The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is 'Qualification'? (Marketing)

Qualification is the process of determining whether or not a prospect is a good customer before they purchase from you. Qualification helps to avoid wasting time and energy on customers that aren't a good fit.

Not every customer is a good customer. Customers that require more than what they are worth, aren't worth attracting in the first place.

Some businesses actively encourage their customers to purchase from the competition if they are not a good fit.

The more clearly you can define your ideal customer, the better you can screen out the customers that are not worth your effort, and the more you'll be able to focus on your best customers.

Josh Kaufman Explains 'Qualification'

Believe it or not, it's often wise to turn away paying customers. Not every customer is a good customer: customers that require more time, energy, attention, or risk than they're worth to your bottom line aren't worth attracting in the first place.

Qualification is the process of determining whether or not a prospect is a good customer before they purchase from you. By evaluating a prospect before they buy, you can minimize the chance of wasting your time dealing with a customer who's not a good fit for your business.

Progressive Insurance has turned qualification into a profitable business strategy. To see qualification in action, go to the Progressive Insurance Web site (www.progressive.com) and request a quote for car insurance.

When you request a quote, Progressive asks you a set of basic questions:

  1. What type of car do you have?
  2. Do you own or lease it? If you own it, are you still making payments?
  3. What's your ZIP code?
  4. Are you married?
  5. Did you go to college?
  6. Have you had any at-fault accidents in the past 5 years?

Progressive then uses your answers to gather data from a series of databases to answer two questions:

If you're the type of person Progressive wants as a customer, they'll quote you a price and encourage you to purchase an insurance policy immediately. If you're not, Progressive will tell you that you can get a better price elsewhere and actively encourage you to purchase insurance from one of their competitors.

Why in the world would a business encourage a hot prospect to purchase from the competition?

Simple: the profitability of an Insurer depends on collecting as much money as possible in premiums while paying out as little money as possible in claims.

Progressive doesn't want to maximize its total client base: it only wants to insure people who are likely to drive safely and have few accidents, which means attracting customers who will pay premiums for a long time without making claims.

Qualification allows Progressive to maximize the number of highly profitable customers it insures while funneling the "bad risks" directly to their competitors. It's good for customers as well-by being "good risks," they get lower rates on their car insurance.

Screening your customers can help you filter out the bad customers before they do business with you. The more clearly you define your ideal customer, the better you can screen out the prospects that don't fit that description, and the more you'll be able to focus on serving your best customers well.

Questions About 'Qualification'


"The product that will not sell without advertising will not sell profitably with advertising."

Albert Lasker, former CEO of Lord & Thomas and pioneer of modern advertising


From Chapter 2:

Marketing


https://personalmba.com/qualification/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

More about Josh Kaufman →