Mike is a salesperson in ABC company. The management has established a sales target for him to meet in order for him to understand the level of performance in the company among his other peers in the sales team. Ultimately to meet his sales target, he needs to sell and to start selling, this brings to the beginning of the sales process.
What is a lead?
In order for him to start selling about his products, he needs to find potential customers. He learns that a lead is a detail that identifies prospective buyers of products or services. But, here lies the first question – where is he going to get the contacts to begin reaching out to the potential customers?
Most of the time, leads get contacted by a company or an organization after opening communication rather than receiving a call by a random person who got their personal information from elsewhere.
At the same time, a new user subscribes to ABC company sales management blog to get updated about their latest posts. The day after, Mike replies to the contact through email as he understands that a potential lead expects to be contacted by a company they’re interested in.
After a few contacts, Mike finds that nearly 80% his leads fail to convert to sales. He then realises that the sales team has to clearly define their lead qualification parameters to solve the issue. Otherwise, it would be a complete mess to send all leads into the sales funnel without qualifying them. In this case, they are not likely to close any deals from the leads.
How to Classify Leads?
However, not all leads are created equal. Mike did an in-depth research and found that there are different types of leads based on how they are qualified and what lifecycle stage they're in. Generally, they can be classified into two main categories:
A. General classification:
1. Hot Lead – The heat’s on... Yes, that’s the lead he wants! This form of qualified lead meets all the necessary requirements that are set most of the time. So, Mike decides to apply the ‘BANT’ lead qualifying system to know if it's a hot lead.
Budget – The person Mike contacts has set or prepared a budget and is just ready for disposal at any time a project proposal is approved by the management.
Questions to ask: Do you have a budget? How much is your budget? Are you willing to expend? What is your budget range?
Authority – The contact person Mike speaks to should be the Person In charge, or the Recommender with the final word to either say “yes” or “no” to the proposal.
Questions to ask: Are you the person in charge/recommender on this project? What is your role on this? Do you solely make decisions on this?
Need – In sales and marketing, the need will always top the list of qualifying questions. When a need is established from the lead, this sends a signal of a brewing lead.
Questions to ask: Are you looking into this type of product/service to improve your process? What product/service are you currently using? Have you encountered any issues? Are there any initiatives from your company to evaluate/replace your current system? What functionalities are you looking at?
Time Frame – The point period from the time Mike spoke with the lead to the planned or projected period of purchase or implementation of the new product or service.
Questions to ask: When do you plan to purchase? When do you plan to implement the new system?
2. Warm Lead – This lead fails to meet one or two requirements but what makes the qualification scale bagged is that the need is identified. Most of the time, many disqualifiers will be either Budget or Time Frame. However, Mike doesn't give up on these leads as they will not be wasted if he spends time to nurture them. In the near future, he may be surprised by a call from them.
3. Cold Lead – No one would like a bowl of cold soup. A cold lead has two or more disqualifiers and the remaining qualifier will be assisted by the lead’s agreement to look at or compare configurations between their current system and Mike’s company’s. This is the kind of lead that Mike needs to keep in view (KIV) most of the time and further nurtures it when necessary.
B. Qualification based on different criteria:
4. Information Qualified Lead (IQL) – Mike publishes a three-page whitepaper regarding ABC company’s sales analysis for the first half of 2020. The visitors are required to provide their contact information in return for the sales analysis whitepaper download link. In this case, Mike has his IQL.
Mike knows that IQL is at the beginning of their research process and has no idea about the product or service ABC Company offers. Once the IQL provides his contact, they will be directed to a thank you page with a link to download the offer and receive a follow-up email with the same download link.
A few days later, Mike will send a follow-up email with additional information related to what the IQLs downloaded. He will also invite them to learn more (free webinars, case studies, free samples, product spec sheets and catalogues) about how the ABC company can help solve the problem related to the sales analysis whitepaper they have downloaded. At this stage, Mike views the IQLs as cold leads as they will take the initial information they need but stop moving on to the next stage. So, it is important to keep in touch with them by sending email newsletters and new content offers.
5. Marketing Qualified Lead (MQL) – If Mike successfully makes the IQLs take the next step, they will become MQL. In short, this kind of lead is marketing qualified because the marketing triggered them to become a warm lead. In most cases, they attended a webinar, downloaded an ebook, subscribed to ABC company’s blog or watched one of Mike’s videos.
To keep MQLs warm, or even turn them hot, Mike has to work closely with the sales and marketing teams to create a proper lead scoring system to identify if the MQL is sales-ready.
The next key step for Mike is to determine if it’s a sales opportunity. Once he has confirmed, he should follow-up closely and offer necessary guidance like free trials, demos, free consultations, estimates/quotes or coupons to make them go to the next stage (decision stage).
6. Sales Qualified Lead (SQL) – If the MQL successfully moved on to the decision stage, Mike now has a SQL. As long as Mike has had an initial conversation with the lead, then it is considered as sales qualified. Through that, Mike determines if it could be an actual opportunity, even if it’s not an immediate one, then at least a potential one.
Usually, this indicates that Mike is aware of the potential client’s need and able to provide a solution to their problem.
The importance of responsiveness can affect the closing rate because studies have also shown that, the faster a salesperson follows up with an SQL, the higher the closing rate.
In sum, the different types of leads mentioned above are just some of the examples. The key is to remember that all of these titles below are applied to people (customers), not companies. After all, company success is not achieved overnight. It takes time, energy, resources, expertise and techniques to achieve the targeted outcomes. So, try to view every lead as a valuable resource and opportunity to reach your goal one step nearer.