The ultimate goal of all marketing efforts is to make a sale. It all begins with prospecting, “the important process of locating potential customers for a product or service”. Prospecting begins with finding a lead, “a person or an organization that may or may not have what it takes to be a true prospect”.
The fact of the matter is not all leads are prospects. It is therefore vitally important for all marketers and salespeople to understand that not every lead is worth your valuable time. So to avoid wasting your time on bad leads, marketers and salespeople must develop a process of first of all qualifying the lead, “the process of determining whether a lead is in fact a prospect”.
Qualifying a lead can occur during several stages: prospecting, collecting pre-call information, making the approach and finding out the needs of the potential customer.
Different Types of Leads
Before we get into the nitty-gritty of how to determine if a lead is a prospect or not, let’s look at the different types of leads and a framework for stages from Jeffrey Russo’s “The Marketer’s Field Guide To Salesforce”.
Subscribers have expressed a very early interest in your company or product by taking an early action (i.e., signing up for your newsletter) – you don’t yet know enough about them to consider them a proper lead, and they don’t yet warrant sales intervention.
Leads are people who have expressed some general interest in what your business sells or does. Maybe they have filled out a form that asks for more than just an email address, or have downloaded a piece of educational content from your website, like a whitepaper.
Marketing Qualified Leads (MQL) Stage
Marketing Qualified Leads, commonly known as MQLs, are leads who have metaphorically “raised their hands” to signify a deeper interest in your product. Maybe they have downloaded a buyers’ guide for the product you offer, or requested a demo or consultation on your product. They are prospective buyers, but haven’t yet been qualified as full fledged opportunities.
Sales Qualified Leads (SQL) Stage
SQLs (sometimes called “sales accepted leads”) are leads that your sales team agrees are worthy of follow up from a real person.
Opportunities are leads who a salesperson has determined represents a real prospective buyer of your product or service. At this point, most organizations will send the lead from their marketing database to their Customer Relationship Management (CRM) system.
An actual, paying customer.
Qualifying The Lead As A Prospect For A Sale
Usually, the amount of time spent on determining which leads are prospects varies in different types of selling. A number of factors come into play, including the type of product or service, the value of the salesperson’s time and the profit per sale.
In their book, Selling: Building Partnerships, Weitz, Castleberry and Tanner, identifies five main questions every marketer or salesperson must ask in order to determine the quality of a lead. They are;
- Does the lead have a want or a need that the purchase of my products or services can satisfy?
- Does the lead have the ability to pay?
- Does the lead have the authority to buy?
- Can the lead be approached favourably?
- Is the lead eligible to buy?
Does the lead have a want or a need that the purchase of my products or services can satisfy?
To determine whether a real need exists for the products or services, the salesperson may use telephone, email or real-time communication tool such as Skype to conduct exploratory interview and assess the needs of the customer.
Does the lead have the ability to pay?
The ability of the potential customer to pay for the products or services is a sure way to narrow down prospects. For example, it will be a waste of time to target a lead whose cash resources amount to R35,000 and an annual income of R200,000 for an automobile that costs R1 million.
Even though the customer may desire the R1 million vehicle, his or her financial condition makes it impossible to seal a deal.
Does the lead have the authority to buy?
The fact that a need exists and the ability to pay for the products or services is positive is not a guarantee for a purchase. For example, a tool manufacturing company found that most of the sales (44%) within their customer’s firm were authorized by engineers. The rest came from purchasing agents (29%), production managers (10%) and others (17%). When the company focused their marketing and sales efforts to engineers and purchasing agents, they increased their profits by 22% over two years.
It is therefore important for the marketers and salespeople to invite the people with the authority to their meetings.
Can the lead be approached favourably?
Some leads with a need, the ability to pay and the authority to buy may still not be prospects because of issues of accessibility. For example, how easily can a salesperson gain access to a major executive of a Fortune 500 company? The chances are very slim for most salespeople.
Is the lead eligible to buy
Eligibility has to do with whether the salesperson is able to satisfy the need expressed by the customer. For instance, a salesperson who sells exclusively to wholesalers has no business with retailers.
Once a marketer/salesperson has satisfied him or herself with these questions, then the lead is ready to be at the opportunity stage and most likely will move to the customer stage of the framework described above.