Spending time on the right leads is crucial for any business growth. When talking with prospective clients, we often forget to ask ourselves whether this is the type of client that could bring long-term value to our business.
Start-up founders and business professionals often get blinded by the possibility of turning a lead into an active client, forgetting to take into consideration the opportunity cost of on-boarding a bad lead. Understanding how to qualify leads becomes an important part of every sales process.
As a business owner and a sales professional, the time you spend qualifying a lead is synonymous with the success you will have. Leads should be prioritized based on their importance and relevance to the business itself.
Applying this simple-yet-effective thought can save you and your salesforce a lot of time in negotiation with potential clients who will bring more troubles than revenues.
Are All Leads Created Equally?
First-time entrepreneurs might think that closing a client is better than disqualifying one. In my career as a sales manager, I have had countless discussions with my team about why a not-so-interesting lead, in my opinion, “had great potential,” according to the sales rep.
As a sales manager in established organizations, you might allow mistakes to happen for learning purposes, as the impact on the company bottom line might be minimal. However, as a startup founder or manager in a growing startup, letting “bad” leads in can seriously harm your business.
As a support to this statement, the latest Altify Buyer/Seller Index, sponsored by InsideSales.com, showed that sales reps chasing the wrong deals can cost a company up to $218,000 for every million dollars in deals closed.
Lead qualification, however, is not a process that is limited to the sales department. Marketing and sales teams share responsibilities for the leads coming in. Creating an effective lead management process for both inbound and outbound lead s becomes crucial to establish successful operations.
According to the Global Benchmark Report on Lead Generation Strategy and Tactics for 2015-16, 48% of sales reps have said that only half of the leads qualified at the inbound stage by the marketing team were taken forward to in the sales funnel.
Why A Winning Lead Qualification Process Can Increase Your Long-Term Revenues
Surprisingly enough, but hopefully not at this point, you understand why lead qualification is the most important step (and maybe the most difficult step) in the sales funnel. Almost half of sales reps confessed that lead qualification is where they struggle the most.
On top of that, it has been shown that 67% of lost sales were due to a poor or bad qualification process. Almost two-thirds of all your sales team’s effort could go wasted because the qualification process is not solid enough.
Are you willing to take any chance and waste money, time and effort on the wrong clients?
Another major consequence of a poor lead qualification process is the impact that a “bad” client has on your company — and not only from an economic perspective. If you onboard a bad prospect, you won’t be able to serve them in the best possible way, which will result in an unhappy customer.
An unsatisfied client will not only take a lot of your time — as you will try to satisfy their needs with a product/service they are not interested in — you might also lose a client referral.
ABP (Always Be Perfect) Lead Qualification
As a lead generation agency, we know that lead qualification is far from being a straightforward process and, without any doubt, it is difficult to create a model that fits all companies. When looking at lead qualification there are several factors that you might want to take into consideration. The first step is to define what you can influence and what you cannot.
There are factors that are dependent on the industry or market-condition that you are not able to influence. Controlling the macro-factors of success is a difficult task and it is completely up to you to decide how much of an influence these will have on the lead qualification process.
Before creating a successful lead qualification process, it is crucial to have all stakeholders at the same table and define the macro factors you’re going to hold your sales team and marketing team or agency accountable for.
After you have done this, take a look at the micro-factors. These are what sales and marketing should be able to identify and influence in the qualification process. For example:
- Budget – Is there budget associated with this activity? Is the budget allocated to this activity enough for you to be considered relevant?
- Authority – How many stakeholders are involved in the decision process? Is the person you are talking to the one making the decision?
- Buying Behavior – What are the steps the lead has gone through before getting where he or she is? Were you able to track the behavior before the lead entered the qualification process?
- Need – Are their needs aligned with your product/service? Can you successfully fulfill their needs?
- Time – How long does the buying decision take on the prospect side? When is your prospect looking at making the final decision?
Based on these factors, you will need to identify questions or metrics that your team will need to follow in the qualification process. Here is an example of a lead qualification framework to implement in your company:
Questions / Metrics
Discussion about budget approved for the project negotiated.
a. Budget <10,000$
b. Budget <10,001 – 50,000>
c. Budget >50,001
a. 0 points
b. 3 points
c. 5 points
Discussion about the role of the person you are negotiating with
a. Decision Maker
b. 1 level below decision maker
c. Recommendation Role
d. Advisor Role
e. Gate keeper
a. 5 points
b. 3 points
c. 1 point
d. 0 point
e. -3 points
Discussion about the level of familiarity with product or service at the qualification stage
b. Somewhat familiar
c. Not Familiar
a. 5 points
b. 1 point
c. -2 points
Discussion about the match between need and product/service offered
a. Actively looking for such solution
b. Moderately looking around
c. No Need
a. 5 points
b. 2 points
c. -3 points
Discussion about the urgency for your solution
a. Looking to make a final decision within a month (quarter)
b. Looking to make a final decision within 12 months
c. No urgency
a. 5 points
b. 1 point
c. -5 points
Depending on your company and industry you operate in, the points associated with each metric or question should be adjusted. When it comes to factors, however, we suggest keeping at least these five in place and, when needed, adding other more specific to your company buying process.
Benefits of a Long-Term Lead Qualification Mindset
Thanks to a lead scoring system, you and your team will be able to attach a “value” to each lead that gets in contact with your company. It is fundamental for every business to work on such model, as the advantages are numerous. Here are some of them:
- Everyone involved in the buying or selling process will be able to objectively understand what makes a “good lead.”
- You can create internal prioritization based on the lead value.
- Salespeople and others involved in the client success journey will minimize the time spent on “bad leads.”
- Your overall business will benefit from letting the teams focus on negotiating the points that matter the most to the bottom line.
Alignment between marketing, sales and client success departments is mandatory before implementing any of these activities. Once this is reached, the company can move forward and create a lead qualification process with long-term revenues in mind.