Prospect or Customer?
Often times, you will hear someone talk about getting more customers. The media rep will tell you to advertise “to get more customers”, your business might need more customers.
But see, when you advertise, you do not get more customers. It would be nice if you did. But what you are getting is actually more prospects. You see, that is the difference between a prospect and a customer.
Often times, you will hear someone talk about getting more customers. The media rep will tell you to advertise “to get more customers”, your business might need more customers.
A prospect can be defined (by dictionary.com) as someone who is a potential or likely customer, client, etc.
When someone responds to your ad, they fall into that category. They are a potential or likely customer – or they would not have responded.
A customer (dictionary.com) is a person who purchases goods or services from another, a buyer.
See, the difference is the transaction of actually doing business.
Who cares? Well, it matters actually – a lot! Read on…
It matters because it allows you to separate the two in your mind and in your actions towards each group.
It allows you to look at your advertising differently.
We say there are only 3 ways to grow your business. They are
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traffic
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conversion
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back end
See, getting a prospect, and the act of turning them in to a customer are 2 different steps. Each can be handled, improved, tested on their own.
You can increase your advertising – that will get you more prospects. Chances are, they will continue to convert at the same rate. So if you advertise to 100 people and 10 of them respond to your ad, you have a response rate of 10%. If you want 100 new responses (prospects), then you advertise to 1,000 people.
OK, so lets say that your conversion rate from prospect to customer is 20%. That means that 20% of the people who respond to your ad turn in to buyers. Then, you advertise to 100 people, 10 respond (prospects) and 2 buy (customers).
Why does this matter? Well, because now if you want to double your business WITHOUT spending more on the ads, you have 2 options. You can either double your prospects, or you can increase your conversions. If you can get more people to respond to your ad (by making a more effective ad) then you could get 20 people out of every 100 to respond. That is one way to grow your business. Then if you can close 4 respondents out of 10 (instead of 2), you have doubled your business as well.
If you just refer to advertising as the act of getting more customers you tend to ignore your closing rate and you don’t isolate it and spend time working to improve it. What if you could do both?
If you advertise to 100 people and got 20 responses (instead of 10), and then were able to convert 4 of 10 into buyers (instead of 2), then now for your same advertising dollar, you are getting 8 sales instead of 2.
So look at both steps in this process as separate steps and work to increase rates of both prospects and conversions to sales. Then watch your business grow.
