Lead qualification is the process businesses use to determine which prospects are the best sales targets. Not everyone who expresses interest in a product or service is ready to make a purchase. That’s why lead qualification is a critical part of any sales strategy.
However, it’s a step that many businesses either ignore or fail to perform effectively. According to one study, nearly two-thirds of B2B marketers fail to consider lead qualification when deciding where to target their sales efforts, even though roughly only one quarter of sales leads are qualified.
Fortunately, it’s easy to avoid these types of pitfalls by having a reliable process in place for your business. This article will explain how that process works and describe common strategies for lead qualification.
In this lead qualification guide, you’ll discover:
- What is lead qualification?
- The lead qualification process
- How to qualify a sales lead
- When to move qualified leads through the funnel
- Frequently asked questions
- Build a lead qualification workflow
Lead qualification is where businesses decide which potential customers are most likely to make a purchase. It’s a crucial part of the sales funnel, which frequently gathers several leads, but only converts a fraction of them.
Lead qualification is critical to ensuring your sales and marketing resources are allocated as efficiently as possible. If you invest equal resources into all potential customers, without first assessing their qualification, you will end up spending time and money on prospects who may be less likely to make a purchase, no matter how well you engage with them.
Given the typical marketing costs organizations must budget for, there is little room for wasting resources on prospects who will never convert. Teams must instead concentrate their resources on prospects who are in a position to purchase.
Lead qualification is a multistep process that’s used to focus on sales prospects you may be looking to upgrade into the ‘ready to buy’ category. It’s also used to help your business stand out from the competition, by getting to know a prospect’s pain points and tailoring your sales solution accordingly.
The marketing team first collects a lead’s contact information, as part of inbound marketing operations, then assesses whether the lead is likely to fit an established customer profile of your target audience.
- Unqualified Leads aren’t considered ready for the next stage, as they aren’t a suitable fit for your product.
- Marketing Qualified Leads are ready for more information on your business’ products and services, whether that’s through emails or onsite offers.
- We’ll get into Sales Qualified Leads below.
- Product Qualified Leads have engaged with the product directly by signing up for a free trial.
- Conversion Qualified Leads have submitted a form for more information or set up a call on your website.
If the lead is deemed a fit, he or she becomes a prospect.
Sales call with the prospect.
At some point, a sales representative will get involved by scheduling a call with the prospect. This is where they will ask key questions, to determine whether the prospect is a good candidate for pursuing further.
What information do I need to gather from prospects?
Asking qualifying questions will help you get to know the different types of prospects better and gauge their readiness for the next stage of the sales cycle:
- Are they interested in buying?
- Do they have a use for the product or service you’re offering?
- Do they have the money to buy what you’re offering?
- Is this the right time to buy?
- Do they have the authority to authorize the purchase?
Using the information gathered during this conversation allows you to determine whether your prospect is worth further encouragement along the sales funnel. Your contact might be ready and willing to buy, but ultimately not have the authority to press on. Alternatively, they may not be able to afford what you’re selling.
Sometimes a lead may be unqualified because he or she doesn’t truly understand what your product or service does, or what problems it can solve. If you’re satisfied that a prospect is a good fit based on this discussion, you can class them as a Sales-Qualified Lead. If not, you should disqualify them as a lead.
You don’t necessarily need to get five ‘yes’ answers to the above questions to qualify a sales lead. But this should be approached only on a case-by-case basis. A majority of ‘no’ responses should suggest the lead isn’t worth committing company resources to chase down the sale.
What is a Sales-Qualified Lead?
A Sales-Qualified Lead (SQL) is a prospect whom you determine is relatively likely to convert through your lead qualification process. This doesn’t suggest an immediate sale, but at some point, an SQL should be in a position to make a purchase. These leads are the most sought after for sales reps.
The initial fact-finding call with your prospects can be exceedingly useful when it comes to finding the best use for your company’s aligned sales and marketing resources. However, sales teams should make every attempt to make lead qualification a quantitative, data-driven process.
This can be accomplished through a scoring model where a team calculates a score for each lead. This is normally based on factors such as:
- How often they use social media
- Clickthrough rates for emails sent to the lead
- The frequency of the lead’s visits to your website
- How recently the lead last engaged with your company
Using scoring data, it’s possible to assess leads in a consistent, comprehensive way. If the qualification process results in a lead who is not qualified, they should be removed from active pursuit, so your team does not continue to invest resources in a lead who is not prepared to make a purchase soon.
Some leads are easy to qualify. Others may be more challenging, due to a lack of available information needed to evaluate them. When it’s difficult to determine the buying likelihood of a lead, speculation and an ad-hoc approach to follow-up activities tend to result in less accurate lead qualification.
To avoid this, you need to have a systematic, data-driven lead qualification process in place. Here are some common lead qualification techniques that brands use to distinguish qualified leads from unqualified prospects, using the information gathered on the first fact-finding call.
The BANT technique focuses on four characteristics, in order of decreasing importance:
- Budget. Does the product or service fit the prospect’s purchasing budget?
- Authority. Is the prospect in a position to make a decision about the purchase or would someone else be the decision-maker?
- Needs. To what extent does the prospect need what you are selling? Are they just exploring or is there a pressing need to make a purchase?
- Timeline. How ready is the prospect prepared to purchase?
BANT is a good choice for brands whose products or services are expensive and don’t fit within the budgets of all buyers. This is as well as B2B brands, where decision-making authority and multiple influencers are important parts of the sales process.
CHAMP is an alternative to BANT that prioritizes whether a lead’s challenges are solved by the product or service being sold.
- Challenges. Does what you’re offering solve the problems which a prospect experiences in their day-to-day activity?
- Authority. Is the prospect the right person to speak to regarding the company’s decision-making process on purchasing?
- Money. Does the prospect have the budget in place to consider purchasing what you’re offering?
- Prioritization. Is the issue you’re offering to solve high up on their list of day-to-day problems?
CHAMP uses the concept of prioritization instead of a fixed timeline. From the CHAMP point of view, a prospect’s purchasing timeline is determined by how much the prospect prioritizes buying the product or service that you are selling.
The CHAMP technique is a good fit for situations where some leads don’t understand what you are selling. Identifying prospects’ challenges first and then determining whether there is a fit with the product or service being offered helps sales teams to quickly disqualify leads who don’t need what you are selling.
MEDDIC is a complex yet effective lead qualification technique that focuses on a range of overlapping factors:
- Metrics. In quantifiable terms, what is the customer hoping to get out of your solution? Is it to increase revenue by a certain percentage every year, for example?
- Economic buyer. Who is the person who makes buying decisions?
- Decision criteria. What are the buyer’s criteria for determining whether to make a purchase?
- Decision process. Which process does the buyer follow when evaluating a potential purchase?
- Pain point identification. Which challenges is your buyer seeking to solve?
- Champion. Is there someone inside the buyer’s organization who already believes in your product or service and can serve as a ‘champion’ for it?
MEDDIC requires gathering a lot of detailed information about leads generated. It works well for teams that have a relatively low volume of high-value sales, such as software vendors selling enterprise contracts worth tens of thousands of dollars each.
These teams can afford the time to engage deeply with each lead to collect the information needed to perform MEDDIC qualification. MEDDIC makes less sense for companies that sell low-cost items at high volumes, such as most online retailers.
The ANUM framework evaluates the same factors as the BANT model, but in a different order.
- Authority. Are you dealing with the decision-maker for product or service purchases?
- Need. What are their needs and will your product help to solve them?
- Urgency. Is your contact ready to make their mind up now on a purchase or will they need further communication?
- Money. Is the budget in place to make the sale?
Using ANUM, the decision-making authority of the buyer takes precedence. While money, which is equivalent to BANT’s budget criterium, is the least important factor.
ANUM is a good strategy for brands that sell to groups where decision-making authority is not always clear, such as startup companies that don’t have a well-ordered purchasing process in place. Organizations like these may struggle to determine who must sign off on a purchase before the sale is complete.
FAINT is also a variation on the BANT technique. Like the BANT model, it prioritizes budget and buying authority as the primary factors. However, it also incorporates a unique interest factor that requires sales and marketing teams to evaluate how interested the buyer is in what they have to offer.
- Funds. Does the prospect have the funds in place, or a budget to spend on your service?
- Authority. Is your lead a decision-maker on purchases and spend?
- Interest. Have you made them aware of how your service can improve their day-to-day work?
- Need. Do they have a need for what you’re selling?
- Timing. Is this the right time to make your approach?
FAINT therefore works well for prospects who may not know that your product or service exists in the first place, such as those you would normally reach through cold calling. In contrast, BANT is best suited for those who are already educated about your product and whose interest is clear from the outset.
By using the technique that best suits the organization, your sales and marketing team can determine when it’s time to move a lead further down the sales funnel. Key indicators that reveal a qualified lead include:
- Ability to answer questions about their needs specifically and consistently.
- Firm expression of interest and a need for your product or service.
- A clear understanding of what your product or service provides.
- Alignment between your price point and the lead’s budget.
Other signs that a lead is ready to continue through the funnel include:
- Doing business in an industry that your brand normally sells to.
- The potential for a purchase soon.
- A profile that aligns with similar customers with whom you have closed deals.
After a lead is qualified, your sales team can begin nurturing the lead further by continuing the engagement. Setting up additional calls or meetings, doing product demonstrations, and creating more opportunities to discuss the product with current customers are common techniques for moving qualified leads towards conversion.
How do you qualify prospects and leads?
The suitability of prospects and leads is based on the findings of your initial gathering of information during a call. Whether they have the budget, the need for your product and the authority to buy it are just some of the criteria you’ll use to determine if they’re a qualified lead.
How do you disqualify leads?
Take a lead out of consideration for your sales campaign if they don’t display the interest in, can’t afford or aren’t a decision-maker on buying your product. Then you can focus your team resources on the strong prospects.
What are the five requirements for a lead to be considered a qualified prospect?
The number differs according to which of the acronyms your business uses as a framework. Generally speaking, you can use any of the BANT, CHAMP, MEDDIC, ANUM or FAINT acronyms to determine whether a lead is a qualified prospect. These deal with things like interest, budget and need for your product or service.
Lead qualification is an essential part of sales and marketing. To be successful, brands must implement an efficient process that suits their organization’s unique needs.
If you’re a small company with only a handful of prospects to manage, you may be able to qualify leads with a manual approach. However, to perform lead qualification efficiently at scale, marketing automation is critical.
Marketo Engage offers a complete set of tools for marketing and lead management that address every part of the sales and marketing funnel. See how Marketo Engage can help automate your lead qualification process by trying a free demo today.