What Is Prospecting? Definition and Guide

what is prospecting

Prospecting is the first step in the sales process, which consists of identifying potential customers, aka prospects. The goal of prospecting is to develop a database of likely customers and then systematically communicate with them in the hopes of converting them from potential customer to current customer.

Historical reference

The original use of the term “prospector” refers to the efforts of individuals to find gold by visually scanning creek beds and rock formations. When flecks of gold were spotted, the prospectors would spend time sifting through dirt to find the valuable nuggets and flecks that were left behind when dirt was washed away.

That’s what modern day sales prospectors do—sift through large lists of potential customers to try and uncover those who are ready to buy.

Steps in the sales process

Unless someone has previously done business with you, it’s a guess as to whether they might be interested in your products or services. They are potential customers at that point, falling into one of two categories; suspects or prospects:

  • Suspects: Individuals or companies you believe may have a need for your products or services but who may not be aware of your business or its offerings. You suspect they could become customers, but you’re not sure. To find out, you need to increase their awareness of and familiarity with your business. Once they are aware, it’s time to determine if they might buy in the future.
  • Prospects: Prospects are suspects you have made contact with and who have confirmed that they might be interested in buying from you at some point. For example, the owner of a 10-year-old car with 200,000 miles could be a hot prospect for your auto dealership, as long as they are aware of it.

A customer is a prospect who has spent money with you.

Prospecting tactics

To make contact with sales suspects—buyers who may or may not be potential customers for your business—there are a number of popular tools and tactics you can use, including:

  • Phone calls: designed to initiate a discussion with the individual who answers the phone
  • Email: designed to share information and entice the recipient to take an action that will identify them as a prospect
  • Direct mail: sent in the mail as flyers, postcards, or catalogs, for example, designed to share information that may entice you to consider buying

The primary goal of these marketing efforts is to qualify a recipient as a prospect, or someone who may have a need for your business’ products or services, or not. Knowing that someone does not anticipate having a need for your offerings—and is not a prospect—helps you refine your prospect database so you can focus your marketing dollars on those people most likely to turn into customers.

Prospecting FAQ

What is prospecting marketing?

Prospecting marketing is a type of marketing aimed at generating new leads and customers. This type of marketing includes activities such as cold calling, email campaigns, digital advertising, direct mail campaigns, and more. Prospecting marketing is typically used to target potential customers who have not yet expressed interest in a product or service. The goal of prospecting marketing is to build a strong customer base and increase a brand’s visibility.

What are examples of prospecting?

  • Cold Calling
  • Networking
  • Referral Marketing
  • Social Media Outreach
  • Direct Mail
  • Email Marketing
  • Attending Trade Shows
  • Hosting Events
  • Advertisements
  • Door-to-Door Outreach

Is it good to be prospecting?

Yes, prospecting is a great way to expand your business, find new customers, and increase your profits. It involves researching potential leads, building relationships, and following up with customers to convert them into paying customers.