All prospects are not good prospects.
By Melissa Chu (Owner, Jumpstart Your Dream Life)
This post originally appeared on Medium. Picture this: an email comes up in your inbox. It’s from a stranger who seems really excited about your product or service. A prospect! You eagerly answer her questions, and ask her to let you know if she has any additional questions. And so the dance begins. She sends out a few more emails, asking more and more questions. While you think of how to respond, you can’t help wondering when she’s going to decide whether or not to use your services. Finally, after a long exchange, the questions stop coming. She’s not interested after all. It can be hard to tell initially who are the hot prospects, versus the ones that are seemingly-hot… that is, the ones that show lots of interest, but then disappear without a trace. Here are a few ways you can figure out the who are the likeliest prospects in order to save yourself time and energy.
1. Decide Whether or Not to Steer Clear Early On
While it’s difficult to identify whether someone will become a customer in early discussions, there are times when it’s best to just let a prospect go. For example, the way a prospect communicates with you is a strong indicator of what things will be like moving forward. If the person is demanding or unrealistic about expectations, chances are, it’s going to stay that way. Sometimes, the prospect is continually on the fence with little signs of moving forward. If you feel that continually providing enough value will encourage them to sign on with you, think again. For someone to use your products or services, there needs to be some sort of incentive. And if they’re already getting the help they need, why should they pay for it? A better approach is to increase commitment levels from your prospect’s perspective. Rather than volleying emails back and forth, suggest a phone call to chat about their needs, or a small project to test the waters. This approach gets the prospect thinking about whether or not they really want to move ahead with you.
2. Differentiate Between Buyer and Non-Buyer Behavior
In psychology, the rule of reciprocity states that when someone has given you something, you feel an obligation to return the favor. So if you provide a lot of time and help to a prospect, the person should feel the need to give something in return, right? It turns out that things aren’t so simple, especially when it comes to the Internet. While providing value gives the prospect an idea of how beneficial your product or service is, it can become detrimental past a certain point. When someone receives help continuously, the person is conditioned to expect help without feeling the need to reciprocate. In other words, the energy and time you spend on someone becomes the norm, which decreases the urgency for the prospect to move forward with a purchase. The Internet is also a large reason why people don’t feel the need to reciprocate. A study shows that people were likelier to cooperate with one another if they were held publicly accountable for their actions. Since the Internet is largely anonymous, there is the decreased need for accountability, making it easier for prospects to use more of your time and resources without feeling obligated to buy.
3. Justify Your Price Confidently
In discussions, the question of cost will eventually come up. At this point, it can be easy to cringe as you say a number and hope the prospect doesn’t run away. But before you get to that stage, it’s important to demonstrate how you can offer value. Discussing what you can provide to make your prospect’s life easier gets them into a frame of mind where the benefits that you offer are the primary concern, and the price point is secondary. The benefits could include how much time the person would save by using your product, or a worry-free experience because your service means one less thing for your customer to think about. Sometimes, though, there are prospects that will just focus on the price and not on your product or service. The first question that the person might ask is “How much does this cost?” rather than about how you can help them. No matter how many times you explain the benefits of your product, the prospect might just be stuck on the price. If so, remember that what you’re offering is not right for everyone (and it shouldn’t be). You’re just here for the people that are right for your business.
4. Assess the Value of Your Current Customers
Taking a step back and getting a big picture of your current customers can give useful insight into how to better spend your time. Using the 80/20 principle: 80 percent of the revenue comes from 20 percent of the customers, and also that 80 percent of your time is spent on 20 percent of customers as well. With these facts in mind, this means looking at the amount of time and support different customers need compared to how much revenue they bring. Using the customer value tool below, you can determine where various customers belong on the revenue and support scale. Placing your customers on the quadrant shows you which customers are in the top left corner, which indicate high revenue and low support. These are your ideal customers. Now that you’ve categorized them, you can find out if there are any trends amongst your ideal customers. For example, do they fit within a certain age group? What websites do they frequent? What types of occupations do they have? This can be as simple as creating a survey and sending it out for them to answer. The information you gather is invaluable for finding ways to reach out to more of your ideal customers. You can now target them specifically in locations they’re most likely to congregate in, while speaking on topics that would most likely interest them. If you haven’t found your ideal customer yet, don’t worry. You can start off by focusing on what your customers need and the revenue generated from serving those needs. Getting the ideal customer for your business won’t begin right away, but rather a process that you can use to increase the efficiency of your business and time.
About the guest blogger: Melissa Chu helps business owners develop good work habits and get more done in less time at Jumpstart Your Dream Life. Download the free guide on how to set and achieve your business goals so that you can start finding your ideal target customer today.