How to Qualify Sales Prospects

When you're striving to grow your business, it's easy to get caught up chasing every lead that comes your way. But all prospects are not created equal.

When you're striving to grow your business, it's easy to get caught up chasing every lead that comes your way. But all prospects are not created equal; some are more likely than others to turn into sales.

To avoid wasting precious resources, you need to weed out the long shots and concentrate your efforts on prospects apt to yield a return on your investment of time, money and energy. And once you have concentrated your energy on finding good prospects, make sure you read The Importance of Sales Follow-Ups.

What are the key characteristics of good prospects? Simply put, a qualified prospect has three things:

A need. A highly qualified prospect needs your product now or relatively soon. For example, if you sell widgets with an average lifespan of eight years, a good prospect is someone who owns a seven-year-old widget, not someone who bought a new one last year.

A sufficient budget. A qualified prospect has the money to buy your product or service. Don't waste time pursuing someone who truly can't afford to buy what you're selling or a company that has already spent its yearly budget.

The authority to buy. A good prospect is empowered and prepared to take action. The simpler and more streamlined their decision-making process, the better your chances of closing a sale.

To make sure you leave no stone unturned, read additional advice in Finding New Sales Prospects.

The following five techniques will help you distinguish good prospects from bad prospects:

1. Define your target market precisely. Break your market down by demographics, geography, industry, company size, budget or other relevant criteria. This will let you focus on the prospects that closely match your target.
2. Assess need, budget and buying authority. Ask basic qualifying questions that will help you determine whether a prospect is ready, willing and able to buy, such as:
   • What's your time frame for this project?
   • Who else will be involved in making the decision?
   • What's your budget for this type of product?
   • How will you make your decision?
   • Are you ready to buy if you find the right product?
   • If you determine that our service meets your needs, what will your next step be?
3. Go for "no." Conventional sales wisdom says that as long as a prospective customer hasn't said "no," then the sale is still alive. But when it comes to rating prospects, you should push for a decision, even if it's no. Better to learn sooner rather than later that the odds of closing a sale are slim.
4. Evaluate financial or business status. Creditworthy prospects are preferable to high-risk customers. And stable prospects are better than those in crisis or flux. A company that is merging, downsizing or shifting its core business, for example, may be inclined to put off buying decisions.
5. Develop a grading system. Rate prospects as hot, warm, lukewarm or cold, or by a letter grade, based on the probability of closing a sale. Concentrate on hot prospects, and upgrade or downgrade the others as their circumstances change.

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