Prospecting Plans and How to Develop Them
An example of the importance of prospecting plans:
Let's say for the purposes of this example, we are selling heavy equipment into the construction industry. You estimate that you will need $10,000 of sales coming from new business per month over the coming year.
There are three relevant estimates to be made here:
1. How many genuine prospects are likely from a given number of sales leads?
2. How many new accounts can you open from a given number of prospects?
3. What average sales volume can you expect from newly opened accounts? See also the business growth plan matrix
At this stage you will have an estimate for the number of new leads of various types required to enable you to meet your sales-from-new-customers requirement. This will be an estimate rather than an exact number but it can be a very useful guide. Not enough salespeople quantify their prospecting in this way.
For example, you want to generate $10,000 of new business next month, (if you don't count the very largest or the very smallest, customers in your territory) the average is around $3,000 per month in purchases, so you need to open three or four new accounts next month.
You know from your call analysis that the conversion rate from qualified prospects to new accounts opened is approximately 1:3, that is, one new account is opened to each three new business presentations made. Therefore, you will need to make 9 to 12 new business presentations next month.
You have some good lead sources to work with, especially a listing of all the relevant construction companies to contact in your area. Using this list and a qualification process based on suitability of this lead, you may have located one genuine prospect for each of the companies contacted. Therefore, you need to make initial telephone contact with 36 to 48 companies.
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Schedule Lead-Generating Activities
Servicing existing customers needs will always tend to have your priority as you perform your sales role day-to-day. It is very easy to let prospecting slip and become too hard to do. The best way to avoid this is to have regular, scheduled times for identifying and contacting leads and to make allowances for new business presentations.
Consider the following example; You know that it takes approximately 4 minutes per call to qualify each lead and arrange an appointment (or withdraw gracefully). Each new business presentation lasts about 20 minutes and you normally find that with traveling and waiting time included, each call takes about one hour.
Also include further research time (gathering information from newspapers, trade publications etc) to provide some topical information at this initial meeting, means you need to allow an additional two hours for research. Therefore your diary for this month should have specific time slots for 2 to 4 hours of telephone calls, and allowances for 9 to 12 hours of sales calls on prospects. You also need to diarise two hours of research and preparation for developing your prospecting approach.
Many good prospectors use their slow times for prospecting. Friday afternoons, for example, can be a poor time calling on customers in many industries.
Use this time wisely to compile a list of possible leads from the various sources available, library resources, directories, yellow pages, the Internet, customer referrals, or trade show contacts to chase up next week.
See also the business growth plan matrix
Prospecting Plan Calculations
Based on our above examples, below is a typical set of prospecting plan calculations to highlight the amount of time that should be considered each month for allocation to prospecting plans.