Mathematics of prospecting

Let's measure on the tip of the pencil what the investment in corporate customer prospecting is.

Prospecting is the way to generate quality leads for you.

Quality lead: Someone who needs and can buy what you sell.

Employees, systems, list generation, approach scripting and cadence, telephony, and management. These all come under the heading of business expenses.

I don't want to take up your time with minutiae. The result is $6,700.00 and 12,500.00/month for you to systematically approach 100 companies in your target market every month.

This is considering that you are shipping the best expertise in all these components.

The expected result on cruise flight is 4 and 8 leads per month.

Annualized is between 48 and 96 qualified leads in the year.

I got these numbers from internal prospecting projects, outsourced projects, and reports from the clients we consult, as well as student feedback from the open courses we provide.

We have been doing nothing else in life, since 2003, other than prospecting corporate clients. Trust us.

If your conversion is 10%, that is, out of every 10 leads you close one new customer, you will close the year with 5 to 10 customers, rounding up.

This conversion number can vary a lot. If your conversion is very low, something like 0.5%, i.e. 1 closed customer for every 200 leads, we have a big problem there. But this is a topic for another article.

And I have seen 50% conversions. Out of every two leads, one closes. Anyway, the number varies.

But for this exercise let's stick with our 10% conversion rate.

Your investment in prospecting to acquire these customers was between R$80,400.00 and R$150,000.00.

What we have so far on both ends (min and max): R$30,000.00 per acquired customer (worst case scenario: 150,000/5) and R$8,400.00 per acquired customer (best case scenario: 80,400/10).

The average is R$19,200.00 per client acquired with an average volume of 7 new corporate clients in one year of prospecting.

This was your investment, for this hypothetical example.

Now, for the purposes of this exercise, let's say that each client leaves an annual turnover of R$50,000.00, and that each client stays on average 5 years active in your company, leaving R$250,000.00 of turnover over this period.

And let's say that each real invoiced leaves a 15% net margin for your company, that is, from the R$250,000.00 you get R$37,500.00 profit.
We then have some indicators

  • CAC - Customer Acquisition Cost: 7.68% (19,200/250,000)
  • ROI - Return on Investment: 95% (37,500/19,200) - You invest 1 and get 1.95 back, within 5 years.

What remains to be discussed is:

  • Maximum reduction of acquisition costs.
  • Maximum possible increase in operational efficiency.
  • Cash available for investment.

The good thing about all this is that you can start slowly and test on all fronts. The most important thing is to do this measurement.

Here is a simple spreadsheet that can help you with these calculations. Feel free to copy or download it.

Winning corporate clients is a race for funders. It is long-term, even if it brings short-term results.

There is no other process that brings you quality leads faster and more assertively than customer prospecting.

Stavros Frangoulidis
Stavros Frangoulidis
CEO of PaP Solutions ⚡ Let's connect on Linkedin too

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