by Jim Lenskold
Managing Prospect Relationships
Managing customer relationships is critical to create a competitive advantage for retaining and growing customers’ future value. We learn about customers and ideally speak to customers based on a centralized view that takes into account all contacts, transactions, and interactions. But when it comes to generating new sales, either to prospects or existing customers, the process often fails to apply some of the same principles.
Within the customer acquisition process, prospects are targeted based on their potential value and expected conversion rates, both important for generating ROI from your sales and marketing investments. Where the approach often fails is in the pattern of 1) select a target segment, 2) make the pitch, 3) convert a small percent into sales, and 4) repeat over and over again. The Marketing Team works this process to the point of potentially exhausting the list quality (i.e., where additional contacts significantly depress response) and the Sales team keeps prospects on the callback rotation far too long. Unlocking additional profit potential comes from managing the prospect relationship concurrent with managing the sales cycle.
This untapped profit potential becomes more evident when we look at the prospect lifecycle. Most companies know that while their customer base may be profitable in total and show a good average profit value, deeper analysis shows that unprofitable customer segments are doing nothing more than cutting the gains from our profitable segments. The same applies to the prospect pool. We meet our financial targets for customer acquisition without looking close enough to recognize that many prospect segments will never be profitable.
The flaws in this approach make sense strategically when looking at the prospect dynamics surrounding the acquisition process. We deliver repeated marketing and sales initiatives and what happens? One of the following outcomes:
As we repeat our prospecting over time, the high level segments that emerge are those who buy, those who we can influence, those who will always ignore us, and those who will never buy from us.
Looking further, we must assess the impact of not only the offer we present to the prospect, but the outcome of repeated contacts that result in no sale. Are we blindly attacking the market to take earn our share without regard to the impact on all other prospects? Are we building interest or conditioning these prospects to ignore and reject our offers? Are we learning anything about how to market to these prospects differently or just trying to wear them down?
There are three key steps we need to take to improve prospecting relationships and profitability.
1. Eliminate the prospects who will not buy. There is a good chance you’ll spend more on repeatedly prospecting than you will get in returns for the small percentage who may eventually convert. Marketers take some steps here by choosing more responsive segments, however learning more about each prospect (and in some cases asking for a no) will allow you to concentrate budget and resources on better prospects.
2. Help prospects first acknowledge a need.Prospects who ignore your message have either not acknowledged that a problem exists or are not engaged by your contact. Marketing tends to focus on getting noticed, however this will not have any benefit unless the prospect acknowledges the right need. The opportunity to do better lies in designing multiple contacts that effectively move prospects through multiple stages of the sales cycle—first identifying the need and then identifying with your solution.
3. Proactively manage your progressive influence of prospects in the sales cycle. Instead of focusing exclusively on closing the sale in each contact, identify a strategic approach to moving prospects through the sales cycle from initial awareness to satisfied repeat customer. Different tactics will have strengths in different stages of the sales cycle. Each must work together to maximize acquisition.
I recently co-authored a white paper with Hugh Macfarlane of MathMarketing (www.leakyfunnel.com) entitled, “The Marketing Profitability Path: Mapping Your Journey” (published on MarketingProfs.com as a four part article series). Hugh brings a great perspective on mapping the buyer’s journey in relation to managing the sales cycle. He talks about a tactical approach to establishing rhythm, where you sustain your perceptions in the market until the prospect is ready to buy. This is radically different from repeatedly pitching the prospect until the right time arrives. Newsletters are a good example of rhythm where you can maintain frequency and presence without conditioning the prospect to constantly say no to your offers.
The prospect relationship approach to customer acquisition is about progressing prospects down a path and recognizing their position in the sales cycle. It is much different than the typical approach where, as Hugh describes it, we are jumping out at the prospects and screaming “I’m ready to sell are you ready to buy?”