mistake here that businesses make is a failure to track. You can't manage what you can't track. Consider things like number of contacts, quality of contact, closing ratio, budget, manpower, sales, etc. Over time, this information will enable you to make necessary modifications in your plan and thereby increase its efficiency and effectiveness, giving you a better return.

David Sandler, founder of the Sandler Sales Institute, said that if you've been in business longer than a year and you're still making cold calls, you're doing something wrong. There are a number of benefits to mixing your prospecting activities and working a system. First, you effectively increase the number of activities in which you engage and, therefore, the number of people you touch. You are able to invest the most time with the most effective activities (effective based on results and not on gut instinct or on what you like or dislike doing). On the reverse, you can then redirect time spent on activities that yield marginal results. Never stop doing an effective activity just because you don't like doing it. Invest time in improving your skills in the activities that make you uncomfortable. Finally, activities can be rotated, thereby taking the pressure off any one activity. Make your prospecting powerful, not painful!

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