Accepting every potential customer is a recipe for disaster, not a growth strategy, so ask the right questions to qualify your leads.
By Marjorie Adams (President/CEO, AQB)
This post originally appeared on Startup Collective.
Does the hunger for a sale ever get in the way of finding clients that are a good fit for you and your business? Any business owner can be seduced into making a sale when a prospect expresses interest, especially when you’re just starting out or are in your early years of growth. Yet, some clients can be challenging to work with, aren’t profitable or just don’t fit for a variety of reasons.
Not every sales lead is worth your time or effort, so qualifying leads is an essential part of any growth strategy. Here are some guidelines I’ve developed to qualify leads and ensure the client is a good fit for our company strategically:
1. What is the problem?
The first and most important area is to discover the problem that precipitated the prospect’s conversation with us. If it is something our company can help with, we’re happy to continue the conversation. If not, I “bless and release” them. In other words, wish them well and say goodbye.
However, I always try to provide the prospect a referral to someone who I think can help solve the problem. This goes a long way in ensuring that we maintain a good relationship, even though we aren’t doing business together. You never know when their problem might be something we can help solve.
2. Is it all about the money?
When the only thing on the prospect’s mind is the cost or it’s the first question they ask, it’s time to shut down the conversation. Of course, budget factors into everything we do, but it can’t always drive business decisions.
Working with someone who is too budget-conscious means that the prospect values the dollar more than the solution. Our pricing focuses on the value we provide our clients in improving their productivity and, in turn, volume and profits. Value pricing also helps us become a better resource for the client, developing a long-term relationship that will lead to future sales.
3. Do we enjoy the interaction during the sales cycle?
The sales cycle can tell us a lot about what it will be like to work with a prospective client. Pay attention to how long it takes the prospect to respond to your questions during the sales cycle and keep track of their expectations of your time. These factors give insight into whether the project will be successful and whether the client will be there for the long haul.
4. What are the opportunity costs?
Does the project put your business at risk in any way? Does it take resources away from other projects that would be more profitable? Sometimes you can’t anticipate opportunity costs – projects could take longer and require more resources than you think they will – and you will take a loss.
As my business has grown, I’ve learned how to better evaluate opportunity costs so that I don’t take on projects that won’t be profitable, take too much time or are too demanding for my team.
5. What is their timeframe?
You should know when the prospect expects to make a decision and how long it will take to implement the solution. Quick decision makers generally result in good clients. Clients who expect you to drop everything and have unrealistic expectations of how long it will take a project to be completed don’t make for great business.
Traditional Lead Qualification Questions
These five questions won’t close the deal. We still rely on the traditional lead qualification questions sales professionals recommend as well, including:
- What is their budget? Can they afford us? Can we afford to work with them?
- Who is really calling the shots? Identifying the decision maker is always important in the sales cycle. If we’re not working directly with that person, we try to turn our direct contact into an ally who can help us close the business.
- Who is our competition? If you want the business, you need to outshine your competition. Knowing who else the prospect is considering gives you good perspective into both what the client is looking for and how to position yourself in the proposal.
- How will they make a decision? Whether the prospect is sending out an RFP, will hold in-person meetings or has a committee making the final decision, may change your sales approach.
It’s Not Just About the Sale
My company is projected to grow 20 percent over last year’s revenue by year end. Since we started in 2005, 20 percent annual growth has been the goal. But as we’ve grown, we’ve also become more and more strategic about the clients we want to work with. We’ve found bringing on the wrong clients can actually impede growth. That’s why we’ve spent a lot of time understanding what type of clients are good for us in the way we market and sell our services.
Before you spend valuable time pursuing a lead, make sure it is a good fit for your company. Part of that process includes examining your own business to determine exactly what you are looking for, the types of clients you enjoy working with and where you generate the most revenue. Happy hunting!
Photo credit: Sergey Peterman via Shutterstock.