Why unblocking sales lead qualification is critical to revenue growth
Why is unblocking sales lead qualification critical to revenue growth?
For most small B2B businesses, the process of sales lead qualification (converting a prospect into a sales qualified lead) is a highly manual, inefficient and time-consuming process. And yet, it is a critical step in most B2B sales.
That’s why small business leaders and sales managers who address this issue achieve significantly faster revenue growth than those who don’t.
This article explains why.
Sales Qualified Lead Definition
There are many definitions of a ‘Sales Qualified Lead’ (SQL), but most would agree that it is a prospective customer that has been researched and vetted, first by an organization’s marketing department and then by its sales team – and is deemed ready for the next stage in the sales process.
The Sales Qualification process is the stage after marketing has identified and found the lead and there is a requirement to engage with the prospect in order to ascertain the level of alignment between the needs of the prospect and the potential solution. There are many simple tools in play to define the level of qualification, such as Budget Authority, Need and Timescales (BANT) or CHAMP or MEDDIC.
Once the alignment is established by both parties, there is a stronger likelihood that the prospect will convert into a customer. They are considered ‘sales ready’ and can be converted in a profitable customer within a defined timescale.
Well qualified sales leads are therefore critical to revenue growth.
The Cost of a Sales Qualified Lead
There are many estimates of the cost of generating a qualified lead. The true cost varies significantly based on the level of qualification, the industry sector and deal size and many other factors.
It’s not uncommon for a qualified B2B lead to cost from just a few hundred pounds into the thousands, and with conversion rates around 10%, typical small businesses will be wasting a lot of money to qualify and convert a lead.
The Pain of Sales Qualification
The goal of achieving a steady flow of highly qualified sales leads eludes all but a few businesses. Solving this issue takes a methodical and logical approach, but the benefits are worth it. There are several steps in the process to consider.
Finding leads in the first place is an imperfect science. Most marketing activities generate less than 5% conversions, which is in effect, 95% wastage. Think about your digital marketing, PR, events and website conversions. It can be an expensive and slow process, therefore inhibiting the quantity and quality of prospective leads. Most expert marketeers advocate building a ‘predictable growth engine’, which is the subject of many articles and not the primary focus of this article.
Having achieved a marketing qualified lead (MQL) or enquiry, the traditional process of sales lead qualification starts.
Engaging with Prospects
Making contact with the prospect can take time as both prospect and sales person juggles diaries and higher priorities. Often, both will have other distractions and time constraints which can hinder an effective two-way communication. Only once both the sales person has the prospects attention can they start to qualify the sales lead.
Equally, expensive sales resources will complain about how many calls they need to make in order to have a meaningful conversation with a seemingly enthusiastic prospect. Research indicates that it takes 8 phone calls to achieve 1 meaningful conversation – that’s probably 1 hour of wasted time before your sales person engages in dialogue with the prospect.
A further limitation of the current sales qualification process is simply ‘bandwidth’. Most sales people will spread their time and focus on later stage, higher profile or bigger price tag deals and deprioritise seemingly smaller or earlier stage qualification processes. They work office hours, and so are not available to respond to out of hours enquiries or opportunities from different time zones.
Most sales people will naturally be managing multiple sales opportunities at different stages and levels of engagement, therefore an enquiry from a keen prospect can be ignored whilst a sales person responds to a larger or more demanding client. Simple information requests or questions can elicit inconsistent responses from busy sales people or worse, no reply.
Many owners or small companies are still involved in selling, either through necessity or because they outperform sales employees. These are expensive resources to invest in time consuming and inefficient lead qualification processes. Ensuring availability of the right sales person to fit the client can add significant delays and confusion to effective and efficient lead qualification.
There will be a range of sales qualification requirements depending on the business type, sector, product and many other factors.
Many of the tasks involved in qualifying leads are straight-forward and repeatable. Asking open ended questions of a prospect, replying to inbound requests, promptly sharing information, setting up product demonstrations or providing pricing and passing accurate, timely and complete sales ready leads over to the right sales person to negotiate and close the deal are activities that can be automated. However, this traditional process remains stubbornly manual and error prone.
In many instances, this process requires numerous email and telephone conversations and constrained by each participants availability, priorities and responsiveness. And sales people are not noted for their pain staking note taking or adherence to process.
The Risk of Inconsistency
We’re only human. So when it comes to receiving and responding to questions, we all perform differently. For many businesses in most sectors, this is not a problem. In small businesses it can be the character or personality of the sales person that builds a relationship with the prospect that helps build trust and get the deals done. People buy from people, is an often used phrase. Whilst it is true, there are some risks to consider.
What works for one prospect may not work for another. Not easy to assess or address, but higher performing sales people tend to have an innate ability to adapt their approach based on their assessment of what would work best to convert the customer. That’s why these sales people tend to be the most in demand and the highest paid. It’s a rare skill that can’t easily be replicated.
Also consider the reputational damage or commercial impact of providing incorrect or misleading information to a potential customer. Without any controls in place, sales people are free to respond as they see fit with the sole objective of winning the deal. However, we have all heard implementation teams or customer service execs complaining that a sales person over-promised or miss-sold the customer.
In some sectors, this inconsistency can be costly. Companies in regulated industries such as financial services or pharmaceuticals can incur significant reputational loss or financial penalties for mis-selling.
Companies handling large volumes of customer interactions through large teams of employees in call centres rely on having consistent and auditable trails for each customer interaction. One poorly worded reply or ‘off-script’ comment can be costly.
Managing customer expectations and ultimately customer satisfaction and retention starts with having accurate and timely responses during the qualification process. Get this right and businesses can improve client retention and profitability.
Valuable data about which message resonated best with the prospect or which response triggered the best conversions are not captured by manual processes.
Whilst CRM’s are capable of logging this information – only a small number of companies capture or analyse sales lead qualification data. For growth oriented companies, this information is gold dust but simply isn’t captured by traditional manual qualification processes.
For management, creating a predictable pipeline of sales is vital to consistent growth. Being able to rely on a flow of inbound customers relies on having a repeatable and scable sales qualification processes with high-quality qualification data. The highly manual process described here, all too many pipelines are based on ‘gut feel’ with no evidence to identify which client will convert and when.
There is often a fine balance for business leaders to strike between the cost and quantity of leads required to convert to a paying customer versus the profit derived from the customer.
Gap in Sales Tech Stack
Inspite of the importance of effective lead qualification, only a very few small or medium sized businesses capture data on the effectiveness of their process. This is due in part to sales peoples’ perception that documenting every aspect of their performance is a distraction from selling and CRM being focussed on tracking the higher level flow of lead through to customer. Mostly importantly, business leaders and sales managers have not had the user friendly tools at their disposal to capture the effectiveness of every inbound and outbound message.
With out tools specifically aimed at sales lead qualification, companies have simply had to accept a highly inefficient, costly and error prone process. Sales Managers may well have used sales training to encourage more effective conversions or informal sharing of anecdotal evidence to try to identify process improvements, but not often will this have been documented or adhered to. Companies simply don’t learn how to do things in a more efficient way. They may work harder to qualify leads more effectively – but not smarter.
So what are my choices?
Its all too easy to be persuaded to outsource to a specialist agency, however, they are unlikely to know your product or value proposition as well as the business. They may have some best practice techniques to apply, but rarely are better at lead qualification than the business’s own resources.They simply have more resources to throw at qualifying leads.
Controlled In House Automation
An increasing number of innovative small business leaders are focussing on improving the efficiency of their lead qualification process. By improving the efficiency they can quickly achieve significant and measurable uplift in sales.
Keeping things in house is often more cost effective than outsourcing and less risky. Additionally, an in house solution enables business leaders and sales managers to capture knowledge, identify best practice and continually improve conversion rates. This approach means the company builds a unique and powerful source of information, such as competitor insights, market knowledge and customer needs.
By automating the lead qualification process, using Sales AI tools such as Jeffrey, companies can scale up their capacity of lead qualification exponentially. They can extend their availability to handle enquiries 24×7 and therefore qualify leads from prospects around the globe and respond promptly – even if the prospect is working out of office hours.
Automating the lead qualification process delivers game changing benefits.