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Not All Leads Are Created Equal – Properly Classifying MQLs and SQLs Will Improve Results

Posted by Dean Moothart

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September 2, 2016

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The objective of all marketing strategies should be to generate revenue. The first step in generating revenue is generating leads. However, marketing teams shouldn’t rest easy because they’re generating hundreds or even thousands of leads—because not all leads are created equal.

A common mistake that many marketing teams make is handing off every lead that’s generated to sales as soon as it’s produced. They check the box on their list of objectives. They feel accomplished. And then they sit back and wait for Sales to do their thing. Unfortunately, what usually happens in these scenarios is not closed business, but closed minds. Sales closes their minds to any thought that Marketing knows what they’re doing. If every lead that’s generated goes directly to Sales for immediate follow up, it’s almost guaranteed that Sales will be overwhelmed with low quality/unqualified leads. They get frustrated, and ultimately they’ll stop following up on the leads they receive from Marketing because they don’t believe it’s a valuable use of their time. Inconsistent lead follow-up leads to inconsistent sales pipelines and inconsistent return on Marketing’s lead generation investment.

To avoid this “death spiral," all leads that Marketing generates should be assigned one of the following classifications: Lead, Marketing Qualified Lead (MQL), or Sales Qualified Lead (SQL). Marketing needs to “own” a lead until it’s ready to be handed off to Sales—until it becomes an SQL.   

Classifications of Leads

The definitions of every organization’s lead classifications can look very different. Below are some general guidelines that can used as a starting point.

Lead: Someone who has interacted with you in some way—downloaded a piece of content, filled out a form, subscribed to a blog, attended an event, etc. If you have a name of an individual in your marketing database, but this person has not yet interacted with your company in some way, then they’re not a lead. They’re just a contact. They’re not even a prospect yet. They’re a suspect.

Marketing Qualified Lead: Someone who has interacted with your company and appears to fit your ideal customer profile. Marketing is responsible for changing the classification from “lead” to “MQL." Answering the following questions can help determine if they are a fit and if reclassification is justified.

  • Does the prospect’s behavior indicate some level of interest?
  • Is the prospect’s business in an industry that you are focusing on or you know you can be successful?
  • Is the prospect’s title/function consistent with the titles/functions of your customers’ decision-makers?
  • Has the company demonstrated potential opportunity triggers (i.e. downsizing, announced expansion, new product strategies, new executive team, etc.)?
  • Are there external factors that make this prospect suited for your solution (i.e. new government regulations or changing macro-economic conditions)?

Sales Qualified Lead: This is a lead that’s ready to be handed off to Sales and owned by Sales because this person has an interest, a fit, and an expressed need for your product/solution. Answering the following questions can help determine the prospect’s level of interest and need.

  •      Has the prospect been responsive and engaged with a salesperson?
  •      Has the prospect specifically requested a consultation or demo?
  •      Does the prospect believe that you can help them?
  •      Do believe that you can help the prospect?
  •      Can they afford your solution?
  •      Do they have a budget established for your solution?
  •      Does the prospect have the authority to make a decision?
  •      Does the prospect have a defined need or a specific problem that you can help solve?
  •      Does the prospect have a set timeframe to make a final decision?
  •      Is the decision timeframe consistent with the sales cycle of your current clients?

The last 4 questions are often described as BANT: Budget, Authority, Need, and Timeframe.

When Sales “owns” the lead, it means that Marketing no longer has the responsibility to interact with the lead. All future engagement or nurturing should be directed by Sales. The Sales organization should be responsible for determining if a lead becomes and stays an SQL. If Sales determines that they don’t have the time or resources to appropriately nurture the lead or the purchase timeframe is too far into the future, they should reclassify the lead back to MQL status. 

How You Should Classify Your Leads

It’s important that each organization customize their lead classification definitions to meet the specific situation of their unique business. They should also meet the specific requirements of the sales organization. What type of lead does Sales need in order to meet their objectives? Involve salespeople in the process of defining your lead classifications. Insist on their input. Re-evaluate the criteria on a regular basis to fine tune the hand-off process. As your business grows and changes, it’s likely that your lead definitions will also change. However, don’t make any changes without feedback from Sales and evaluation of performance metrics. Take a look at the conversion rate from SQL to Opportunity to closed business. If it’s too low, then your criteria may be too loose.

Most importantly, continue to look at each lead with a critical eye and assign them the proper classification. This will ensure that each lead will receive the appropriate treatment and you can optimize your marketing and sales efforts.

The Future of Sales and Marketing

Topics: lead generation, inbound marketing, Sales, media, deanmoothart, professional services

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