Business Glossary

Prospecting: A Definition

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.

Prospecting is an essential part of the sales cycle, attracting potential customers and encouraging them to buy goods or services from you. Discover everything you need to know about sales prospecting, how to target the right customers and the tactics you can use to nail a sale.

What is prospecting?

Sales prospecting, or simply prospecting, is the first step in the sales pipeline. It involves using outbound marketing techniques to make potential customers (or prospects) aware of your company, start to familiarise them with your brand, and begin to move them into your sales funnel. The term has its roots in the gold rush of the mid-1800s. Prospectors would sift through soil and rocks to find nuggets of gold.

Centuries later, the principle is much the same - in sales prospecting, businesses identify potential customers or decision-makers who might be a good fit for their product or service. Using a specific strategy they will target relevant potential clients with the intention of selling to them.

Why is prospecting crucial in sales?

Sales prospecting is used in both B2B and B2C contexts. B2C prospecting targets consumers directly, while B2B prospecting will typically target key decision-makers, such as executives or their PAs. These prospects are often referred to as “cold” because they have no prior familiarity with your brand, or discernible intent to buy from you. In any industry, sales prospecting is an important part of the lead generation process as it qualifies whether or not a prospect is a good fit to become a customer, and prevents sales professionals from wasting their time and effort in targeting prospects who are unlikely to ever convert.

Sales prospecting is instrumental in growing your business, as it enables your brand to reach new customers. Getting it right can lead to improved market campaigns and targeted strategy, sustainable growth, and greater revenues. Getting it wrong, however, can lead to undue expense and a waste of time, activity, effort and resources.

Prospecting tactics and techniques

There are several techniques that sales teams can use to engage new prospects in conversation and move them to the top of their sales pipeline. Digital technologies have opened up new possibilities for prospectors. However, many tried and true solutions can still prove effective in approaching and converting prospects.

Conversion need not necessarily require a transaction. It may simply result in a prospect signing up for your email newsletter, following you on social channels or simply visiting your website.

Cold calling as a prospecting technique

Cold calling is designed to initiate a conversation between a member of your sales team and a prospect or decision-maker. While cold calling can be a risky tactic, it can generate success for gifted sales professionals. However, the communications watchdog Ofcom has specific guidelines on cold calling legally in the UK.

Automated voicemail for effective prospecting

Cold calling can be successful for businesses, but it’s historically low success rates can mean that it yields a fairly low ROI. As such, companies often don’t want their talented sales teams dedicating too much of their time to cold calls. Automated voicemail is a form of prospecting that can draw traffic to a physical premises or website without taking up too much of a sales professional’s time.

Prospecting through email and social media marketing

Email marketing is a popular form of prospecting because it is largely automated. The sales team simply needs to draft a great email template and the rest is done by algorithms. Using third-party applications, companies can send huge numbers of emails in short periods of time, thereby mitigating the risk of low conversion rates. They can also create multiple email templates designed specifically for the different industries they target.

Utilising direct mail for prospecting

Direct mail requires businesses to create and send printed materials to be delivered to prospects’ homes and / or business premises. This might include leaflets, postcards, catalogues and anything else that might encourage a prospect to buy from you.

Examples of sales prospecting

There are many ways to approach sales prospecting and the method you employ will depend on the industry you want to reach, the type of marketing activities you feel comfortable with and the product or service you’re selling. What increases interest in one industry might be a disaster for another.

Phone-based prospecting

With this type of sales prospecting a salesperson will phone a prospect and start a conversation. Their job is to rapidly communicate who they are and what they might be able to do for a prospect. The advantage of telephone prospecting is you get immediate results - if you get appointments and sales, it’s working. If you get lots of hang ups or irate people you may need to adjust your strategy.

Email-based prospecting

Through email marketing you can create highly targeted lists and campaigns which segment prospects in many different ways - industry, interests, size of business, previous spend etc. You can be particularly detailed and send very different emails depending on who you’re trying to reach and what result you’re trying to achieve. Email outreach enables you to personalise anything you send so that rather than sending generic copy you send something which will resonate with the recipient and increase the chances of conversion.

Prospecting through social channels

Social networks are a great way to identify potential prospects and reach out to them. You can use social media to engage and create a relationship first so they move from being a cold prospect to a warm one. And of course once you’ve built an audience and got warm leads, it’s far easier to convert them into paying customers.

Identifying good prospects

Your sales resources are limited - even big businesses are constrained by budgets - so identifying prospects who are most likely to convert is crucial. You’ll enjoy greater success when you focus your marketing activities on those who are a good fit.

This will depend on several factors:

  • Can you build a long-term relationship with them? It’s far easier to sell to existing customers than it is to acquire new ones.

  • Do they have the budget to be able to afford your product or service? Not all prospects will and you need to align your sales activities with those who do.

  • Are they geographically suitable? This might not matter if it’s an online service or you ship anywhere but particularly for businesses bound by location your prospects should be nearby.

Steps in the sales process and prospecting

Regardless of whether your prefer over the phone or email prospecting, the steps you follow are the same:

1. Prospecting and lead generation

Whether the source of your leads is an automated email marketing mail out or a phone campaign you need to decide how to acquire those leads.

2. Qualifying leads

Once you have leads you should categorise them into ones which are a good fit for your business and ones which aren’t worth spending time on.

3. Needs analysis and solution identification

At this stage your sales team should endeavour to understand the specific needs, challenges and opportunities for each prospect. From there you can develop strategies to solve their problems.

4. Presenting and demonstrating the solution

As soon as you’ve created a solution you need to demo it to your client and use your sales skills to show why it is the answer to their issue.

5. Handling objections and concerns

Buyers will have questions, they won’t bite straight away. Make sure you ask open-ended questions, build a rapport and successfully demonstrate you’ve understood their problems and can offer the perfect solution.

6. Closing the sale

Once you’ve demonstrated the power of your product or service and got the client on the hook it’s time to close the sale. This is easier if you genuinely believe you can help them rather than using fancy gimmicks. Speak directly to the heart of your prospect and with passion.

7. Follow-up and relationship building

The relationship doesn’t end with the sale - you can cement it for future sales by making an effort to stay in touch, provide the personal touch and get feedback which can help you further hone your sales prospecting process.

Top tips for successful sales prospecting

Here we’ll outline some tips to help ensure successful prospecting:

Starting small in prospecting

Cold emails are much more likely to be opened and acted upon if they address the prospect by name, mention where they live or work, or do something else that makes them feel as though you know them.

Similarly, a “spray and pray” approach to prospecting can not only be a waste of time and effort, it may damage the goodwill that your brand has built up by associating it with nuisance contact. It’s far better to target a dozen high possibility ones than 100s of not-so-great ones.

Following up with relevant content

Successful prospecting needs to position your company as the solution to a problem that the prospect is likely to experience. If your call, email or leaflet is relevant to their needs and pain points it stands a much higher chance of success.

Knowing when to stop pursuing relevant prospects

No matter how great your pitch sometimes a client just isn’t that into you. If they don’t fit your target persona, they don’t need what you’re offering, they don’t have the financial means to commit or they’re just downright unpleasant or rude to do business with, it’s probably time to move on.

Updating ideal customer profile (ICP) regularly

You should review your ICP often to reflect changes in the market, customer behaviours and your product offering. As your business evolves your customers will too and by doing this regularly you can ensure any marketing materials you’re sending remain relevant.

Planning and executing effective sales calls

  • Understand your target and where they are in their buying journey.
  • Visualise the scenario you want and establish a reason for the call.
  • Plan your questions and consider any objections that might arise.
  • Have an end goal in mind
  • Time the call right
  • Don’t overthink it and go for it!

Explore how Square can help you run your business.

Invoicing Software

Square Invoices is a free, all-in-one invoicing software that helps businesses request, track and manage their invoices, estimates and payments from one place.

Free Online Store

With Square Online, you can turn any business into an online business with a free eCommerce website. Set up a free online store that syncs with your inventory and your social media.

Mobile Card Reader

Square Reader lets you accept chip and PIN cards, contactless cards, Apple Pay and Google Pay anywhere. Connect wirelessly, accept payments quickly and get your funds fast.