The Difference Between Prospecting And Lead Generation

It’s quite likely that you’ll have used the terms prospecting and lead generation. It’s also quite likely that they will have been used interchangeably to describe the same thing. However, there is a considerable difference between prospecting and lead generation. Whilst the goal may be the same; to bring in new business, the way that they are used to do so is vastly different. In the context of lead generation for financial advisers, this could be the difference between you spending half your day in front of new prospects selling, or trawling through social networks or old contacts to try and get on a call. In this article, we’re going to break down the fundamental difference and help you identify which methods could benefit you most.

What is Prospecting?

Prospecting is primarily an outbound activity. Typically this is carried out by sales reps but usually by the BDM’s (if you’re lucky enough to have one). This is a largely manual effort and can be quite a time consuming exercise. Prospecting is a short term approach to generating leads that has become more of a busy work exercise these days. That’s not to say it isn’t useful or no longer has a place in the world of lead generation. It can be super effective, especially if you are doing account based marketing. 

Prospecting focuses on the use of more traditional methods of lead generation. Namely that of cold calling, cold emailing or direct messaging on social media platforms. It’s quite a labour intensive activity and unless you already have an established lead source that is consistently delivering you a qualified pool of people to reach out to (like a Facebook group) and have prospecting conversations, then a large majority of your conversations can be a waste of time. 

What Is Lead Generation?

Lead generation is led by the marketing division. The key objective of lead generation is to deliver qualified prospects to the sales team. Well surely that’s what prospecting does too? To some degree. The major difference between prospecting and lead generation is that lead generation is targeted and data driven. Lead generation happens through mediums such as ad campaigns, landing pages and email marketing. In theory, all leads delivered via lead generation efforts are people who have identified themselves as potential clients and who are your ideal client fit. 

Lead generation can be an incredibly time consuming activity, depending on what lead gen efforts you are actually employing, however, it should be a fairly automated process once up and running. 

Which Is The Best One To Use?

There’s no such thing as the best in the world of lead generation. Acquiring new prospects for your business can be done in so many different ways and depending on who your ideal client is, and can require many different touch points and tools along their customer journey. They are, in fact, very different parts of the sales process. Prospecting tends to be used at the top end of the funnel when you are trying to get your pipeline filled. It can be good in fits and starts but if it’s only yourself managing the process then you will find very quickly that your ability to manage clients and then prospect for new ones drops very quickly.

If you feel as though you have more success in a sales based environment, or you’re good at making inroads to prospects in a cold outreach manner, then stick with it. There is no best way for how you generate your highest converting leads. If you have a relatively healthy pipeline then you might find that prospecting is not really a required activity and you can spend time speaking to prospects about their goals and challenges, rather than seeing if they are interested in learning more.

How To Use Prospecting And Lead Generation Together?

In an ideal world, you will have the functions, time and capacity to be able to run prospecting and lead generation together. The reality is that you will most likely end us using a hybrid of prospecting and lead generation. At the start if you have never done any lead generation before, you will find that you are leaning heavily into one side or the other as you try to combine them. There will be a need to spend all day sending cold emails, direct messages and hammering the phones. Sometimes you just have to make contact and get the volume of work out there. Remember what you do now will pay off three months down the line. The same goes for the lead generation and marketing efforts.

Lead generation is not necessarily going to pay off for you right away, but three months of articles, link building, paid ads and networking certainly will. So, how can you use prospecting and lead generation efforts together?

Considering that prospecting is based around reaching out to ideal looking prospects, it would be highly beneficial to think about what those people need to see from your lead generation efforts. Do they need to know how to select the right stocks for their wealth management plans? Are they looking to build a retirement fund? What do these people need and what do they look like that would make them a good fit for you to work with?

The research that you put into it at that end will help better guide your lead generation efforts later on. 

Can You Stop Prospecting All Together?

Things change. The world of marketing and sales has changed dramatically over the past 20 years. What worked really well years ago doesn’t work quite as well today. For every new innovation there is still a desire to have existing values upheld. For example, people can invest completely by themselves using robo-advisors in the stock market. They may even get good results, but you won’t ever get the considered approach or even beat the market by simply using that tool. A financial adviser will always be able to bring additional value. Similarly, if you are looking to invest a large sum of money, speaking face to face with someone is preferable to staring at numbers on a screen. There is always a place for everything. You just have to find out what tool fits within your lead generation matrix. 

Prospecting and lead generation are two sides of the same coin and really can work well together. You start to see a larger divide at larger financial companies, but if you are running your own business and have to do all of the hard work yourself, then it is likely that you will naturally blend the two together. 

If you think you are ready to do this, or are already making marketing efforts on your own, then our 3 step guide to exploding your lead generation is exactly what you need to accelerate your prospecting and lead generation efforts. Click the link below to grab your copy now.