In the old days, a “lead” meant you’d caught wind of a good business opportunity — someone who had money to spend and was looking for a product like yours.
A lead was worth pursuing.
But in the digital age, the word “lead” is almost meaningless.
Marketing is a dissemination machine, being a prospect means “Googling” stuff, and buyers have made 70 percent of their decision before they ever talk to you.
Without a true appreciation for the lead, the practice of lead generation (which is supposed to drive real business opportunities) devolves into a sophisticated tool for building contact lists. In the worst cases, a lead can be as negligible as a name and email address. Never mind whether they’re a good fit for your product. They filled out the form, and they’re on the list. It’s all a numbers game, right?
How about this number: Only 5-15 percent of B2B leads are initially sales-ready.
Or these: For the average B2B company, only 5-10 percent of qualified leads actually convert, and 25 percent of marketers don’t even know their conversion rate.
It’s really no cause for jubilation when your site captures a bunch of leads, or even when you deliver those leads to sales.
The real triumph comes from producing qualified leads. And not just as marketing defines them, but “qualified” in the sense that marketers, sales development reps (SDRs), and account managers all agree: these leads are worth pursuing; these leads have a high probability of converting.
Why a Shared Definition is Important
To achieve that kind of alignment, marketing and sales need to have a shared definition of “qualified lead.” This shared definition is important for a couple reasons:
1) It keeps salespeople from wasting their time.
If your marketing team delivers leads they think are qualified, but really aren’t (for example, leads that meet your targeting criteria, but don’t have purchase intent), the sales team will inevitably waste a lot of time reaching out to people who aren’t interested and don’t convert. Sales enablement goes out the window, productivity drops, and the sales cycle itself becomes tiringly long.
Done well, lead qualification should have a kind of rarifying effect: the volume of your pipeline reduces as leads move further through the funnel, but the quality of the remaining leads increases.
Take Marketo, for example — one of the biggest marketing automation software vendors in the industry. Marketo only passes about 10 percent of their new names to sales development each month, and about four percent of their existing prospects. But taken cumulatively, this adds up to 2,000 MQLs (marketing qualified leads) every month. Of those MQLs, development reps pass about 7 percent to account managers, and a breathtaking 80 percent of those leads convert into opportunities.
2) It helps marketing align their efforts with revenue.
With a shared definition of “qualified” in place, your marketing team can better align their efforts with the needs of the sales team, and consequently, with revenue goals.
A lot of that has to do with the anatomy of the definition:
- What does “qualified” mean for your bottom line?
- What can you do with a “qualified” lead?
- What have your qualified leads looked like in the past?
By answering these questions, marketers can focus their daily decisions and campaign tactics in service of sales enablement, which is known to pay dividends. According to SiriusDecisions, companies with well-aligned sales and marketing departments have reported 24 percent faster revenue growth than companies with poor alignment.
Different Levels of Qualification
As you work with sales to hammer out a mutual understanding of lead qualification, you’ll quickly realize that what you need is not a single definition, but a set of definitions, a body of knowledge, and common language.
That’s because there are many different levels and stages of qualification, each with different requirements.
Most companies use some variation of these three:
Marketing Qualified Lead (MQL)
A marketing qualified lead is exactly what it sounds like — a lead that’s been qualified by marketing. By performing certain actions (downloading a piece of content, registering for a webinar, passing through several email nurture tracks), the lead has demonstrated some level of interest and intent that marketing deems significant enough to merit a sales conversation.
Marketers track this process using marketing automation software, lead scoring, and other tools. As HubSpot defines it, “An MQL is a lead judged more likely to become a customer compared to other leads based on lead intelligence.”
SiriusDecisions offers the following framework to explain qualification levels. Typically a good MQL will fall somewhere between levels 3 and 4.
This stage is fairly straightforward. After marketing passes a lead to sales, an SDR decides whether to begin the development process, discard the lead, or send the lead back for re-marketing (usually through a drip campaign). Leads that sales decides to pursue are referred to as “sales accepted leads” or SALs.
Sales Qualified Lead (SQL)
The qualification process doesn’t fall entirely on the shoulders of marketing.
Once a lead reaches sales and is confirmed actionable, sales reps must further qualify the lead before assigning it to a dedicated account manager. This usually happens through a series of conversations in which the SDR clarifies needs and timeline, and provides the lead with any supplemental information they might need to confirm their decision (case studies, ROI calculators, free trials, etc.).
The aim of the SQL stage is to turn the lead into a business opportunity.
Things to Agree On
Reverse engineer your buyer journey: start by examining a handful of your most successful opportunities, and see what they looked like as leads. How did you capture them? What touchpoints and behaviors informed the qualification process, and when did you decide to pass them to sales?
From these insights, lay out a set of criteria that your sales and marketing teams absolutely must agree on. Your list should include some or all of the following:
- Buyer Personas: At the most basic level, sales and marketing need to agree on a few ideal customer profiles (ICP) that are prerequisite to lead qualification. These profiles typically address job title/role, key challenges, motivations, and interests. ICPs tell marketers who their audience should be, based on the kind of people sales wants to talk to.
- Firmographics: Firmographics are all about finding a good fit. Most salespeople look at company size, industry, and geographic location to determine, at a high level, whether or not a lead would be eligible for their services. If the firmographics data doesn’t match your requirements, you should consider discarding the lead (although there can be exceptions here).
- Behavior: Unlike firmographics, behavioral data is about what’s not stated. Some marketers refer to this as “lead intelligence” or “digital body language (DBL).” With the right tools, you can analyze a lead’s digital behavior and make inferences about their status or position in the funnel. E.g. a prospect downloads a case study, followed by a pricing sheet, so they’re probably a hot lead in the final decision-stage.
- BANT: BANT (budget, authority, need, timeframe) is an age-old framework for lead qualification first articulated by IBM. This is an important aspect of lead qualification, especially during the sales development process, but businesses should be careful not to get too hung up on matching all four BANT criteria for each lead. Sure, lead quality is just as important as quantity, but if you’re too stringent, you may see an unsustainable drop in lead volume.
Interest and Intent: Even if a lead does match all four BANT criteria, or is a perfect “profile fit,” as SiriusDecisions would call it, that doesn’t necessarily mean they’re qualified. What you should really be looking for — perhaps above all else — are interest and intent. I.e. the lead is interested in your brand, and intends to purchase.
- Lead scoring: Lead scoring is the framework for tracking lead qualification. It assigns (and deducts) point values for implicit and explicit lead attributes, and when the lead has reached a certain threshold, they’re transferred to sales. This is an area where it’s crucial for sales and marketing to agree, specifically in deciding how different scoring factors should be weighted and where to set the threshold.
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Whatever you decide, make sure both teams are willing to reassess definitions, depending on how your campaigns perform and whether or not you hit revenue goals. Ideally, you’ll make lead qualification a frequent topic of your monthly or quarterly meetings and create an atmosphere where both teams are focused on the same end result. TechnologyAdvice can help you with lead generation and strategy with one of our software vendor programs. Contact us today to get started.
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