What is a prospect in business?

We can use the word prospect as either a verb or a noun. It has several meanings. In most cases, the term is associated with something positive that we expect to happen in the near-, medium-, or long-term future.

Prospect – verb or noun

Noun

1. A prospect may be the likelihood or possibility of something occurring in the future, as in: “The prospect of becoming friends again gives me hope.”

2. A consumer who I think could well become a paying customer is a prospect. Some people (not all) use the term hot lead with the same meaning.

3. A candidate for a job is a prospect. If I say: “I’ll be interviewing two more prospects on Friday for the position,” I mean two more job applicants or candidates.

4. The term may also refer to the likelihood of medium- or long-term success, as in: “That job has excellent career prospects.” It means that the possibility of promotion and nice things happening over the long-term are good.

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1. During the California Gold Rush from 1848 to 1855, many people were prospecting. In this context, the term means searching for gold. A mining company may be prospecting for silver, bauxite, or any mineral.

2. In business, prospecting means looking for leads and then trying to turn them into likely customers, i.e., prospects.

Sales and marketing

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A person or company that fits certain criteria that a business has outlined based on its product offering is a prospect.

Imagine you sell racing bicycles. A young man calls you saying that he is professional cyclist who makes a living wining prizes. He would like to try some of your bikes. You arrange an appointment for 2pm tomorrow. In your notes, you will definitely describe him as a prospect.

Thebalancemb.com makes the following comment regarding the term from a salesperson’s point of view:

“Companies deem potential customers as prospects once they’ve been qualified as possessing predetermined characteristics.”

“In most cases, a prospect fits your target market, has the means to buy your products or services, and is authorized to make buying decisions.”

Must a prospect express interest in buying?

Some sales managers say that the person must have indicated in some way that they were interested in possibly making a purchase. Otherwise, they are simply hot leads, but not prospects. Other say that as long as they meet certain criteria, expressing an interest to buy is not necessary.

Prospect vs. lead

Some people use the two terms interchangeably. They shouldn’t, because their meanings are different. The main difference between the two is the level of engagement and the direction of the communication flow.

Leads

With leads, communication goes in one direction; from the seller to the target consumer.

Prospect

In this case, there is two-way communication.

I might send thousands of emails to a target audience in the hope of getting some leads. Some of them respond with their names, and other details I requested in the email. They are now not just names in a list. They are leads.

As soon as I start communicating with these leads and they answer back, perhaps asking for details about the product or service, they have become prospects. Our communication is now two-way – from me to them and from them to me.

Companies’ usage of the terms vary

These definitions are not set in stone. One company may have several types of leads, such as cold leads, warm leads, hot leads, and then prospects. Others may have fewer categories.

A salesperson’s conversion rate will be much better when dealing with a prospect than a lead. Conversion rate, in this context, means sales per presentations/conversations. If I present to 100 leads and make 10 sales, my conversion rate is 1-in-10 or 10%. My conversion rate with prospects will be higher; it might be 25%, 30%, or even higher.

A prospect is a potential client, someone who is in the market for your product and has the resources needed to buy it but has not purchased it yet. Once the prospect buys the product, which is always the end goal, they become a customer. So how do you find and court prospects to turn them to a customer?

You have to know what kind of prospect you want to find. Creating a buyer persona (B2C) or an ideal customer profile (B2B) is the first step, as it helps identify the person/company you want to sell to. For example, if you’re trying to sell cat toys, your buyer persona will be based on a cat lover, as you’re not going to put your efforts into researching what dog lovers like.

Knowing your intended audience helps target, find, and reach prospective customers. You want your focus to be on those who need or want your solution and can afford it. Searching for people outside of that qualification is a waste of time and resources that are best spent on converting qualified prospects.

Sales prospect profiles can be specific and are best determined by the characteristics and actions of existing customers. All of your clients were at one time prospects. The way you interacted with them worked, and you have successfully sold to them. So, use this experience and information to create a prospect profile. 

Start by asking simple questions (edit them to fit your niche):

• Who are your customers? 
• What business are they in? 
• What is the size of their business?
• Who are the customers who have stayed with you the longest, and what do they have in common?

Answering these questions will help you see who you are selling to and aim your attention to qualified prospects, which greatly increases your chances of turning them into long-term customers. 

Finding sales prospects

Now you know who you’re looking for, but how do you find them? Will lead generation be like panning for gold during the Gold Rush, or will it be like finding a needle in a haystack? Well, that depends on how much effort you put into it, and yes, lead generation takes effort. Use all the lead generation tools you can, and you’ll end up with a handful of gold. Only use one, and you’ll be sifting through the hay forever. 

There are many lead generation methods you can use. The most common ones are sourcing from LinkedIn, email and social media marketing, networking, referrals, conferences, and conventions. 

Not everyone who fits your sales prospect profile will become your prospect. But putting yourself out there and letting your potential customers know what makes you special and worth their time and money will lead to more interest. 

Building a relationship

Even if your sales prospect is a company, it’s made of people, and people strive for relationships. 

You can fill their needs or desires with your product. Listen to your prospect, be genuine, and promptly answer their questions to build trust and position yourself as helpful. Don’t forget to ask questions to make sure you understand what the prospects want. These interactions will determine if your product is what they need and if your company is the one they want to work with.

In a lot of ways, prospect marketing is like any other interaction. Learning their interests, needs, and fears, and always finding time for conversations instead of simply sending hard sales pitches is the only way to achieve good conversions. 

Prospect marketing is impossible without lead nurturing – share articles you think they’d be interested in, make your interactions easy, and most importantly, be patient. No one likes to feel pushed to make a decision – or pushed into a business relationship. Go with their flow. 

Prospect pushback

Sometimes a prospect is not on the same page as you. Maybe they don’t have the budget, maybe they don’t have the time, maybe they already use a similar product by a different company. 

You have to decide if that sales prospect is worth the effort and time. If you think they are, you have to take a step back and determine if maybe they are saying no without saying it. If that is the case, it’s best to move on to your next prospect. Don’t chase a dead lead at the expense of other viable prospects who could be turning into paying clients.

From prospects to customers: what’s next

You created your prospect profile, did your research, put yourself out there, crafted a business relationship, sold the idea of your product, and sold your product. You have a customer! Pat yourself on the back because that’s a lot of work.

But you’re not done yet. To keep that customer, continue to follow-up. Your goal is not just to turn 1 prospect into 1 sale. So while you search for more prospects, make sure to work on minimizing your churn rate, as 80% of your company’s future revenue will come from just 20% of your existing customers.

All in all

There are a lot of prospects for any business out there – it’s all about knowing what you’re looking for and reaching out. Understanding your current customers is the easiest way to find your sales prospects. 

To turn prospects into paying customers, you have to reach out; you can’t just sit back and hope they find you. There is an infinite number of tools that can help you with prospect research and lead generation – it only takes research to find your most converting lead source.