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Evaluating Seriousness of Prospective Customers
Not all prospective customers are equal. If you spend equal amount of time with all, then you will quickly go out of business . Prospects will give you several signals you can use to evaluate their seriousness. The less serious the prospect, the less time you should spend on them. Below is an example company and how they evaluate their prospects so as to efficiently use their time.
I sell a software service that is used by nearly all types of industries. Think of it as something like an online Microsoft Office. I have received thousands of inquiries for it over the past few years and have developed a 'gut' feeling for whether someone will actually buy our service and be a long-term customer. Here is my customer 'totem' pole starting with least desirable to most desirable:
- Businesses from foreign countries. With the exception of USA, UK
and Canada, the rest of the world is on a very tight budget. They can not
justify paying for services, since labor in their countries is always much
cheaper than the USA. So if you are offering something that just saves
them time, then it better be close to free and be cluttered with features
specific to them. This even holds partially true for most western European
countries. Despite their high standard of living, they remain a rigid
class structured society with a large segment of low cost skilled
labor.
- People launching new businesses - I actually look forward to helping such types out, yet unfortunately most of them need a good dose of humble pie! They think they are embarking on the most ground-breaking thing the world has seen . Consequently they demand all types of complexity, none of which has been proven they actually need. Most of them close shop in a year anyways . So I am very careful about not spending much time on these types of prospects
- Business that deal with artists, religion, and spiritual clients. These people are all talk and no show. When it comes to putting money where their mouth is, they run away. They make it seem like they are really interested in your product/service, but when it cames to making a sale they always back away. I am very careful not to be moved by the strength of their words.
-
Leisure industry, i.e sports clubs, health clubs, entertainment etc.
These clients are 50/50. It is a tough industry
since it attempts to captilize on people's need for fun .
Leisure is usually free so trying to make money off it is not easy.
I find businesses that are successful in this field are typically run
by exceptionally smart entrepreneurs.
- Best customers are those who have been in business more than 10 years and produce a tangible product/service for society. These kind of customers have a definite need and will be back year after year. Examples are institutions, mid-sized to large companies, universities, schools , hospitals, government, manufacturing, engineering etc.
Since my service is new, I mostly get inquiries from the first three types, i.e new businesses, artists, and leisure industry . Only in the past year have I been getting more inquiries from the more stable industries. I wonder if this is natural as more established businesses are conservative and are not early-adaptors of new technology?
Or maybe my service is just more suited for these less reliable industries? What do you think?
Some people seek out new service businesses in hopes that they're so eager to make sales / make a name for themselves that they'll be under priced.
Reliable and established businesses prefer to deal with other reliable and established businesses. Makes sense to me. The longer you're in business and the better reputation you get for being both good and reliable, the more established businesses will show interest.
I think you hit the nail on the head. Small companies are always on the lookout for products or services that would help them grow, or make life easier - but they typically do not have the money to spend, or they are looking for something for free.
Larger companies are harder to get into, and there are many decision makers and routes the employees have to take to get a purchase made. Some of the employees may just be lazy or set in their ways. Smaller companies usually employ faster-paced people that need to get a lot done.
It is tough to reach the decision makers in larger companies, but well worth the effort. People in larger companies won't necessarily seek you out - you need to go after them through networking, trade shows, and marketing.