Sales leads are the lifeblood of your company. They’re your link to new customers, new opportunities, and future revenue. However, not all leads are of equal value. The ideal lead identifies a prospect who wants to buy your product or service immediately ,has more than enough budget, is not price or term-sensitive, is looking to make a significant purchase, and has identified your company as the sole source. Ideal leads rarely occur, if ever. Usually, one or more of these seven variables affects the value of the lead: decision timeframe, requirements, budget, price, terms, deal size and competition.
Your sales representatives will spend time on each sales lead according to the rep’s perceived value of the lead. If the rep perceives value – easy to close, immediate decision, large deal size or significant follow-on business, and little competition – he or she will be more likely to follow up on the lead. By establishing a good lead qualification process, you can provide reps with a reasonably accurate assessment of each lead’s value.
Lead Qualification Process
The lead qualification process involves gathering information about the opportunity and the prospect. The amount of information gathered and the effort expended should vary based on the size of the deal and the timeframe involved. Smaller deals, deals with very short sales cycles, or low-margin deals do not justify a major lead qualification effort. Larger transactions or leads for prospects that represent significant future business potential justify a much greater effort.
Once you’ve collected the data needed to qualify your lead, rank the lead “A,” “B,” or “C.” “A” leads are the most important. They represent significant opportunities with a high likelihood of closing. Your sales reps should follow up on “A” leads immediately. “B” leads are important, but may be smaller in size, less likely to close, or have other obstacles your sales team needs to overcome. “C” leads are the least promising leads or they may require a significant investment of time and resources to close. Sales reps should actively pursue “C” leads, but with a lower priority. Over the life of a lead, you may adjust its ranking (from “A” to “B” or “C” to “A”, for example) as conditions change.
For complex, high-margin transactions, the following information is generally valuable when qualifying a lead and jump-starting field sales involvement:
- Customer or Prospect – Is this lead for a new prospect or an existing customer?
- Transaction Size – How large is the transaction? What is the budget?
- Timing – When will the prospect make a purchase decision?
- Products and Services – What products or services are being considered or are needed?
- Decision makers – Who are the decision makers at various levels within the company? What are their levels of decision-making authority?
- Contact points – Get name, title, address, phone, email address, area of responsibility
- Procurement/purchasing –Who will make the vendor selection? Who will issue the purchase order?
- Business Executives – Who will make the buying decision? Whose budget is paying for the transaction? How does this purchase affect their business? What are their relationships with other lines of business?
- Prospect’s Level of Interest – Is the prospect actively looking for new suppliers? Is the prospect interested in a particular product? When does the prospect plan to make a decision?
- Competitors – Which competitors are in the account? What products do they supply? What are their volumes? Which customer business units do they serve? Which competitors are being considered for this opportunity?
- Size of company – How large is this prospect? Is the prospect of a sufficient size that the sales representative will want to spend time developing it? Is it large enough to warrant a call? A visit when in the area? Arrange a special visit?
- Revenue – Annual revenues of the company? Growth rate?
- Number of outlets – How many locations, plants, stores?
- Volume – How much business do they do in your market today?
- Company’s product mix – What products does the company sell? How much of each line?
- Business mix (markets) – Into which industries do they sell?
- Future growth potential – What is the company’s revenue growth rate? Rate of product introduction? Expected growth of the prospective application?
- Corporate structure – How do the various departments and product lines relate to each other? Which departments are strong? Which departments are well positioned for future strength?
Who Should Qualify Your Leads?
You have several options to consider. You can use your marketing staff, inside sales team, field sales reps or outsource the function to a specialty company. The option you choose will affect the quality of leads passed on to your sales force. It will also affect how many leads are followed up on and how many ultimately produce new business. You will want to select the option that will:
- Accurately evaluate leads
- Effectively leverage your resources
- Deliver value to your organization at a reasonable cost.
First, evaluate whether it makes sense to outsource lead qualification or bring the operation in house. Here are the key questions to ask when comparing an internal group with an outside firm.
- Which represents the least expensive option?
- Which one will present the benefits of our products/solutions to prospects most effectively?
- Which one will gather the most information during the lead qualification process?
- Which one will follow up most effectively with the field sales force?
- Which one will qualify leads fastest?
Whether you use an internal or external group, it’s critical to properly train those responsible for lead qualification. They need proper telephone and sales techniques. They need to be motivated to act fast, with a sense of urgency because leads can go stale very quickly. Leads must be qualified quickly and delivered to the field sales representatives while the opportunities are still hot.
To be most effective, lead qualifiers need to be thoroughly grounded in your company’s:
- Products – Basic understanding of every product and where each product should be used.
- Solutions – What customer problems your products can address. Tools and services you have available to help your customers.
- Markets – the different markets and industries you serve. Your strengths and weaknesses in each market relative to the competition.
- Sales organization – Your sales organization structure and responsibilities.
- Qualifying criteria – Specific criteria used to prioritize leads as “A”, “B”, “C” or a non-lead, developed in conjunction with the field sales force.
- Qualifying questions – Questions which help determine whether a prospect meets the qualifying criteria and to what degree.
- Information gathering – Techniques for gathering as much information from a call as possible. Includes: questioning skills, listening, probing, and analyzing responses.
Sales leads fuel your company’s growth and help maintain its competitive position. Make sure you fully realize their value.
For more information, contact Wallace Management Group at (203) 834-0143 or email David Wallace.
© 2009, David P. Wallace