Prospects vs Customers

November 19, 2024

You have probably heard the phrase, "Now that you're a customer, the honeymoon is over." It represents the opinion that after a company has a customer, it can stop making the same efforts that first drew the prospect in and encouraged them to buy. In any business, however, should there be a distinction between prospects and customers on how they are handled? 

Prospects and customers both certainly need to be treated with respect, enthusiasm, etc., but there is actually a difference or philosophy between the two when it comes to certain specific elements of the buying process. While driving revenue is essential, prospects and customers are at different stages of a buying process. Their needs, expectations, and relationship with the business vary. Treating prospects and customers as one in the same would be a mistake since their interactions with a business serve different purposes. 

The Buying Process

A fundamental reason why prospects should be treated differently than customers is because of where they are in the buying journey. This is generally divided into three stages: awareness, consideration, and decision.

• Prospects are typically in the awareness or consideration stage. They have shown some level of interest in a business’s products or services but have not yet made a purchasing decision. 
• Customers, on the other hand, have already moved into and through the decision phase of the buying process. They have decided to purchase a product or service, experienced various benefits, solved a problem they had, and, hopefully, built a certain degree of trust with the business and it’s products or services.

Due to the stages in the buying process, prospects require more attention, possibly education, and coaxing to purchase, while customers might need on-going support and communication/follow-up strategies to retain their business in the future for additional purchases. 

Building vs. Sustaining Trust

Trust plays an important role in making the distinction between prospects and customers. Since a prospect has not yet made a purchase, the business must work to build a sense of trust with the prospect for its products or services. Since, a customer has already made a purchase or a repeat purchase, there is an implied degree of trust.

For prospects, the emphasis should be on establishing trust. This might involve providing them with relevant information needed for the product or service they are considering to purchase, offering demonstrations, testimonials, or other types of proof to establish needed trust. 

For customers, the trust issue shifts to maintaining and reinforcing the trust that has already been established. Although a purchase has been made, customers need to remain satisfied so they will make repeat purchases in the future. Ongoing trust can be enhanced through continued communication, after-sales support, loyalty rewards, etc.

Nature of the Relationship

Prospects may show interest in a product or service but can also lose interest; therefore, the business needs to be proactive in communicating with prospects pushing them further down the buying process culminating in a purchase. This might include targeted ads, promotional offers, or follow-up emails to maintain continuing communication and engagement.

In contrast, customers are more likely to engage regularly with the business, either by making repeat purchases, leaving online reviews, or requesting or requiring customer service support.

Personalization and Communication

• Prospect communication is usually more generalized and frequent but less personalized, focusing on building awareness and educating potential buyers on products or services. 
• Customer communication, however, is more personalized and focuses on appreciation, loyalty, and furthering the relationship that has already been established.  

Investment of Resources

From a financial perspective, businesses treat prospects and customers differently because the potential return on investment (ROI) is different.

• Since prospects represent future revenue potential, businesses must invest marketing dollars to convert them into current paying customers. The investment is speculative because the prospect may or may not actually make a purchase.
• Conversely, customers, represent current revenue and, ideally, future repeat purchases. Likewise, marketing dollars invested in current customers often yields a better ROI since it is typically less expensive to market to and retain an existing customer than to acquire a new one. 

Conclusion

While both prospects and customers are vital to a company’s success, they have different needs and expectations. Understanding and addressing these differences allows businesses to create more effective marketing strategies and build ongoing and long-term relationships that will ultimately grow businesses. You might say that prospects are the seeds of future business growth while customers are the fruit, offering immediate value and requiring care and attention to ensure continued loyalty.