Some say it’s worth meeting with everyone, because you never know what you’ll learn from the encounter.
While being open to everyone is laudable, very few of us have the time to carry out this philosophy. In developing business, we want to have the most impact for our investment of time and effort something we can only achieve by qualifying prospects.
Even if you can successfully convince prospective customers to move their business to your company, some may not do so for various unexpected reasons. You may eventually find out that a prospect will never make a move, perhaps because they’re squeamish about informing their current vendor of their decision, or because the prospect’s father-in-law is their supplier and the prospect is unwilling to endure the family tension and conflict that a move might create. There’s no shortage of potential “becauses.”
Asking the right questions when you first make contact with a prospective client can save you considerable time, effort and disappointment later on. One of the key questions you should always ask is: “Assuming we are able to fix the problems we’ve identified, is there any other reason we could not do business together?” This incisive question truly cuts to the chase, and avoids wasting your time on a prospect that will never pay off.
Here are other important questions you should attempt to answer when qualifying potential customers:
-What is their purchasing time frame?
Do they need to act right away, or are they just beginning the process of looking? Where do they stand in the sales cycle of your product or service? (Some sales cycles take much longer than others, depending on the complexity and price of the product.)
Even if they’re not ready to buy right away, you should move them into your pipeline and continue to maintain contact with them. Study after study shows that moving a prospect from a “cold” relationship to an actual sale frequently takes about 12 interactions. Unfortunately, most people give up after the fifth contact.
Only every third contact need be in person; the others can take place via e-mail, direct mail, phone or fax, as long as the communications are personalized for each prospect. This is why it’s critical to have a computerized contact-information management system, so that you’re sure to be alerted when it’s time for the next follow-up communication.
-What is their budget?
In many instances, prospective customers are unfamiliar with the particular business area in question and don’t have a realistic idea about what a product or service should cost. Try to build a framework by asking probing questions such as, “What would you say if I told you that providing what you want would run in the range of $2,000?” If someone is thinking $500 and you know the cost will be $2,000, it’s better to learn that right up front.
Also, try to get a sense about whether they’re shopping only on price. Unless your strategy is to have the lowest price on the block, you’ll want to avoid competing strictly on the bottom line. Ask probing questions to see if they really have no intention of switching vendors, but are merely using your price as a way to hammer their current provider. Can they give you valid reasons why they’re shopping around? Are they truly dissatisfied with their current provider?
-Are they able to pay you?
You may be able to run a Dun & Bradstreet credit check on them, but many businesses can’t be found in Dun & Bradstreet’s records. You can mitigate some of the risk by asking for a retainer.
-Are their expectations realistic?
If they aren’t, here’s where you’ll want to start the educational process. For example, if they come to you to handle a litigation matter and will accept no result except a win, you need to explain how the litigation process works in reality. Then listen carefully to get a sense if they’ve genuinely heard you. If they have not, you may want to think about whether you’re setting yourself up for a fall.
-Are they willing to do their part?
Even though you’re the expert, a team effort usually needs to happen. Do they expect to dump the whole project on you? Will they provide information in a timely manner? Will they be responsive to answering any questions you have, which could make a big difference in the outcome they receive?
-Can you be effective for them?
If you don’t have the required expertise, can you partner with someone who does? Can you perform the service or deliver the product within their time frame? Are they asking you to do something you don’t feel comfortable doing from a business or ethical standpoint?
-Can you work with them?
This may be the most fundamental question of all. What do your instincts tell you? They don’t have to become your best friend, but do you at least like them? If you conclude that you and they would not be a good fit, you might be better off foregoing their business and referring them to someone else.
Even though certain prospects don’t pass your screening process, there may be reasons why you want them for clients anyway. For example, you may be trying to penetrate a new industry and feel they would give you an “in.” Perhaps being able to leverage your association with their respected company name would be a good marketing tool for you. Maybe they’ll provide a conduit for helping you find other new customers.
The bottom line is, you have to trust your own instincts. No matter how good prospects look on paper, if they become your clients or customers, you’re the one who has to deal with them.
Sharon Berman is principal of Berbay Corp., a marketing consultancy. She can be reached at [email protected].
Entrepreneur’s Notebook is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications at the University of Southern California. Contact James Klein at (213) 743-1759 with feedback and topic suggestions.
