Qualifying Prospects and Leads | Sales Prospecting Methods

Qualifying Prospects – Seek “Ideal Target”, Not Budget

For some time I’ve been meaning to post about the topic of qualification. The traditional way of qualifying prospects requires evaluation based on budget, timing, need, and decision process. Often, these elements are even used to judge whether marketing has delivered a viable lead.

Fundamentally, I don’t agree with that approach.

A Modern Approach to Qualifying Prospects

While need, budget, and decision-making elements are critical to closing the deal, they are largely influenced by timing and vary throughout the sales process. When organizations limit qualification to whether or not a prospect is ready to buy now or in the near term; they relegate themselves to Demand Response selling.

Why Is This A Problem?

In 1975, Frank Watts first coined the term ‘Solution Selling’ while working at Wang Laboratories (betcha don’t remember them). Thirty years ago, Michael T. Bosworth branded a one-day workshop for Xerox Corporation (more familiar right?). The first print version (that’s code for a “book”) came out in 1994. Solution Selling is predicated on the belief that, in order to compete, companies must focus on discovering a prospect’s true pain and align their solution to those specific needs.

In his seminal piece, still in print and worth a read, Michael T. Bosworth was one of the first to talk about the differences between Latent Need and Acknowledged Need (I prefer the term Existing Need). Existing Need (Acknowledged Need) refers to a situation where the buyer has defined their need, timing, and budget, and represents less than 5% of all the  qualifying prospects you will encounter. Every other prospect falls into the category of Latent Need, which presents itself in three distinct ways:

  1. A problem exists but has not been identified or acknowledged by the prospect.
  2. The problem has been acknowledged by the prospect but they are not currently pursuing a solution.
  3. The problem is acknowledged, solutions have been pursued in the past, but the prospect does not believe a solution exists.

If these scenarios make sense, you quickly realize that the majority of qualifying prospects we encounter are dealing with Latent Need scenarios. This represents an incredible opportunity for talented salespeople who know how to discover need (pain/gain) rather than simply probe for it.

The good news about Existing Need is that the prospect typically calls you, visits your website, or at least tends to be receptive to your call. I refer to this as the ‘it’s your lucky day’ scenario. The bad news about Existing Need is that the prospect is likely having the exact same conversation with your competitors, and your deal will be won or lost based on features and price.

In contrast, Latent Need selling represents an opportunity to be present at the inception of need. This is the period of time where requirements, budget, and decision process are formed. This gives you tremendous influence in the sales process.

Latent Need selling situations typically present little or no real competition. Even when it does, you compete based on the degree to which you have formed the problem in their mind and have a solution that exactly meets their set of needs and requirements instead of price.

There is an emerging school of thought referred to ‘Insight Selling’ or ‘Anticipatory Selling’ that suggests that engaging a prospect that has already identified and acknowledged their problem means you are too late. In the words of one buyer, ‘I want vendors who come in here and offer insight and solutions to a problem I didn’t even know I had.’ This is fascinating stuff, but far to esoteric (even for me) and get’s out too far in front of the headlights when most sales organizations still have so much to gain from simply understanding and embracing Solution Selling.

When Selling Into Latent Need, How Should We Approach Qualification?

First, it is important to stop thinking about qualification as an exercise, a set of questions, or even as a moment in time. Rather, consider qualification a phase of the relationship between you and the prospect wherein you seek to determine if there is sufficient alignment between who they are and who you serve, regardless of whether or not they are ready, willing, or able to engage with you now.

Latent Need Qualification requires that you focus on assessing objective factors aligned to (and constructed from) your image of an Ideal Target Prospect.

When I use the term “Ideal Target”, I am not referring to prospects who are ready to purchase now. Instead, I am referring to qualifying prospects that, because of who they are and because of who you serve, represent a fit whether or not they’ve identified a specific problem, established a budget, or quantified the benefit of addressing the issue. Qualification based on what can be referred to as ‘Buyer Personas’ is a binary decision. A prospect is either a match or they or not. The sales process and transaction that may follow are merely functions of timing.

A Personal Example

My Ideal Target is a CEO, Founder, or Principal of a company with $2 – $20 million in revenue who believes the potential exists to grow revenue by increasing the effectiveness of their selling organization. I work with individuals frustrated with symptomatic issues in their CRM, their demand creation efforts, as well as their opportunity management and forecasting process.’

When I say my Ideal Target is the CEO, this means I don’t engage with a VP of Sales even when they claim to have a fistful of dollars ready to spend next week. Don’t get me wrong, VP’s of Sales are great to work with and often have budget for training and programs. However, the Founder or CEO is the only person who I believe can fully align with my goal of working with companies that possess the desire, motivation, and capacity to invest to drive significant revenue growth.

One of the challenges for salespeople and organizations making the shift to Ideal Target-oriented Qualification Criteria is that it requires they say no (pronounced: walk away) from what might appear to be an attractive prospect. Additionally, ‘I serve companies where the opportunity exists to double their revenue within two years.’ However, a company may be unable to double revenue in two years for a variety of reasons: lack of will, insufficient capital, weak leadership, or external (industry and economic) factors, to name a few. They may also be better served by solutions I don’t have in my toolbox. Keep in mind, ‘doubling revenue’ is not a pitch or even a claim on my part. It simply represents one of several criteria used to determine if this is a client I want to try and engage with.

Even when a prospect strongly desires growth, this does not automatically mean the timing is right for us. Regardless of how attractive the fit or desirous the outcome, timing matters and is not something I worry about during the qualification process. My intent is only to test for fit and then nurture the relationship until such time they are ready, willing, and able to engage.

So What?

When you approach qualification seeking your Ideal Target instead of looking for budget or an initiative, you tend to get very open and honest dialogue. When a prospect aligns to your ideal target profile, there should be no doubt you will work with them some day. If they don’t align with your criteria, why would you continue to invest your energy to try to acquire them? Salespeople waste time chasing deals that will never close when they focus on timing, budget, urgency, and decision-making criteria. Worse, they often win business with customers they can never satisfy. When presented with a prospect talking about their project, its budget, and how quickly they are to get going, sales organizations get excited and emotionally involved in the deal. This works against the goal of objectively assessing the value to both parties.

As you shift focus to qualification criteria aligned on your Ideal Target profile; you will attract and retain clients that represent a much better fit, and, more importantly, deliver higher quality work, better outcomes, and generate more referrals as a result.

For more on Sales Prospecting Methods, you can check out: How NOT to Ask for Referrals.

By Townsend Wardlaw

photo credit: Daniel*1977 via photopin cc

Comments

  1. Great stuff TW – i am going to work on defining my ideal prospect better thanks to you. But it`s a lot like yours. THANKS JAG

  2. Townsend, another great blog, thanks for sharing what is going on in your brain. (Good stuff in there!!!)
    I think your categories of existing and latent need are very helpful for planning a sales approach
    For the most part, existing need is a smaller percentage of prospects. AND, I would say that the opportunity here is that they typically have misidentified their existing need, AND it is not so common to have a “it’s my lucky day” phone call. (An example of how an addiction to existing need is with those selling to government clients. They oftern have an unfortunate belief that they have to wait for an RFP of existing need to come to them, (as they get bypassed by salespeople discovering latent need at their clients)

    On the latent need opportunities, it seems 3 different approaches would be called for.

    1) A problem exists but hasn’t been identified or acknowledged by the prospect.
    A longer sales cycle, and a greater need for research/discovery on the sales persons part. Better be very good at helping them discover and acknowledge critical needs. First step here is getting their attention, as you are basically saying they missed something that you can find. (which sounds like “are you stupid?” to some people.
    2) The problem has been acknowledged by the prospect but they are not currently pursuing a solution. The art here? get to the constraint of why they are saying no, and have them explain to you why they shouldn’t move forward, given your new insights to how they could proceed. (Also requires some great discovery)
    3) The problem is acknowledged, solutions have been pursued in the past, but the prospect does not believe a solution exists. This is good news if (as you say TW), you have the secret sauce they didn’t know existed. The temptation here is to spew your abilities, the art form is to explore options and provide them with a choice, one of which is you.

    Love this thinking Townsend, helpful to sort out a pipeline. I am curious to here others reactions!
    Is there any other category missing?

  3. Its just perfect, the latent need assessment is the real task , whats is there in hands of marketer these days.
    The real challenge is to customise the latent need assessment process for the target segments. Please let me know if you have some insight in that direction also.

    Thanks,
    Gaumzz

    1. Author

      Thank you Gaumz… If you search the site (using the search tool found on the lower right) for ‘Artful Discovery’ you will find several articles on that topic as well – Townsend

  4. Townsend,

    Interesting take on selling with insights and always fun to harken back to the literature on Latent and Acknowledged Need. Years ago, I used to teach this simply as Potential Need (sales rep sees it) and Confirmed Need (prospect recognizes it). Even when you have that, though, there’s no guarantee that it’s urgent enough to resolve. But, that’s just the next thing to weigh and assess, in the process, and it’s all good stuff that still works today.

    I would have enjoyed reading your thoughts on how you’d maintain the prospect’s interest, during the interaction, or initially win their attention, in today’s environment, without insight or bringing some added-value lure to the table. To me, that that’s one of the real upsides of using insight, if you’ve actually got it (relevant, compelling, yada, yada), and can deliver it effectively. I just found your blog, so I’m sure I can search down more later, just thought I’d add my two cents on that.

    By the way, as a former sales consultant (see http://slidesha.re/PerfLevers082011 in a dull moment) and a long-term corporate sales training leader, I was clapping at your ideal profile and the walk-away comment. In my consulting years, my sanity was saved and my results far improved by the clients I DIDN’T work with. Of course, I got to the that point the hard way, but I still got there. Really tip my hat to you on that and respect the thought process.

    Mike

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