Do You Have Enough Prospects To Make Your Numbers?
By Lori Feldman
Several years ago I worked with a CPA who wanted 20 new
clients. We came up with a great direct marketing campaign that brought in 10
leads per 1,000 letters. His closing rate was 10%, so after his first few clients
came on board, we calculated that acquiring new clients was costing him between
$500 and $600. He liked the numbers (one client was worth about $8,000/year),
but progress was slow. We advised him to open the spigot and mail 5,000 at a time,
instead of the 1,000 he was sending. It worked, and he acquired the new clients
he was looking for sooner rather than later.
I do quite a bit of public speaking on direct marketing. One question I like
to ask my audience is “How large is your database?” I get answers anywhere from
100 to 250,000. I worry about companies who don’t have at least 2,500 names
in their databases. Unless they’re selling high six-figure products or services
or have a closing rate near 100%, they don’t have enough prospects to meet their
Database marketing is all about up-selling and cross-selling your existing
customers and targeting prospects to find qualified buyers who are ready to
buy now. It’s a numbers game. The more you put into the funnel, the more orders
that come out at the other end. Here’s the formula for calculating how many
leads you’ll need this year:
Annual projected sales / average order size / sales close percentage rate.
Let's say your annual sales quota is $750,000. An average
order is $1,000. You're a pretty good sales person so let's say your closing rate
is 40%. Using the formula above ($750,000 / $500 / 40%), you'll need 3,750 new
leads, or 313 new leads per month. If you’re relying on traditional prospecting
like shoe leather (networking, clipping “prospects” from the paper, telemarketing),
you’re not going to get “there” in time! The fastest way to build a client base
is to build a database of qualified prospects. Consider these shortcuts:
1. Buy a targeted prospect mailing list. Review your top 20 customers and figure
out the demographics that make them ideal customers for your business. Then
buy lists of these prospects. There are 40,000 different prospect lists on the
market; you'll need to find the best 3 to 4 that fit your “profile.” You may
find it faster and cheaper to have a mailing list broker help you find these
needles in the haystack.
2. Capture targeted leads off the Internet. Rather than cut and paste, you
can use data capture software to compile your own chamber lists, membership
lists, yellow pages listings, and email signatures in an Excel-spreadsheet-like
format, which can then be downloaded into ACT! or any database.
3. HP, the printer company, did a study that showed 80% of a buyer’s sales
decision is made by the time he calls you. Consequently, your goal is to make
prospects call you. With enough prospects, you can start a drip-marketing campaign
to educate and qualify them. Use direct mail letters and postcards to drive
prospects to your website, where you can then capture their opt-in email addresses
to start email marketing campaigns.
Do the math! Start building and marketing to your prospect database now, and
you’ll meet your numbers by year-end.
Lori Feldman teaches small businesses and sales executives how to make more
money with customers they already hav. She is the Database Diva of Aviva, a
database marketing and ACT! Software Certified Consulting firm. She has been
a mailing list broker for 20 years and is a recipient of the Direct Marketer
of the Year award from the the Direct Marketing Assn. of St. Louis. Reach her