The issues I’ve identified are symptomatic of a failure to achieve a company-wide consensus (and a clearly documented agreement) on what an “Ideal Prospect” looks like - or, if such a definition exists, to base it solely on the basis of traditional demographic metrics like size, sector or location.
Where’s Your Organisation’s Sweet Spot?
In every high-value, complex sales environment I’ve ever come across, demographics are a completely inadequate approach to identifying the “sweet spot” centre of any target market. They might vaguely define the box within which your prospects might be found - but basing segmentation on largely demographic factors is about as productive as looking for a needle in a haystack - and hoping against hope to find it.
Here’s my definition of an Ideal Prospect: it’s an organisation in a market you can address that’s suffering from problems or issues that you can solve, who are motivated to buy something, where you have a strong chance of winning, and which are likely to turn into good and profitable customers.
The demographics of size, sector and location are very poor predictors by themselves. In every win-loss review programme I’ve ever been involved in, when you really dig into the common characteristics of winning or loosing deals, and setting aside sales competence as an influence, structural, environmental, behavioural and situational factors predominate.
Structural factors are internal to the prospect: the reflect the way the company is structured or organised. For example, are they centralised or decentralised? Are they growing, stable or shrinking? Are they local/national/multinational or global? Are they heavily unionised or non-union? Do they have a history of acquisitions or of organic growth?, etc.
Environmental factors are external to the prospect and relate to their market and their position within it. For example, are they a leader or a niche player? Do they set trends or follow them? Is their market - and their market share - growing or shrinking? Are they affected by changes in regulation or legislation, or by changes in the competitive environment?, etc.
Behavioural factors reflect the way the prospect organisation makes decisions. For example, do they have a command-and-control or a consensus-driven management style? Are they early adopters or laggards when it comes to adopting new technology? What is their history of buying similar solutions (particularly important for SaaS vendors)? What approval mechanisms do they use? Does procurement get involved?, etc.
Situational factors are very important when it comes to the timing of any opportunity - they relate to recent changes to the prospect organisation. For example, have they had a recent change in management? Been through a downsizing exercise? Made a recent acquisition? Announced a new strategy or a key company-wide initiative? Published particularly good or bad financials? Been affected by recent changes in their market?
Your Best Sales People Know Already
Taken together, these non-demographic factors are consistently better predictors of your chances of sales success than conventional segmentation. And you know what? Your best sales people - almost invariably - are putting many of them into practice, even if subconsciously, when they qualify opportunities. They reflect the way an opportunity “feels”. What you need to do is to systematically capture and share their insights.
You Can’t Buy Non-Demographic Insights From List Brokers
Of course, there’s an inevitable consequence of focusing on non-demographic factors. You soon get to realise that you can’t buy ready-made lists from conventional list brokers. The characteristics of your “ideal prospects” will be different from those of your competitor’s best opportunities. So there’s no alternative to doing your own research.
But this is, to my mind, a good thing. It forces your organisation to agree what an ideal prospect looks like and to embark on a systematic programme of in-house research (much of which is best conducted by your telemarketing or sales teams) to progressively build up a picture of where your best prospects can be found.
But there’s also a growing number of interactive research tools - many tapping in to LinkedIn, Social Media and news services - that can help you to identify some of the key situational factors that turn a suspect into an active prospect. But you have to know what you are looking for.
Building your Ideal Prospect Profile(s)
I recommend that you start by systematically and dispassionately reviewing your recent sales wins, losses and “no decisions” - as well as a cross section of the most important prospects in your current pipeline. Your goal must be to identify the common characteristics of your most valuable prospects, as well as the factors that characterise opportunities that are never likely to close or which turn into bad customers if they do.
Bring together a group of your most experienced customer-facing employees. Invite them to collaboratively build up a picture of what makes for a “perfect fit” sales opportunity as well as the characteristics of “poor fit” prospects. Encourage them to think laterally. Pay particular attention to those structural, environmental, behavioural and situational factors.
Build up an Ideal Prospect profile for each of your most important offerings and target markets. Circulate them within your organisation. Test the profile against recent wins and losses, and against key opportunities in the current sales pipeline. Make sure that everyone knows how to recognise an “ideal prospect”. Get marketing to reflect the findings in their messages and campaigns, and get sales to incorporate them into their opportunity qualification questions.
Download Ideal Prospect Template
Do that, and you’ll be well on your way to eliminating a lot of the wasted effort I referred to in the introduction to this piece. I’d like to set the ball rolling by sharing a recently-updated template that I’ve found extremely helpful in building ideal prospect profiles. You can download it here (no registration forms are involved).
Please let me know how you get along. I’d be happy to share my experiences of helping to develop dozens of these profiles for B2B organisations of every stage and size. I’ve become convinced that these ideal prospect profiles are the essential foundation of truly effective B2B sales and marketing.