Heading into 2014 many companies are examining their business development and prospecting efforts. Here are some smart ideas by Scott Hornstein on this very subject:
I’d like to suggest a concept and a formula for improving the efficiency and the effectiveness of your prospecting efforts. The concept is “propensity to buy” or the likelihood that a given lead will purchase, and become a customer in the near term. Understanding, and measuring this concept allows us to vary our marketing investment to achieve a greater return.
Propensity to buy has four variables: source, need, timing and budget. With some insight on each we can construct a simple scoring model to gain an indication of where each lead is in the buy cycle.
Most prospecting efforts these days only pay attention to the immediate purchase. Here we are building a tiered sales funnel. You are probably getting most of this information as a byproduct of the prospecting communication process. Now we’re going to store it and analyze it.
Source is where you got the lead. This is enormously important in understanding quality. For instance, the source might be a customer referral, which is powerful. Or, the lead might be a reader of a trusted publication, or it might have dropped on your desktop and be untraceable. Let’s assign three points to a referral; two points to a trusted list; and one point to the unknown.
Need means exactly that – how does the prospect express their need for your product or service. If the prospect is in conversation with you because of a mission-critical need, let’s assign three points. Research for a planned project? Two points. Curiosity and/or tire-kicking gets one point.
An aside – to understand Need, Timing and Budget, you’re gong to have to talk to the lead. Ick! If a lead doesn’t rate a conversation, whether person-to-person, by ASL, email, IM or snail mail, I’m guessing we’ve got a lot to talk about.
Timing is how soon the prospect expects to be making a decision. ASAP gets three points. Perhaps three to six months, two points. Sometime in the future gets one point.
Budget. Please be clear, I am not advocating asking the lead how much money they have in their wallet. But I’d assign three points if the project is budgeted; two points if the budget has been requested and is in discussion; and one point if the prospect is still building their business case.
The maximum point score is thus 12 – leads with 12 points should experience the highest close ratio. It’s worth concentrating your resources here (duh). Ten to eleven points shows high potential, but may need some hands-on work. Eight to nine point leads are still in the game, but should be nurtured through lower-cost communications. We want to build brand preference so when their point score rises, they think of you first. Leads with less than eight points go directly to the database. They have expressed interest in what you do by raising their hand, or responding to an offer or promotion.
And a caveat, the under eight-point pool is where you usually find your competitors lurking. I encourage all my clients to engage in such espionage. Make sure your database has a robust list and can suppress these little buggers.
This scoring model is directional. It has got to be tweaked to your individual business, and then fine-tuned through experience. I encourage you to keep it as simple as possible. The bottom line is a more efficient prospecting machine, better communication between marketing and sales, and more satisfied customers.
So let’s go fishing where the fish are.