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Prospecting leads

Identifying prospects among unqualified leads requires sales reps to put in real work. Learn all about prospecting leads and finding opportunities.

Rose McMillan · November 22, 2023
Prospecting leads

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Prospecting leads is one of the single most important skills for sales team members to develop. It's the main way to separate unqualified contacts from those that actually fit your ideal customer profile (ICP).

The process of turning leads into prospects is sometimes referred to as sales qualification. It's essential for targeting your sales efforts in the right areas and minimizing the time your business wastes on pursuing unrealistic targets.

In this post, we'll take a closer look at the theory behind prospecting leads, explore the differences between sales leads and sales prospects, and work through the main stages of the qualification process. As a result, your sales team will be better equipped to identify ideal targets and prioritize the most realistic and beneficial opportunities.

The basics of prospecting leads

Sales prospecting is the process of searching for and making contact with potential buyers with the aim of generating more business. As a definition from Gartner outlines, the primary objective of prospecting is to create a list of likely customers.

Ultimately, prospecting is important because it helps you increase the percentage of sales activities resulting in closed deals. Without prospecting, businesses risk wasting time pursuing unlikely buyers.

Despite its importance, sales prospecting is also considered to be one of the most challenging areas of sales. In fact, 42% of sales reps believe prospecting is the single most difficult stage of the sales process. This statistic highlights why it's so vital to create a clear plan for prospecting leads.

A good prospecting strategy typically involves establishing an ideal customer profile, conducting research, and attempting to establish whether an individual or business is worth pursuing based on need and intent.

Leads & prospects: what's the difference?

At this stage, it's worth highlighting that there's a fundamental difference between leads and prospects. While these terms are often interchangeably used, they represent entirely different types of contacts. The best way to think of this is as follows:

  • Leads are contacts who've expressed some interest in your business and what it offers. Interest could be shown by visiting your website, reading your blog, signing up for your mailing list, or following your social media accounts. Leads are at the very top of the sales funnel, but they may not necessarily be good targets to focus on. Their intent, level of interest and areas of need are all yet to be determined.

  • Prospects are contacts who've been qualified as potential customers. That means they fit your ideal customer profile, and your products or services have been deemed to be useful to them. Most prospects begin as leads until they're qualified through outreach and research. However, it's technically possible for a contact to become a prospect through research alone, even if they've had little or no previous interaction with your business.

Investopedia explains that prospecting leads involves examining and qualifying them in order to determine their intent and level of interest in what you're selling. If they demonstrate clear interest, have buying intent, and match your buyer profile, then they can be regarded as sales prospects. If your products or services are unlikely to benefit them and they're unlikely to buy, they aren't qualified as prospects.

Inbound vs. outbound prospecting

As mentioned, prospects can either be leads who've been qualified after interacting with your business, or contacts you've identified through other means, like research.

Reaching out to existing leads who've previously interacted with your brand or expressed some form of interest in what you're selling is referred to as inbound prospecting. The lead has made a movement towards your business, which is what 'inbound' refers to. You've then qualified them as a genuine prospect. There's usually direct involvement from marketing in order to generate the initial interaction.

Identifying potential buyers who have not previously interacted with your brand is referred to as outbound prospecting. This usually occurs through online research, such as viewing social media profiles. It's a form of cold outreach. Unlike inbound prospecting, this is usually a pure sales activity with little or no marketing involvement.

When we talk about prospecting leads, this usually refers to inbound prospecting. With this, you're taking action to move contacts further down the sales funnel, turning unqualified leads into qualified prospects. Learning this kind of sales prospecting should be a key part of any sales training you invest in.

Key steps for prospecting leads

It's important to understand that prospecting is an activity led by the sales team rather than marketing. While the precise process will differ from one organization to another, there are numerous key steps that most sales teams should follow:

Creating an ideal customer profile

One of the first steps to success with prospecting leads is creating an ideal customer profile. A collaborative article on LinkedIn highlights the importance of an ICP.

You should use market research, existing customer data, and other relevant information to build a picture of the characteristics of your ideal customer. Your ICP could be an individual or an organization.

Creating an ICP allows your sales team to focus their efforts on the right kind of leads. Your ICP differs from buyer personas because your ICP should be a singular representation of the perfect buyer, whereas you may have multiple buyer personas.

During this phase, a good tip is to look for relevant trends among your most valuable customers. How did they come into contact with your business? What were their primary needs and concerns? What were the main pain points?

Once you have your ICP, use it to determine the industries to target, the size of organizations to focus on and to generally filter leads. Eventually, you'll develop a list of appropriate and realistic targets.

Carrying out research & building a prospects list

Prospecting leads is manual effort from your salespeople, who are actively trying to find new sales opportunities for themselves. To do this, they need to carry out some level of independent research on leads and then qualify those who meet the criteria for becoming genuine sales prospects.

Research begins by analyzing information that's already been collected by the marketing department and, hopefully, added to your CRM software. However, you need to go much deeper than this.

Whether you're researching individuals or organizations, it's sensible to take a look at social media accounts and their own websites. LinkedIn can be an especially good platform to explore, but Instagram, X (Twitter) and Facebook could also provide value.

For organizations, in particular, it's worth carrying out a Google search for any recent news stories that may have relevance to what you're selling. It's possible you may also have mutual contacts that you could speak to.

Ultimately, your sales team needs to be able to answer some important questions about contacts, like:

  • Is the contact a match for your ideal customer profile?
  • Are there any obvious obstacles in the way of making the sale?
  • What are some of the contact's unique challenges or circumstances?
  • Have you successfully sold to similar people or organizations?
  • What level of awareness do they have of your business, your products and your services?

Putting all the different pieces together, you should start developing a list of prospects or high-potential leads you believe are genuinely worth pursuing and have a realistic chance of becoming customers.

Creating & tailoring your value proposition

Once you've built a list of sales prospects who you feel match your ICP, make sure your team knows your core value proposition. To begin with, this should be generalized. Think about what makes your product or service unique and try to define why people would want it. Most importantly, you need to think about the benefits associated with using this product or service and what it will do for customers.

As a Shopify article explores, your value proposition needs to be kept entirely distinct from any slogan or catchphrase you use. Think more along the lines of how your product or service can improve things for the buyer rather than focusing on specific features or obvious marketing language.

When creating your value proposition, you also need to think in terms of the top priorities for your customers. Your value proposition shouldn't be an extensive list of benefits. Instead, try to think: what are the number one and number two reasons why customers would want your product or service?

You may have to tailor your value proposition slightly for each potential customer you reach out to. What are their specific problems? How could your product or service help them overcome their problems? This is another area where CRM software becomes useful because you'll likely have data that can assist you.

Reaching decision-makers & making your initial pitch

The next stage in prospecting leads is to actually reach out. There are various stages in this process. For instance, sales reps should refer to their research and decide on the right channel to establish contact.

For one organization or individual, it could be over the telephone, whereas for another, it may be through social media or by arranging an in-person meeting. Reaching an actual decision-maker is also vital.

Generally, it's easier to reach decision-makers through initial outreach than by going through various channels first. People lower down in an organization will often be very reluctant to refer you to someone above them. This can make it difficult to speak to the person you need to, so try to aim initial outreach as high up as possible.

For an initial sales pitch, the focus should be on building a good story that covers how your product or service will improve things for the buyer. Pitches should be designed around the value proposition tailored for each potential customer. It's important to move past general overviews and stick to topics the buyer will actually care about.

Nurturing, education & overcoming pain points

Finally, once the initial pitch has been made, you need to make sure your sales team switches gears to nurturing the prospect. They must educate them on the product or service being sold and work with them to overcome any pain points.

During this education phase, it's best to focus on the tangible benefits of using your product or service rather than simply reciting a list of features. According to Sales Insights Lab, average performers spend 18% of their time speaking about features during discovery calls, while top performers only discuss features 9% of the time. In presentations, average performers speak about features 31% of the time, compared to 19% for top performers.

Buyers can quickly become overwhelmed when hearing about what your product can do in a broad sense. Instead, sales teams need to focus much more on what your product can do for that buyer specifically.

How can it help them with day-to-day tasks? What problems will it solve? How will it make life easier? What will the return on investment be? What evidence do you have that other people or other organizations have benefited from what you're selling?

Final thoughts on prospecting leads

Prospecting leads is widely regarded as one of the most difficult phases of the sales process because it requires a lot of manual work from individual members of the sales team who need to seek out opportunities for themselves. Research is absolutely crucial, and there'll be plenty of data to gather and make sense of along the way.

Capsule is a cloud-based CRM solution that sales and marketing teams can use to centralize, share, and update valuable information about leads and prospects, along with existing customers and other key business contacts.

Sign up now for a 14-day free trial to see how Capsule can benefit your business.