What is Prospecting? 6 Steps to Ensure Success

Successful prospecting builds a solid pipeline of qualified leads for your business. It involves identifying, engaging and nurturing potential customers who are most likely to buy your product or service.

However, successful prospecting takes a lot of work. It can be time-consuming, especially if you’re unsure who your ideal customer is. As a result, you waste time and resources on leads that aren’t right for your business.

In this article, you’ll learn how sales prospecting works, how to prospect successfully and how to spend your time and resources on suitable leads.

What is prospecting in sales?

Prospecting in sales involves identifying and reaching out to potential customers, or “prospects”.

You research which prospects are right for your business and try to engage with them. Sales prospecting aims to convert prospects into leads and move them into your sales pipeline.

Imagine a software company that sells customer relationship management (CRM) tools. Here’s how this company might approach prospecting:

• A sales rep researches small businesses that could benefit from a CRM system to streamline their customer interactions

• They find a local bakery chain that recently expanded and discover that customer management is a challenge, as seen in a recent online interview with the owner

• The sales rep reaches out with a cold email, introducing themselves and suggesting the CRM could help the bakery manage customer information and enhance loyalty tracking

• The sales rep speaks with the owner to confirm interest and learns the bakery has the budget and desire for the software, making them an ideal prospect

• The sales rep moves the new prospect into the pipeline for lead nurturing

How to prospect depends on what your business does and who you want to target. We look at a general formula for getting started in more detail later.

How does prospecting fit into the sales process?

Prospecting typically happens at the start of the sales cycle because it ensures you start with qualified leads to nurture. Qualifying leads means you spend your time, money and resources on consumers who are more likely to convert.

Sometimes, sales reps prospect warm leads further into the sales process. Warm leads are individuals or businesses that engage with your company by opening follow-up emails or visiting your website. Prospecting these leads builds on their existing awareness, increasing the chances of closing a sale.

Why is prospecting so important?

Sales prospecting can be a lot of work. Trying to find potential prospects and sift through companies that don’t want your product or service is time-consuming. However, the process is worth it because it helps you:

• Develop a strong pipeline. Prospecting builds a pipeline of qualified, potential customers. Sales teams can focus on those most likely to buy to increase conversion rates.

• Get a strong flow of leads. Prospecting ensures a consistent flow of qualified leads, which is vital for sustaining and growing revenue.

• Understand your ideal customer base better. Prospecting helps sales professionals better understand customer needs, industry trends and potential challenges. As a result, sales reps can nurture leads.

• Build a good relationship with prospects. Reaching out early in the customer journey can establish trust with prospects. Studies show that trust is important to consumers when choosing where to buy.

The two types of prospecting in sales

There are two main types of sales prospecting: inbound and outbound.

Inbound prospecting involves reaching out to warm leads who have already shown interest in your product or service.

They typically come to your business through content marketing, social media or search engine optimization. Since inbound leads are familiar with your brand, they’re often more receptive to outreach. Examples of inbound prospecting methods include:

• Following up with individuals who filled out web forms or requested a demo

• Reaching out to leads who downloaded e-books, white papers or case studies

• Connecting with and nurturing leads who engaged with posts or ads on social media

Outbound prospecting is when sales teams reach out to potential customers who may need more information about your brand. The process involves identifying potential leads and initiating contact to introduce your product or service. Here are some examples of outbound prospecting strategies:

• Cold-calling potential customers who fit the target profile to introduce the product

• Cold emailing to generate interest and invite prospects to learn more

• Contacting prospects on LinkedIn or other social media platforms to build relationships and introduce your brand

The best prospecting efforts often combine these two approaches. Outbound prospecting focuses on engaging with the right audience, while inbound prospecting nurtures already interested leads.

What’s the difference between leads and prospects?

The terms “lead” and “prospect” are often used interchangeably, but they’re not the same:

• A lead enters your company’s nurturing process but may not show interest beyond opening emails and reading content. They might not engage or reach out to see how your product or service could help them.

• A prospect shows interest in your product with the intent to make a purchase or learn more.

Another difference is who’s responsible for these activities. Marketing teams use social ads or content marketing campaigns to attract new customers. Prospecting falls under the remit of the sales team, while lead generation is more of a task for marketing departments.

Here’s a breakdown of the differences:

Knowing the difference between leads and prospects is essential when prioritizing efforts. It allows sales and marketing teams to tailor their focus based on a potential customer’s interest.

6 steps for successful prospecting

Let’s walk through the steps to implement successful sales prospecting in your business.

1. Define your ideal sales prospect

Create an ideal customer profile (ICP) that outlines the characteristics of your best customers.

An ICP clarifies your most valuable customer (unlike a target audience, which is any person, group or company you hope to sell to). Creating an effective ICP helps you focus on prospects most likely to benefit from your product or service, increasing your chances of successful outreach.

Follow these steps to create an ICP:

• Analyze paying customers. Identify your most successful customers and note common traits, such as industry, size and challenges

• Define characteristics. Focus on demographics like company size, revenue, location and decision-maker roles

• Identify pain points. Understand the problems your product or service solves for these customers

• Evaluate buying behavior. Note how and why these customers purchase your product or service

2. Collate a list of prospects

After identifying your ICP, create a list of companies for prospecting. To do this, research companies that fit your ICP.

Technology streamlines your search for ideal prospects. Look at Pipedrive’s Prospector tool as an example. The LeadBooster add-on identifies high-quality outbound leads and prospects. Here’s how it works:

• Go to Leads > Prospector in your Pipedrive dashboard

• Add filters to find the right prospects and narrow down your search (things like job title, location and industry)

• Check your search credit balance (10 Prospector credits monthly at no extra cost, or click “Get more credits” to add more)

• Find prospects from a database of over 400 million profiles based on your ideal customer persona

• Select ”+ Add prospects” to add potential leads to your account

Watch this video to see these steps in action:

Find out more about how the Prospector feature collects data.

3. Research prospects

After identifying potential prospects, research their background, industry and specific challenges. Knowing more about your prospects will help you understand how your solution addresses their needs so you can tailor messaging.

It also helps you pinpoint decision-makers, which ensures you engage people with the authority to approve or influence purchasing decisions.

Here are some tips for researching prospects:

• Use social media. Check LinkedIn for job titles, career history and recent posts to understand their role, interests and challenges. Follow their company pages for updates.

• Review industry reports. Analyze reports for market trends, common challenges and benchmarks relevant to the prospect’s industry.

• Visit the company website. Look at the “About Us” and “Team” pages to learn about the mission, values and decision-makers. Explore press releases for recent news.

• Read customer reviews. Check platforms like G2 or Trustpilot to identify potential pain points or successes.

Prospecting tools are also helpful platforms for researching prospects. With Pipedrive’s Prospector, for example, you can learn more about your prospects in a central location. Here’s how the information appears in Pipedrive:

View decision-maker information, identify communication platforms and read notes from colleagues with more details.

4. Identify prospecting channels

Select the channels that best suit your prospects. Common prospecting channels include email, LinkedIn, phone calls, industry events and social media.

Choosing the right channel ensures you connect with potential buyers where they’re most receptive. For instance, email and LinkedIn may be more effective than cold calls if your prospects are C-suite executives. Getting high-level employees on the phone can be tricky, especially when targeting a large company that filters cold calls through reception.

Here’s how to identify the best prospecting channels for your audience:

• Study communication habits. Observe how your ICPs engage on platforms like LinkedIn, Facebook or industry-specific forums

• Analyze existing data and metrics. Review past customer interactions to see which channels generate the most responses

• Leverage social media insights. Check where your prospects are most active – LinkedIn for professionals, Instagram or TikTok for creative industries

• Ask current customers. Learn their preferences to identify patterns among similar prospects

• Track competitors. Observe which platforms or channels competitors use to connect with similar prospects

Over time, you’ll better understand what your prospects prefer. The more you communicate, the more insight you have into what works best.

5. Initiate contact

Reach out to prospects to introduce your company. Personalize the messages to speak to the prospect’s needs and teach how your product or service can help them. Research shows that 89% of decision-makers believe personalization is invaluable to business success.

Say you discover a prospect needs help managing their growing team. Address this pain point in your initial contact:

Addressing these issues shows you understand their challenges and how to solve them. You avoid generic communication and get straight to the point, which is likely to pique their interest.

6. Qualify leads

Qualifying leads early helps you focus efforts on those most likely to convert, allowing for efficient resource allocation.

For example, if a prospect shows high interest, you can invest more resources into nurturing them through the sales funnel. However, if a prospect is unlikely to buy, you avoid wasting time and resources trying to convert them.

Ask qualifying questions to assess whether the prospect is a good fit based on their needs, budget, authority and timeline.

Also, use Pipedrive’s lead scoring to categorize leads. Here’s how lead scores appear in Pipedrive’s dashboard:

Use custom fields and automatic lead assignment features to capture, segment and rank prospects based on their likelihood of conversion.

Find out more about using lead scoring to improve sales performance.

Enhance your prospecting with Pulse by Pipedrive

Pulse by Pipedrive is an AI-powered prospecting tool for managing and prioritizing leads. It analyzes your data and arranges a plan of action, prioritizing activities. As a result, you can engage with prospects and close deals faster.

Watch the video below to find out more about how Pulse works:

Let’s explore some of the features in more detail:

• Track progress in the action feed. The action feed shows activities you need to focus on, with a time or date when each task is actionable. These actions include activities, emails and deals to prioritize.

• Spend less time sorting through prospects. Pulse sifts through leads and prospects to ensure you take the most impactful action. It makes recommendations based on engagement levels, the stage of the buying journey and the likelihood of conversion.

• Rank prospects with AI scoring. Using AI, Pulse shows you who has the highest buyer intent so you can plan outreach.

• Gauge your chances of closing. AI summaries provide concise breakdowns of your deal history and sentiment analysis to understand each deal’s full potential.

• Automate communication. Generate emails based on the context of your current thread. AI features analyze the conversation and provide suggested replies that align best with the discussion.

Final thoughts

Effective sales prospecting sets your business up for success. It ensures you identify the right prospects, spending time and resources nurturing companies that will benefit from your service. As a result, they’re more likely to convert.

Use a lead CRM like Pipedrive to support your prospecting efforts. Identify relevant prospects, personalize the customer experience and move qualified leads into your sales pipeline. Sign up for a free trial today.