Definition:

A prospect is a potential customer or sales lead which has been qualified as fitting certain criteria. This may include: fitting the target market, having buying authority and being a key decision maker. To become a prospect, an indicated interest in the product or service being offered is not always necessary.

Once qualification criteria is met, the lead is then converted into a "prospect" (a potential customer).

The selling phase begins AFTER the prospecting phase. A properly qualified sales prospect has a great chance of earning future sales and moving on to become a long-term customer of the company.

Not a Sales Lead

A prospect is often confused as a sales lead. A sales lead is unqualified and raw contact information. Most sales leads come from purchased lists based off various demographic factors. However, leads can be found anywhere -- phone books, referral lists or even people you meet walking down the street. It is the sales department's responsibility to reach out to each lead and whittle the list down based off the qualifying criteria listed above.

What is Prospecting?

Prospecting is the act of finding prospects. Additionally, it is the first phase of the typical sales cycle. Here is a simple look at how a typical sales cycle fits together:

1. Prospecting: Prospecting is the collection of contact information. Many sales representatives use purchased lead lists to begin the prospecting process. Another great way to collect leads is to attend trade shows. Most trade shows offer an excellent forum to collect attendee and exhibitor information. A well-sized trade show could provide hundreds of leads.
   

1. Follow-Up Communication: Once you have the raw lead, it is necessary to contact the lead to move through the qualification process. This can be done over the phone, email or in-person.
   
2. Qualification: This step is taking the information you collected during the "communication" phase and determining whether or not the lead meets your qualification criteria (i.e. if they are someone who would be a good fit for your product or service). If they are qualified, they are then converted over to a prospect.
   
3. Selling Phase: The selling phase of the typical sales cycle only begins once there is a qualified prospect (trying to sell something to a lead which may or may not even be an appropriate candidate is a waste of time and money). The selling phase is typically the most time consuming and will vary by industry. For instance, if you are a freelance architect, it may take months to close an interested home builder. If you sell Avon make-up, it may only take you a few minutes to close a sell. The selling phase should include a call-to-action and a close.

Organizing Your Prospects

Sales prospects are a business' greatest asset. These are contacts with whom you have had various interactions and who sit in various places within the sales cycle. Prospects are a future revenue stream. The best way to cherish and track your prospects and relative communication is with an inexpensive Customer Relationship Management (CRM) database. There are many great inexpensive and free CRM tools available.

Pronunciation: pra-spekt

Also Known As: Sales Prospect, Prospective Customer, Prospecting, Prospective Lead, Sales Lead

Examples:

1. While we worked the trade show, we found many fitting and interested sales leads which we determined were qualified enough to become a prospect.
2. After purchasing a raw list of over 1,000 B2B companies in the medical field, we contacted each business and determined 300 where fitting prospects.
3. To meet my sales quota for the month, I began to make calls using the local phone book. Of the 40 calls I made, 5 were fitting or interested prospects.