Selling to Your Best Prospects

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If I were to ask you to describe your best prospect, how would you answer? If you sell to consumers, do you know your prime demographic? If you sell B2B, can you describe your target customer in terms of size, industry or some other factor?

Whatever you do, please don’t tell me you sell to “everyone.”

Many entrepreneurs buy into the myth that the bigger their market, the greater the opportunity. The fact is, the bigger your market, the greater the likelihood you're wasting your time with undesirable prospects.

When you’re in business for yourself, you have to work smart. You don’t have the time or resources to sell to everyone. The more you can define--and refine--your target customer, the better you can concentrate, and therefore maximize, your sales efforts.

Identify Your Best Prospects
If you don’t already know who your target prospect is, ask yourself "Who is most likely to buy my product or service? Who will appreciate the value of what I have to offer?" And if you’re still not sure who your target market is, you may find the answer in your current customer base.

Make a list of your top 10 customers. You know who they are. Then, think about what it is they have in common. If the answer isn’t obvious, look beneath the surface. For example, maybe your B2B customers work in different industries but share common priorities or a similar work flow. Once you figure out what the common denominator is, you can use it to identify your best sales prospects.

Take this exercise one step further. For each customer, identify why they buy from you. Is it something unique about your products? Is it your speedy turnaround time? Some facet of service you provide? Now not only do you know who your prime customer is, you know what your unique selling proposition should be.

Here’s an example: I know an entrepreneur, John, who sells boxes. One of his bestsellers is a tall, wardrobe-style box with a bar for hanging clothing. The box is a favorite with moving companies. However, John began selling these boxes to a menswear store. Then to another. And somewhere along the way, he became a bit of a specialist. Realizing he had something to offer, he began to concentrate his sales and marketing efforts on menswear stores. Instead of trying to reach the entire universe of “companies that need boxes,” he's targeting his efforts to the menswear industry--a group that has already demonstrated a need for his products.

Target Current Customers, Too
For most entrepreneurs, getting repeat sales from current customers is essential. But not all customers are created equal. You know who your A-list customers are. And I bet you could just as quickly name those whom you’d assign an F.

And I’ll hazard a guess that you’re actually spending more time and energy on your F-level customers. Whether you’re conscious of it or not, that’s one reason you assigned them a failing grade. The squeaky wheel most often gets the oil--but when you’re the one filling the oil can, it pays to give this some thought.

Let’s go back to your list of A-level customers. Now identify why they scored an A. Do they order more? Buy your most profitable products? Always pay promptly? Are they easiest to deal with? It may very well be a combination of factors, but these are the factors that are most important to you. These customers deserve your best, most attentive service because you want to keep them around.

If you’re like most entrepreneurs, time is your most valuable asset. Accounts that require constant handholding or habitually pay late are costing you money in lost opportunities. Stop bending over backwards for them. If they go away, you’ll be better off.

Similarly, when you’re prospecting, wooing customers outside your target market is simply less profitable. You’re less likely to get their business, and you may not want it once you get it.

The moral of this story is, you can’t sell to everyone. Nor should you try to. When it comes to targeting prospects, less is truly more.

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Ray Silverstein is the "Sales" columnist at Entrepreneur.com and president and founder of PRO: President’s Resource Organization, a network of advisory boards for small-business owners.

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Direct Selling: Dreams And Reality

What Makes Prospects Buy?

Direct selling of products such as cosmetics and cookware may not be the easy path to riches. But the flexible hours have made this the work of choice for some 14.1 million Americans, most of them women.

Though there are those who earn six-figure incomes from selling person-to-person or through the home parties that characterize this business, that is more the exception than the rule. More typical of the $30.5 billion industry, which includes names such as Avon, Tupperware, Amway and the Pampered Chef, is part-time or occasional involvement in distributing the products to friends, family and acquaintances. For many, it's a way to earn a bit of extra money during the holiday season or when households are pressed for cash.

How much can you make? The earnings of a distributor, sales associate or independent consultant -- as those in the field are variously known -- average around $13,000 or $14,000 a year, according to the Direct Selling Association, an industry trade group. But that number may be skewed by some hard-driving consultants who choose to make a full-time career of direct selling.

Median Earnings: $2,400

The median income, the point at which half of the work force falls above and half below, is more like $2,400, or $200 a month, says a spokeswoman for the trade group. Only 13% of the participants devoted themselves to their business more than 30 hours a week in 2005, the group notes. The majority of the part-timers work less than 10 hours a week.

To set up their businesses, consultants often purchase a line of products to demonstrate their use, spending an amount that is typically under $100, according to Joe Mariano, executive vice president of the Direct Selling Association. Start-up costs higher than $500, or inventory that can't be sold back to the company when an associate wants to fold up his or her business, should raise a red flag about the character of a venture.

Consultants earn a commission on their sales, and, in many cases, a percentage of the sales of any distributors they recruit to the business, in what's known as multilevel marketing. In larger organizations, the parent company pays additional compensation or incentives based on sales performance. For instance, Herbalife, the nutrition and weight-loss company, says 25% of its distributors sell enough goods to entitle them to an average of $2,200 in additional annual compensation from the firm.

Some people may be taken in by promises of easy money once the multilevel marketing aspect of the business kicks in, but the reality is that the people who have made a fortune in this business have clocked the hours and sharpened their selling skills to succeed.

The Federal Trade Commission is considering a rule that would require direct-marketing firms to give new recruits a week to think over whether they want to sign on, and would require greater disclosure about typical earnings, including how many people aren't able to earn back start-up costs.

It's Not Just the Pay

The appeal of direct selling can go beyond the money. For Mary Lord, a 43-year-old mother of three young children in Chatham, N.J., selling Mary Kay Cosmetics is an "opportunity to have more intelligent conversations" and reconnect with her friends on the computer, to say nothing of the $1,000 a month she earns.

Some people turn to direct selling as a second job. Menina Givens, a 36-year-old Los Angeles resident, started selling Mary Kay products as a sideline 12 years ago, to help chip away at her $20,000 of credit-card debt and $15,000 of student loans.

About a year later, when her Mary Kay income started to top her $50,000-a-year salary as a pharmaceutical sales rep, she quit the day job to concentrate on Mary Kay sales. Today, Ms. Givens has 110 people under her and says she earned more than $100,000 last year.

But success of that magnitude doesn't come easy. Instead, the direct-sales business is known for high turnover. An untold number of people give up after wearying of having to continually buttonhole friends and family to sell them products they may not want or need.

Before You Sign On

If you think you want to give direct selling a try, go with a well-known, reputable company. Don't sign on to any business that bases earnings on the number of people recruited. Beware of companies that require only that you recruit consultants, but don't have any products or services to sell.

The Direct Selling Association advises potential recruits to talk to other people who have had experiences with the company. Verify information about costs, commissions, average earnings of distributors and return policies with the company, not just the recruiter.

Finally, consult the Better Business Bureau or your state attorney general's office to see whether any significant complaints have been filed against the company.

After all, you want to be the one doing the selling, not the one being sold a bill of goods.

[Via - StartupJournal.Com]

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