Isn’t it strange that we are willing to embrace new technologies to improve our sales, yet we rely on old selling techniques to actually make those sales?

In our industry, traditional sales approaches are the norm. Companies allow their salespeople to focus on their existing customer base, constantly reselling old customers. The problem here is that there’s no proactive plan for customer growth or strategy to enlarge their customer base. In the good old days, that was an acceptable "organic growth" approach; recent industry data suggests these good times will not return any time soon.

Some say their growth now comes from "word of mouth." They believe their reputation for good quality will lead potential customers to contact them. It’s nice to sell based on a referral, but the problem with this approach is you never know what you are going to get next. It doesn’t mean the customer that comes along is the right or wrong customer, it just means that you don’t know who will be coming along. Your sales department simply becomes a reactionary force, allowing a lot of wasted resources.

Other companies believe they are being progressive when they turn to the Internet for sales leads. They chase leads through Google ads and Web sites designed to lure buyers. While these are valuable tools when used as pieces of a comprehensive selling strategy, when used alone they also reduce your sales department to a reactionary mode. You hope you’ll get some click-through leads, and yet you never know who will call or visit your Web site.

The Real Cost of Prospecting

Nearly all PCB manufacturers share a common sales method: prospecting from end-user buyer lists. Like my father once said, though, "Just because everybody’s doing it doesn’t make it right." Prospecting is the largest waste of time for sales departments. The waste is derived from having salespeople calling on "suspects" instead of calling on qualified prospects.

In PCB sales, a suspect is someone that you know uses circuit boards but you aren’t quite sure if they have a need for your product. Contrast this with a qualified prospect, a person who you know uses the products or services that you offer, who you know has the ability to make or influence a purchase decision. Rather than swinging in the dark at suspects, you should be targeting qualified prospects.

Separating suspects from prospects takes a great deal of time and energy. Many sales departments try to build qualified prospect lists. They purchase general lists, pan for leads by exhibiting at trade shows, and rely on their sales reps to build those lists. Oftentimes, however, the result is the same. Sales departments squander time, money, and—most importantly—opportunities to make sales.

Along with unwieldly prospect lists, many companies measure sales people by how many phone calls they make per week. The thinking here is that a sales rep should be making as many sales calls as possible. One sales manger I know insists that his salespeople make 50–100 calls per day. What is the point of all these "per day" goals if you are calling on suspects? Most likely you will find only a small fraction of that effort will produce a qualified prospects—and only then does the real selling process begin. Sounds like some waste could be eliminated from traditional sales strategies such as this.

How much waste are we really talking about? If you have a list of 5,000 suspects and it requires an average of nine minutes per call, you will spend 750 hours looking for qualified buyers. Is it really worthwhile to spend 94 days cold calling? If we continue the math, let’s assume you pay someone just $10 per hour to make the calls. You will spend $7,500 sorting through the list—and that’s if you’re paying on a telemarketing payscale rather than the base salary of a sales professional. And what lists will these people be calling? Most companies purchase general lists that yield about 5% of what you’re looking for: qualified prospects that purchase printed circuit boards.

The total amount of waste you are building into your sales effort looks like this: Assuming that you mine 7% qualified prospects (which is generous) from your list, you are wasting 93% of your sales investment. That waste translates into $6,975 wasted calling on suspects, or non-qualified prospects, and 87 days wasted. Keep in mind that there are only 254 workdays in a year; a traditional selling approach means your sales department could be wasting 34% of those available days.

The question becomes then, how much could your sales improve if you eliminate prospecting from your sales effort? What would a sales team using a list of pre-qualified prospects do with an extra 87 days of real selling time focused on the right prospects?

"Sweet Spot" Prospecting?

Minimizing prospecting waste allows you to be a proactive organization with a specific strategy targeting specific types of customers. It brings exactly the right type of work into your factory. The right type of work will fit into your core manufacturing competencies—your manufacturing "sweet spot." This is the type of work that your operation excels at; you know you can produce the jobs competently, maximizing your profit while doing it. Even better, because you are chasing work that fits what your company does best, you end up with satisfied customers receiving great service.

Slowly, as you earn work that fits your core competency rather than accepting any order you can get, you actually improve the quality of your customers. Many companies have a customer rating system. For example, they may have Tier 1, Tier 2 and Tier 3 customers. With "sweet spot" prospecting, you can eliminate the Tier 3 customers that are least profitable – and furthest away from your best manufacturing competencies – and replace them with Tier 1 and 2 customers that allow you to make the greatest profit.

As your capacity continues to fill with customers that match your manufacturing and lot size capabilities, you can then shift your focus to better serving your Tier 1 customers. The time saved prospecting becomes time spent on servicing customer needs. You now have an opportunity to fortify your customer base while continuing your sweet-spot prospecting to expand it in a controlled fashion. In a best-case scenario, you would one day have 100% Tier 1 customers. This is where you can provide the best service, be the most competitive, and make the best margin.

Getting Started

How do you enact a sweet-spot prospecting plan? Start by looking at your sales team. If it is comprised primarily of outside sales reps, you have to ask the following question, "Do we have any control over how they spend their day?" If you don’t, then you may need to discuss a new strategy with them, to incorporate their effort into your sales growth plan. Remember, if they’re prospecting to a list of suspects, they could be wasting as much as 97% of their prospecting time! In other words, you are losing a lot of sales opportunities waiting for them to pan a nugget of gold in a very large river.

If you have your own internal sales force, your first step is to review and sharpen your sales strategy. Specifically, look at what you are doing to bring in new customers. Examine each selling activity and determine if it is reactive or proactive. If it turns out that your efforts are primarily reactive or you are not prospecting to qualified prospects, you need to change.

Next, examine your current customer base and categorize them into tiers. Tier 1 should be your best "must keep" customers. You can also add customers who might be a small percentage of your work now, but really fall in your targeted layer count space. Tier 2 should be those smaller customers who have potential to become Tier 1 customers or who, though they ask for smaller lots, still allow you to maximize factory floor efficiency. Tier 3 customers are ones you’d like to either push to Tier 2 or get rid of, plain and simple.

To help you classify your customers, you may want to use some of the following criteria:

• Are they in our target market?

• Do their technology requirements match our manufacturing capabilities?

• Do they purchase between X and X square feet per year?

• Do they order between X and X times per year?

• Do they believe a quality supplier is more important than price alone?

• Are they loyal?

• Do they pay their bills on time?

• Is their business well established?

• Are they in an end market that will boom over the next three to five years?

• Do they operate with a similar business philosophy as we do?

• Do they have between X and X in annual revenue?

• Is their business growing?

This simple list can help you redefine your entire customer base. You might also add additional criteria that are important to you. Then, answer each of these questions about your existing customers. Customers that receive a positive answer to every question would certainly be in your Tier 1 group. Your Tier 2 group will be comprised of customers that receive positive answers to 80% of the questions that are the most important to you. The Tier 3 group will become obvious.

Once you have your customers classified, you will know where you stand. This exercise will also act as a guide to help you start your prospecting efforts. The idea is not to make 100 or more phone calls a day to suspects. The goal is to make several great contacts in a day to qualified prospects. Over time you will have much better success using this approach. Prospecting is a long term endeavor, not just a roll of the dice hoping Lady Luck will smile upon you.

Start by contacting five new qualified prospects per salesperson each day. By limiting the number of contacts per day, you are sure to have the proper resources to follow-up and build meaningful relationships with them. Keep a detailed profile of each prospect to understand what tier they will ultimately fit into. Initiate actions associated with the initial prospecting call – whether it’s a follow-up phone call, a trade show meeting, or an in-person visit. Keeping actions associated with prospects makes those prospects real, rather than database fodder.

Remember, there is more science in sales than most people think. By following a method, you can measure your results and alter your sales process accordingly. Just as you would monitor any manufacturing process, so too must you dedicate yourself to the sales process.