Small Business Blog

Prospect Target List: Size Does Matter

When building your suspect list, prospect targeting is everything. Go for quality over quantity, in this case smaller is better. Consider the following example:

Bob owns a PR firm (or a Legal firm, Accounting firm, or whatever B2B services company). He wishes to grow the firm and has highlighted he would like to increase revenue by about 400,000 pa, and he could do that with 12 new clients at £36,000 or $36,000 pa (are there any other currencies? … I await your hate mail). Looking at Bob’s current close rate of appointments to clients of 1 in 10 and the estimates from past direct marketing initiatives we could assume the following reverse calculations;

At first look we might think, ok it can’t possibly cost us 432,000 to acquire these new clients and we haven’t even considered the lifetime value of the clients to the firm. But we need to dig and uncover the true cost…

The obvious:

Marketing Expenses to the 12,000 list of suspects… our huge beloved list of potential prospects. It is easy to determine the cost of Direct Mail or Flyers or Telemarketing or a combination of all these things delivered to any list size, we just need to ask any number of service providers for a quote.

The not so obvious:

The massive point that is often missed is the person hours required to implement each escalation in the sales pipeline. Consider 120 opportunities to deal with…

This could mean for each 1 opportunity a person in the firm will need to do….

• 30mins of discovery phone calls
• 30mins of evaluation meeting preparation
• 30mins of travel to evaluation meeting
• 60mins of evaluation meeting
• 30mins of travel to back to office
• 60mins of proposal preparation
• 30mins of travel to proposal review meeting
• 60mins of proposal review meeting
• 30mins of travel to back to office

This equals = 6 hours, now if we assume you need to complete 120 within 10.5 months (12months – 4 weeks holiday leave + 2 weeks statutory holiday + 0 days sick leave) = approx 11.5 opportunities per month x 6 hours each = 69 hours. That is about 40% of the time in sales, or 2 full days a week selling. Now the firm needs to ask…

1. Who is going to do this? The MD or a sales person? Is this even possible?
2. What is the direct cost of this in salary package?

What about the 1,200 leads that were generated how do we filter this out to find the 120 qualified opportunities? Do we use rules and technology to decide for us or do we use an account manager to do this qualification over the phone? 1,200 at 15mins a call = 300 hours / 10.5 = 28 hrs a mth, almost a day a week when that person is at work? What does this cost?

The Point:

Better prospect targeting through detailed prospect profiling will yield much higher conversion rates. With better conversion rates you need a much smaller prospect list. A smaller prospect list not only gives you immense focus (because you will pretty much actually know who your clients are going to be because the list is so small), but it also massively reduces costs. Both direct marketing costs and internal staffing resource requirements. Consider Bob’s example in two different forms….

Scenario C: What if we, through a much deeper profiling process, uncovered the real key clients that Bob wanted were not the 36,000 pa clients (that was just an average of his top clients, a number he had used for years), the real perfect clients were 48,000 pa.

Conversion Rate Improvement

'But haven’t you just changed the conversion rate to fix the numbers'. Yes, well spotted. But I there is a reason.

Better targeting means rather that have messages and lead generation offers that are very generic and can only be communicated once due to the expense of such a large suspect list, you now have a far smaller list where you can communicate a message and an offer which is less generic and more relevant to that person… oh and you get to increase the frequency with which you communicate… it is better to send 10 relevant letters to 1000 people over the course of a year, than 1 generic message to 10,000 once.

You could communicate 5 times as much, for half the price, to people actually interested in your messages and offers. I mean, hello!!!

I’ve also assumed you will work out what it means to create valuable relevant messages and lead generation offers for the specific very tight profile. Make it relevant, high value, interesting and frequent and people will start putting their hand up, rather then you trying to raise their hand for them when they don’t want it.

Action Points

• Print this page.
• Get out the excel spreadsheet or piece of paper and calculate a couple of scenarios, see the massive difference conversion rate makes, set your ideal scenario.
• Profile the different personas of ideal clients for you and your company. Get super detailed, not just the normal; size, industry, title, location….. go far far beyond that, this is a topic for another article - prospect profiling.
  
  

Go for it!