What Is a Prospect?

Definition & Examples of a Prospect

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A prospect is a potential customer who has been qualified as fitting certain criteria outlined by a company based on its business offerings. Determining if a contact is a sales prospect is the first step in the selling process. Once you've determined that the person meets the criteria, they're a prospect and can move into the next phase of the selling process.

Learn more about prospects to tune up your selling process and improve your customer relationship management.

What Are Prospects?

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. Prospects don't have to have indicated an interest in buying; they just need to meet the mentioned criteria.

For example, if you sell virtual support services to small businesses, a prospect would be a small business manager who can afford your services and make the decision to hire you. If your contact doesn't have permission to make a buying decision, they're not your prospect.

  • Alternate definition: In sports, a prospect is a scouted athlete who has yet to achieve rookie status as outlined by their respective professional leagues.

How Prospects Work

Prospecting is the act of finding leads and turning them into prospects. Leads come from various places; you can buy lists, skim the phone book, search the internet, or talk to people while you're waiting in line at the store. In most cases, whatever form you use, your goal is to determine if the person could become a prospect.

You determine this by qualifying them on one criterion, usually your target market. For instance, you can buy lists based on demographics and interests; you can narrow a phone book or internet search on your target market's location; and while you're standing in line, you can strike up a conversation that would get you information about whether or not the lead was in your target market. 

Once you've determined that the lead could be a prospect, you then work to qualify them under the other criteria, which can be done in various ways, including a phone call, in-person meeting, online form, or email. Your goal is to determine if the lead is a good candidate for what you offer and has the money and ability to buy. 

Many home business owners end up wasting time on the sales process because they don't qualify leads before trying to sell to them or spend too much time on unqualified leads.

Prospects vs. Leads

Like many industries or occupations, the business sales field has many words unique to its own language and use. Terms will often be used interchangeably, even though they don't mean the same thing. This is the case with the business sales terms "prospect" and "lead."

A prospect is often confused as a lead, but there's a fundamental difference. A lead is an unqualified contact; any potential client or customer you meet who hasn't been qualified as a prospect is a lead. In the sales process, you gather leads first, qualify them into prospects, and then move them through your sales funnel or process.

Organizing Your Prospects

Sales prospects are a business's greatest asset and a future revenue stream. These are contacts that you've talked with and meet the criteria of your best potential customers. The best way to track your prospects and communications with them is with a customer relationship management (CRM) database. There are many great inexpensive and free CRM tools available.

Prospect tracking allows you to keep information about your prospects, including notes on all your conversations. Noting a customer's questions and concerns is helpful for addressing them in the future if need be. You can also keep track of where they are in your sales process. For instance, a lead can become a prospect, and a prospect can become a sale, and hopefully, a repeat buyer.

Key Takeaways

  • A prospect is a potential customer who has been qualified as fitting certain criteria.
  • Prospects fit your target market, have the means to buy your product or services, and are authorized to make buying decisions.
  • A lead is an unqualified contact, while a prospect has been vetted to fit the defined criteria.
  • Prospect tracking is important for the sales process.
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