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Prospecting is quite important to your career if you are in sales and to the company if you are in management. Often we get proficient at things we do not initially like if it is important. The following is a snapshot at just how important prospecting is.
I spend a lot of time at my seminars preaching about prospecting. I am met with many enthusiastic responses mixed with many rolled eyes of those who are sick of hearing about prospecting. I am writing this article to point out how important prospecting is to your career if you are in sales and to the company if you are in management. Often we get proficient at things we do not initially like if it is important. The following is a snapshot at just how important prospecting is.
One reason many of us ignore prospecting is that it seems like a big effort for a small return. The truth is, the return is huge. Let's say you made a commitment to self-generate six demos per month. That is only 1.5 per week. Do you think you could do that if you really wanted to? I always use a line at my seminars saying "this won't put your kids through college" but I realize now how wrong that is.
Six extra demos per month would result in two extra closes if you close at the national average closing rate of one sale per three demos, although your closing rate will be higher on self-generated leads. Two extra closes per month at an average commission of $300 each means extra earnings of $600 per month. That is enough to lease a new Mercedes. Assume for a moment that you invest that $7,200 per year in a IRA at a 6 percent return. In 10 years, you will have saved $93,600. In 20 years you will have saved $207,897. It could mean the difference between college for your kids and none, or between a nice retirement for you and poverty. This monumental difference in your life can be yours for only six extra demos per month or 1.5 per week.
You may be asking yourself as the owner why your salespeople do not realize that and do something about it. Take a look at the big picture for owners. If a salesperson sold two extra per month and made $600 commission, you would probably make $1,400 in gross on those two sales after you pay commission. (I am using a figure of $1,000 gross profit per sale less the $300 commission paid for two sales per month.) That means for every salesperson you have who is not selling just two extra sales per month by prospecting, you are losing $1,400 you could be making. This virtually is net profit, because none of your other expenses need to increase to get these sales.
If you have one salesperson who you encourage to follow a program that netted two sales per month and you made the extra $1,400 per month, in 10 years you would earn $194,382 and in 20 years $455,262. That is for one salesperson. If you have four, this minimum little prospecting plan would allow you to earn more than $1.8 million for your retirement.
That is the big picture. Best of all, it requires very few extra hours. It merely is better use of the time and resources you and your staff already are spending.
Some people say, "Carl, I tried prospecting once, and it didn't work." Well, most of us buy lottery tickets or go to Las Vegas even though it does not work--in the vague hope we may make a big win. I am suggesting a program that costs discipline and dedication that is guaranteed to pay off big over the years if you stick with it.
Some people tell me they are happy to just work the call-ins, and they keep fairly busy doing it. It is a great way to live now with no pressure, no rejection and no goals, but what if you really need an extra $500,000 or more in a few years? Where will you get it? It could have been yours.
Compare ourselves with other industries. The lowest paid salespeople on earth are the ones who wait for people to come in. For example, in automobile sales, 80 percent of the salespeople barely get by. They wait at the door. The 20 percent that do well are the ones who prospect. I met a top Volvo salesperson at a seminar who refuses to take floor leads because she says they are harder to close than the ones she brings in.
There are industries such as insurance, real estate, mortgages and many others where the company provides no leads. Salespeople do very well in those fields. You can't really see too many situations where salespeople make big money based on walk-ins or call-ins.
In the age of specialization that we live in, many of us think there are closers and prospectors. The truth is that you can never close your way to riches. For example, the company gives you one demo per day from call-ins. That is the industry average--20 demos per month. If you are like most, you close six times in the month. If you earn $300 per sale, you would earn $1,800 for the month. That puts you just above the poverty line. Assume you become a great closer and close 66 percent (that is twice the national average). You now make $3,600 per month. The fact is that if you could close 100 percent of every demo you do, you would make only $5,400 per month. A person who can close 100 percent deserves more.
The only way to make your fortune is to become a master prospector. Even if you are not great at closing, prospecting will make you rich.
You may be wondering why everyone does not do it, especially since it is an easier way to make more than to learn to close them all. Many sales forces unofficially are led by poor salespeople who try to drag others down to their level of mediocrity. They realize that they would look bad if everyone worked at the level they could, so they are negative and do their best to stay on top by keeping others down.
The other reason few succeed is that it takes discipline over a long period of time. That is not something our society encourages. The fact is there is not much traffic on the extra mile. If you want to be a millionaire, you will have to rely on inner strength and discipline.
The fact is, it is not easy to make it to the top of any profession, especially sales. That is why they pay people who do so much. They are unique and valuable.
Your level of prospecting is the true measure of your belief in the company, product and yourself. If you want to make it to the top, read "Three Ways to Boost Your Prospects."
Many great philosophers say that the key to success is in our own backyard. This could not be truer for those of us who sell. It takes effort and discipline, but we should all be grateful we have chosen a career where we can become millionaires if we only are willing to try.