When old-timey prospectors headed for the mountains, they searched for nuggets of gold hidden at the bottom of creeks and inside dark caves.
Modern sales teams might not physically search for gold, but they perform a similar process when looking for new customers.
Prospecting in business is about finding value in lists of consumer data. Once identified, prospects are converted into sales opportunities through tailored email marketing, phone conversations, social media campaigns, and in-person pitches.
The goal of prospecting is to develop a database of likely customers and then communicate with them in the hopes of making a sale.
Here, learn the full definition of sales prospecting and how to develop a prospecting strategy for your business.
What is prospecting?
Prospecting is the first stage of the sales cycle. It involves identifying potential customers and engaging with them to increase the chances of making a sale in the future.
Good prospecting allows you to get to know the people or businesses who may be interested in your company. It reveals their concerns and needs so you can find relevant ways to position your products.
Imagine you run a company that sells accounting software for small businesses. Your sales team could start prospecting for new customers by analyzing datasets. They might look at lists of attendees from a recent small business expo, followers on your company’s LinkedIn page, or leads generated from a webinar you hosted on financial management.
Next, the sales team researches potential targets within those lists to determine their level of interest in your product. They’ll look at factors like the size of the business, the industry, and whether a business has grown or pivoted in some way that might necessitate better accounting software.
Armed with this information, the sales team reaches out to prospects. They might cold call a business that recently received funding, send an email campaign to expo attendees offering a free trial, or use digital advertising to target your LinkedIn followers.
Each outreach is personalized to the prospect’s needs. For instance, your team might emphasize the scalability of your software to a rapidly growing business, while talking about your product’s compliance features to a business in a highly regulated industry.
This is prospecting: a strategic, targeted approach to identifying and engaging potential customers, with the ultimate goal of closing a sale.
Why is sales prospecting important
It’s easy to hear about concepts such as cold calling and think that prospecting is an outdated or unhelpful sales strategy.
But when performed correctly, prospecting techniques connect an already-motivated audience with a company’s offerings. Careful prospecting ensures that potential customers are aware of your products and have access to the information they need to make a purchasing decision.
Without prospecting, your sales cycle is missing the crucial first step of discovering the people or organizations most interested in your business. That makes it hard to interact with your audience on a customer-by-customer basis.
Lead vs. prospect vs. opportunity
When prospecting, sales teams identify, contact, and interact with potential customers. Different terms are used along the sales pipeline to describe the status of prospects during this process:
A lead is somebody (or an organization) identified during prospecting that shows an interest in your products or services. Leads are often tagged as qualified or unqualified.
Qualified leads are motivated buyers. They show a higher level of interest in marketing materials or product information and may already be interacting with your sales funnel.
While unqualified leads are also potential customers, they don’t currently show an interest in your offering. Unqualified leads need additional nurturing in order to become sales opportunities.
For example, a cold outreach campaign could convert unqualified leads by letting them know that your product exists. Alternatively, a video ad addressing common questions about your product could help qualify hesitant leads.
Suspects are a type of unqualified lead. The term applies to individuals or companies that may need your products, but who aren’t aware of your business or its offerings. In other words, you “suspect” that they could become qualified leads and customers.
Prospects are a type of qualified lead. These are people or companies that you’ve judged to be a good fit for your products. You may have also contacted them and established an interest in your business.
When prospects become seriously interested in a sale, they are described as “opportunities.” A prospect becomes an opportunity when they are open to hearing your sales pitch and are ready to make a purchasing decision.
Once a decision is made, the sales opportunity is closed. Most businesses refer to successful sales as “closed-won” and lost opportunities as “closed-lost.”
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How to prospect: 6 steps to build a sales prospecting strategy
Let’s delve deeper into the sales prospecting process. One way to break down a prospecting strategy is to think of a six-part sales journey, from researching prospects to closing and evaluating the sale.
Research is the first stage of the sales prospecting plan. It’s about deciding the type of customers you want to pursue, as well as finding specific leads.
Create an ideal customer profile
Many businesses determine who to pursue by creating an ideal customer profile (ICP). An ICP is a data-driven description of your theoretically most valuable customer, including details such as their job or industry, budget, and preferred methods of communication.
For instance, if you’re selling a mid-market project management tool, your ICP persona might be project managers in tech companies with 50 to 200 employees.
With an ICP in hand, you can use data-sifting tools to find prospects that match the profile. Many industry directories and social media platforms have premium tiers that allow you to search for prospects based on the features of your ICP.
Follow prospects before you connect
If you use social media to find prospects, why not begin interacting with them on the platform before you officially reach out? In many cases, you may be required to connect with a prospect before the site will allow you to send a direct message.
Once connected, you can begin to comment on, like, and share prospects’ posts as a way of building trust and contributing to their goals—every social media user wants to go viral.
Look for groups and communities (online or in real life)
If you’re prospecting for individual customers, one effective research strategy is to join groups related to your niche or industry. These could be Facebook groups, LinkedIn groups, online forums, or local community events.
Being part of these groups gives you a firsthand look at the conversations, questions, and concerns that are top of mind for your potential customers. Moreover, these groups allow you to establish yourself as an expert in the field and engage directly with prospects.
Depending on the type of group, you could join as your business, or as an individual. Just ensure that your participation is genuine, respectful, and adds value.
After researching prospects, the next stage is to initiate contact. Sales teams reach out to prospects through email, phone calls, social media messages, and in-person meetings.
The key to successful outreach is personalization. With information gathered during the research phase, messaging can be tailored for each prospect. Highlight how your product addresses a prospect’s pain points or furthers their goals.
An important aspect of outreach personalization is choosing the most appropriate channel for your first interaction. Whether it’s a carefully crafted email, a direct phone call, or an engaging social media message, the place where you make your first point of contact should be informed by your prospect’s preferences.
Telemarketing is a direct and personal way to introduce your product or service, answer questions, and gauge the prospect’s interest. Usually, the goal is not to make a sale on the first call but to establish a connection and set the stage for further conversations.
Email campaigns are often designed to encourage recipients to take an action that will identify them as a prospect. This could mean replying to the email, signing up for a product demo, or simply clicking a link that signals a desire to learn more. Email segmentation can group prospects with similar characteristics so you can deliver tailored content.
If you have a large number of people to reach out to, prioritizing your leads becomes crucial. Not just in terms of who you contact first but also the quality of the interaction you aim to have. Consider these sales prioritization questions:
- What is the potential revenue of a prospect?
- What is the prospect’s readiness to buy?
- Does the prospect have a clear need that your product or service fulfills?
- Is the prospect an influential person within their organization?
- Are your competitors also pursuing this prospect?
Discovery is one of the goals of outreach. After starting a conversation with prospects, sales teams want to find out about the everyday needs and challenges that their product can solve.
In traditional sales, discovery was often conducted via a phone call or in-person meeting. Today, however, discovery usually takes place online and is more likely to be a form of passive information collection.
For example, surveys or questionnaires can gather standardized information from multiple prospects efficiently. Social media and online forums also serve as platforms to glean insights into prospects’ challenges and experiences.
For prospects with complex needs, virtual meetings via platforms like Zoom or Microsoft Teams offer face-to-face interaction and screen-sharing capabilities, allowing sales teams to demonstrate product features and apps.
While discovery is about listening to prospects’ needs, the education stage is when a business explains to prospects how their product or service can help.
If you use a B2B sales model, you might educate prospects through case studies that show how you’ve helped similar businesses overcome the same challenges.
The closing stage is where you seal the deal. By now, your prospect and prospective buyers should understand the value of your offering and how it can help them.
Closing can involve negotiating pricing and discussing implementation details. Depending on the product and niche, this stage of the buying process may take several days or weeks.
The final level in the prospecting game is evaluation. This is where you take a step back and assess the effectiveness of your prospecting strategy. It’s about learning from your successes and failures to continuously improve your approach.
Sales analytics can provide valuable insights into your prospecting efforts. Look at metrics like response rates, conversion rates, and the average time to close a deal. Are there tactics that are generating better results?
Listen to “nos”
Every rejection is an opportunity to learn. Why did a prospect say no? Was it the price, the product features, or simply bad timing? Understanding the reasons behind a rejection can help you refine your approach and improve your chances of success in the future.
For example, if you’re getting lots of rejections due to price, it might be time to reassess your pricing strategy.
Sometimes, a “no” doesn’t mean a closed-lost sale. Sales reps can use moments when prospects reject part of a sales pitch to hand over control of the conversation and allow a potential customer to explain what they would need in order to sign a deal:
Sales prospecting tips
1. Look at your prospects’ online presence
Examine your prospects’ websites and social media profiles. Look for recent posts or press releases that could indicate their current business needs or challenges.
2. Classify prospects with ratings
Use a rating system to prioritize your prospects. For instance, “A” for sales opportunities who are ready to buy, “B” for qualified first leads and prospects who need more nurturing, and “C” for unqualified leads.
3. Prospect by vertical
When prospecting, consider focusing on one industry or vertical at a time. This approach allows you to become familiar with the pain points, language, and trends of that industry.
For example, if you’re part of the sales team for a data management tool, you could spend a month focusing on prospects in the health care industry to find out the specific challenges associated with patient record management.
4. Ask for referrals
After successfully closing a deal, ask your satisfied customers for referrals. They could introduce you to potential prospects within their network.
5. Follow-up after a closed-lost deal
Don’t discard closed-lost deals. Follow up after a few months to check if their situation has changed or if they’ve reconsidered your solution. If your business or product evolves, it may become more relevant to your prospect’s needs.
Outbound vs. inbound prospecting
Another way to categorize sales prospecting is by inbound and outbound communications.
Here are the most popular forms of inbound and outbound prospecting:
Warm emailing is when a business resumes contact with a prospect. The recipient could be a previous customer or have signed up for a free trial. Alternatively, they may have interacted with you indirectly, such as by spending time on your website.
The best warm emails are personalized. They acknowledge prior interactions and anticipate why a prospect is showing interest in your business.
Social selling is about building an active presence on social media channels. Creating original content, sharing relatable posts, and replying to comments are all ways to increase trust between your business and prospects.
Cold calling is the original form of prospecting. It’s the modern equivalent of ringing a homeowner’s doorbell to ask if they’re happy with the suction power of their current vacuum cleaner.
While salespeople rarely go door-to-door anymore, they still participate in cold calling. Modern day cold calling leverages consumer data to find potentially receptive sales prospects. For example, a sales rep for a cybersecurity company might cold call the CTO of a startup that recently suffered a data breach.
Cold emailing is sending a message to a prospect you’ve never interacted with before. Because you’ve never met the prospect, cold emails are typically short and ask for little from the recipient. The best cold emails quickly offer something that a prospect might need.
For example, a cold email from a footwear company might begin by acknowledging that a prospect recently signed up for a marathon, and then give them a promo code for a discount on their first pair of running shoes.
Sales teams often send cold emails to long lists of recipients to increase the chances of finding leads.
Prospecting: A potential goldmine
Prospecting is more than just a sales tactic—it can tell you who your customers are and what they want from your products. That information contributes to future marketing campaigns, product feature upgrades, and even the voice and messaging of your brand.
What is prospecting marketing?
What are examples of prospecting?
- Cold calling
- Referral marketing
- Social media outreach
- Direct mail
- Email marketing
- Attending trade shows
- Hosting events
- Door-to-door outreach