How To Identify Prospects in Your Target Markets

With the Federal Reserve raising interest rates in order to combat inflation, many sales leaders have had to adjust their prospecting strategies to find good opportunities in an environment with both tighter access to capital and constrained budgets. 

For many companies, gone are the days of frequent referrals and customers regularly knocking on your door to ask about buying. If you’re a sales rep looking to close deals in 2024, you need to be more proactive about finding the right customers with the right needs that you can help them solve. 

There are several tools on the market that can help a sales leader find company names, org charts, and contact info, but as many reps are generalists, where do you even start looking for the right companies? 

Identifying the right industries to target first can be an impactful starting place when trying to drum up fresh prospects, but there are a few key steps that your sales or marketing team should take before executing a go-to-market strategy.

Using IBISWorld's Industry Wizard tool, we created a list of the top 50 industries sales teams should target right now. To check it out, download the list above. 

Step 1: Define your market territory 

The first step to proactive prospecting is defining your business territory by pinpointing select regions, states, or counties where you aim to concentrate your efforts. Then, using research tools, you can identify the industries prevalent in these areas to capitalize on opportunities and broaden your reach. Finding one new opportunity is great, but if you target industries with multiple companies in your territory, you can parlay success with one client into multiple wins. 

It's also important to dive into the factors that contribute to industry concentration within your market, allowing you to incorporate emerging trends seamlessly into your sales strategies. If you've already uncovered that there’s a lot of competition, can you help the customer win more market share in some way? Here are some key questions you might ask your prospect: 

• Are competitors in your industry offering products that you don’t currently sell?  
• Are there demand industries or consumer demographics they can be targeting that the customer isn't currently? 
• Are there any industry threats to be made aware of? 

By adopting a strategic approach to defining market territories and understanding industry dynamics, your team can more effectively streamline its prospecting efforts, ensuring a more targeted and successful outreach. 

Step 2: Analyze profitability metrics 

Facing budget pressure is all too common and you don’t want to spend time with customers that don’t have the cash flow to make it worth your while. Along with considering the industries that are concentrated in your territory, you should analyze each industry's profitability metrics like profit margin and net cash after operations to determine where to target your efforts. For example, looking for a profit margin of 9+%, currently above the national average, might be a good place to start in your prospecting efforts.  

When analyzing profitability metrics, remember not to confuse sectors for industries. The hospital industry for example, despite being part of the lucrative healthcare sector, may not necessarily be cash-rich itself. 

Step 3: Assess revenue stability  

Another crucial aspect of conducting thorough industry research involves acquiring the skills to identify seasonal and volatile revenue trends within various sectors. It's important to note that numerous small businesses operate on a seasonal basis or are influenced by the fluctuations of macroeconomic factors, such as commodity prices and consumer sentiment. The Oil Drilling and Gas Extraction industry, as an example, is highly dependent on oil supply and prices, heightening the industry’s revenue volatility.  

A reliable, long-term client, however, typically demonstrates consistent cash flow instead of experiencing significant fluctuations. One example of this type of client can be found in the Electricians industry, which has consistent demand across a variety of industries and consumers. It's also worth remembering that industries characterized by high revenue volatility are typically higher risk and may require more scrutiny from credit analysts, investors, or accountants. 

Step 4: Evaluate capital intensity  

Along with the attributes mentioned previously, your targeting efforts are likely to be more successful in industries with the right level of capital intensity. For example, financial and lending services are best suited for prospects with high demand for more plants, property, or equipment that have ongoing financing needs. Clients in industries like Corn Farming, which is highly dependent on heavy equipment such as tractors, combine harvesters, and storage mills, pose an opportunity for you to establish long-term relationships by offering tailored financing solutions that align with their growth strategies. Meanwhile, software and services related to human resources management or employee productivity are best suited for buyers that are not capitally intensive and have higher labor costs. By understanding their specific needs and providing continuous support, you can become a trusted partner in their business development journey, leading to sustained success. 

Step 5: Utilize industry risk assessments 

Once you’ve found a strong list of prospects matching the above criteria, the final piece to understand are the various headwinds facing each industry. Using industry research and risk assessments, you should pre-screen prospects to ensure suitability and leverage risk insights to tailor sales strategies and mitigate other potential risks. Products like IBISWorld's Industry Risk Rating Reports can help you position your solution to solve relevant problems. For instance, IBISWorld currently categorizes the Wood Product Manufacturing industry as higher risk due to a high level of competition around product pricing. Therefore, if you're offering a product that can help wood product manufacturers cut costs in other areas of their business, the current risk in this industry is actually a reason to include, rather than exclude, them in your ICP.