What’s a Lead?

End the marketing/sales tug of war (and improve ROI) with a better lead qualification process

November 2006 By Brian Carroll

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A recent report by Aberdeen Group, Sales Effectiveness: Helping Sales Sell, concludes: “The number one issue for most CEOs and marketers is lead generation—getting more leads to their sales team.” The number one desire for salespeople, however, is more selling time with sales-ready opportunities.

You must realize that the extreme time pressure salespeople face—especially those with a complex sale—requires them to ignore what is not immediately relevant and highly likely to produce revenue. Why? They are not paid to do anything else. And that makes quality more important than quantity to them.

If you are in marketing, are you currently sending your sales team qualified leads or merely inquiries? There is a difference. An inquiry is an interested party who has requested information and needs some level of assistance. But inquiries are not leads. A lead isn’t a lead until it’s been qualified.

Numerous lead qualification programs have shown that as little as 5 percent to 15 percent of all inquiries are truly sales-ready opportunities. If inquiries are sent to the sales team as leads without first being qualified, then many will turn out not ready for a salesperson to attempt to close and thus are more or less a waste of time for sales.

The biggest mistake made by marketers is to give mere inquiries to a salesperson. When inquiries are handed off without being methodically qualified, it doesn’t take the sales department long to start viewing all marketing-generated “leads” with skepticism. And without well-defined criteria of what constitutes a qualified sales lead, the wheat mixed in with the chaff has little chance of improving to sales-ready status or being accepted by the salesforce.

There is a systematic process for successful qualification that includes specific steps. This article highlights those steps, while paying special attention to the critical role the telephone plays in that process.



Step One: Define and Agree On What the Word “Lead” Means

I’ve spoken with hundreds of companies, and less than 10 percent have a definition of what a lead means that is clear, written down and unanimously agreed on by sales and marketing. Even in small companies, I can ask three salespeople, “What is a good lead?” and get three different answers. This question goes to the very heart of the lead qualification process. It seeks to identify the relative quality of a lead compared to a predetermined standard.

Companies that don’t ask this essential question are relegating their lead generation program to ruin. Failure to properly answer this question often leads to miscommunication, poor teamwork between sales and marketing, and ultimately missed revenue targets and wasted budget dollars.

For the lead definition to be useful in its application, it must be applied to all leads, regardless of source—e.g., teleprospecting, Web site, inbound calls, direct mail, event attendees. The need for the definition to apply to all sources is critical to implementing a lead management system. It sets a standard by which your lead generation efforts can be measured. Otherwise, you will just be comparing apples to oranges. Most importantly, the lead definition must be universally agreed on by both sales and marketing.

The universal lead definition is that standard against which every poten-tial customer is compared. Its priority is determined by where the customer
is in the buying process and delineated by its degree of sales readiness, regardless of source. Here’s how it’s done:

Meet. Get everyone who is involved with the lead generation program together and select a capable leader. Bring in a facilitator who is credible, speaks the language of both sales and marketing, and can “clear the air” if necessary. If everyone is not on board with this process, it will fail.

Ask. What do we consider a qualified lead? What are the characteristics of the ideal sales opportunity? What do we really need to know? What would be nice to know? Who should we be contacting? Who is involved in the buying process? What common needs are we addressing?

Meet again. Is there still consensus that all parties are on the same wavelength?

Expose. Widely publish the universal lead definition in the interest of integrating it into the organization’s culture and language.

Close the loop. Marketing and sales should meet regularly to review and reconfirm the universal lead definition’s efficacy with such queries as: Was a particular lead an actual lead? Did it enter the sales process? Why or why not? What else should be known about it? How can we improve on what we are doing?

Edit and republish. There is no reason the universal lead definition can’t be improved on, if required.

So, for example, a definition of a hot lead that should be passed on to the sales team might be:
* Talked with vice president of sales (economic decision maker);
* In the sweet spot (meets ideal customer profile);
* Clear business need/initiative for what we sell;
* Wants to fix the problem;
* Purchase decision made in less than six months;
* Has a formal budget of X or can find a budget; and
* Ready to speak to a sales consultant.

Ultimately, if everyone is consistent in the application of the company’s lead definition, confidence in the quality and viability of leads within your sales ranks will grow. Lead acceptance will be drastically increased, and salespeople then can focus only on those prospects who have a definite interest and need.



Step Two: Consolidate and Centralize Your Prospect Information

Leads come to marketing departments from a wide variety of sources: information requests from your Web site, demo downloads, event attendee lists … the list goes on and on. Sometimes the prospect data is sketchy, but usually you have at least a name, a company name, and either e-mail or phone contact information. You also have the source of the lead, which eventually will help you determine whether that inquiry source is a viable contributor to your lead funnel.

Put that information, incomplete or otherwise, in a database to which additional data can be entered. A properly designed and maintained database is the well-oiled hub of all lead generation activity. It represents the rallying point for collaboration between marketing and sales. It also can foster cooperation among other groups in the organization, including those interfacing with customers, such as solution implementation, front-line customer service, accounts receivable and others, like corporate management and research and development.

When constructing this lead database, consider what fields are “must haves” and which are “nice to haves.” Much of your data field requirements will be dictated by your universal lead definition. What are the quantifiable attributes of a qualified lead? You then can determine necessary dashboard reports, like activity, results and analysis. Track and manage all contacts made to the prospects in this database. Because the database is an invaluable nucleus for lead generation, you should assign maintenance responsibility, agree on data-entry processes and keep it current with regular updates by all stakeholders.



Step Three: Pick Up the Phone and Qualify Prospective Leads

The role the phone plays in modern lead generation is all too often overlooked by marketers. This is unfortunate, because if done well, outbound calling is by far the most effective tool for qualifying leads—particularly for the complex sale, in which few other economical options exist for contacting high-level decision makers.

This quote from a favorite book by authors Brian Fugere, Chelsea Hardaway and Jon Warshawsky, “Why Business People Speak Like Idiots: A Bullfighter’s Guide” (Simon and Schuster Free Press, 2005) summarizes my feeling on this topic:

The deluge of e-mail today has brought a different dimension to phoning. The live human voice makes significant things happen. There is perhaps less economy in a phone exchange than an e-mail message, but economy is not necessarily a good thing when the need is to connect with people. In another sense, phoning implies effort. People appreciate effort. That five-minute conversation requires you to dedicate that much of your time to the person you are calling. You talk. The prospect listens. The prospect talks. You listen. It’s an amazing thing, knowing that someone is paying attention and then returning the favor. Amazingly different, anyway.

The voice is the ultimate weapon in the war on anonymity and the best way to create a relationship. If you have a tenuous relationship, if you exchange five e-mails without one live call, if you are dealing with an important issue, or if you are trying to persuade someone of something, invest a few minutes in a live call. On the phone, you have a better chance of hearing the truth, complete with all of those editorial comments and undertones that separate humans from business idiots. If you really want to know, pick up the damn phone.



There are, perhaps, more glamorous ways to develop and foster leads or inquiries, so the phone as a tool for qualification gets less media attention than other more buzz-worthy tactics. But no other channel is as accurate when it comes to collecting the qualitative information salespeople require to justify pursuing a prospective lead. The phone is timely, interactive and personal—the perfect combination of assets for building a relationship.

Qualification calling comes into play with a prospect who has “raised his or her hand” but whose demonstrated interest still has not reached qualified lead status. Qualification calling is designed for:
• preventing wasted time pursuing unqualified leads;
• ensuring that good sales opportunities are pursued;
• adhering to the universal lead definition;
• following up on events;
• following up on Web inquiries;
• following up on direct mail responses; and
• following up on all inquiries, regardless of source.



Even in light of its uniquely important role, the phone can’t stand alone. It must function as the convergence for all other modalities in the lead generation system, the central point for qualifying inquiries and leads of whatever description.

A good quality lead typically needs to satisfy the requirements of the BANTS formula:

Budget. Is the prospect aware and capable of meeting budget requirements?
Authority. Are the important players in the purchasing decision process involved?
Need. Has a clear initiative or need been acknowledged? Are they motivated?
Time frame. Has it been determined when the purchase decision will take place?
Sales ready. Is there comfort in the imminent prospect of meeting with a salesperson?



If your organization has set out to provide genuine, sales-ready leads to your sales team, pick up the phone. In fact, this function is so important that creating a dedicated teleprospecting function should become a top priority.



Step Four: Handing Off Leads to Sales

If you have gone through the worthwhile trouble to pick up the phone to identify leads that are ready for sales to attempt conversion, then the handoff from the teleprospecting team to sales becomes critically important if you hope to make the most of your investment.

Here are five guidelines for making sure the baton doesn’t get dropped in the process:

1. Qualified, sales-ready leads are prepared in the marketing department for the handoff to sales. This means all the gathered data is complete and in the database.

2. Marketing sets up a meeting or phone call between the lead and the appropriate parties in sales.

3. The teleprospecting team sends a confirmation e-mail to the lead, informing him or her of the handoff, and copies both the sales representative and the sales lead.

4. The teleprospecting team alerts the salesperson of the new, sales-ready lead and sends him or her a lead data sheet, which provides prospect profile information and detailed notes of all phone conversations with the lead.

5. Each sales-ready lead is transferred to the sales database or CRM system.



It’s important to be methodical when passing leads to the salesforce. Taking shortcuts in the handoff stage, such as not adhering to the lead definition or providing incomplete contact history to the salesforce, may result in miscommunication and missed opportunities.

For example, my company recently was retained to develop a lead qualification program for a company whose marketing department was concerned that the sales department wasn’t acting on the inquiries generated (which marketing called leads). Marketing felt the sales process basically was a black box: No one except the sales team knew what was going on inside the black box until a proposal or sale happened. Worse still, many leads that went into the sales black box were never seen again. This made it particularly challenging for the marketing team when it was trying to measure its revenue contribution and lead generation ROI.

Ultimately, it was concluded that without the skill, desire and incentive, the sales team should not have been asked to pursue the activity of lead qualification, and a special lead generation/qualification program was adopted. The program also took into account the impact speedy lead follow-up has on ROI. First, all leads are centrally qualified via phone against the company’s universal lead definition within two hours and distributed to the field salesforce and sales channel, which then is required to follow up on Web inquiries within four to eight hours. The company generates 4,000 inquiries per year, mostly via its Web site, events and webinars.

If the qualified sales lead is not reviewed or followed up by the assigned salesperson within 24 hours, this salesperson can count on a call from his or her sales manager. Inactive leads automatically are flagged in the CRM system. If a sales lead goes more than 48 hours before being touched, the assigned salesperson risks having that lead reassigned to someone with more selling time capacity.

This might seem aggressive, but it works. The company has a lead conversion rate triple the amount of many industry peers, and it now knows exactly how many marketing-generated leads are being pursued by the sales team. Goodbye black box.



Step Five: Closing the Loop

Lead generation and, as an extension, lead qualification, is an iterative process that significantly benefits from consistent closed-loop feedback. Closing the loop on a regular basis allows you to constantly learn from each interaction. Closed-loop feedback is the principle of eliciting a continuous flow of pertinent information from the sales team. It tracks each qualified lead from start to end, whether to sales close or to rejection.

Here are some issues that successful, multistep marketers address to conduct closed-loop feedback meetings with their clients. It works wonders! A typical closed-loop feedback meeting will include:



Attendees
- marketing program manager (internal or outsourced)
- lead generation specialists/inside sales/teleprospectors (internal or outsourced)
- sales team
- interested observers (managers and leaders)



Tools Needed
- reports
- summary of the month’s activity
- export of leads into sales stage



Agenda
- status of leads in the sales process
- feedback on each lead, if available
- leads active and moving forward
- inactive leads
- incorrectly qualified?
- further follow up?
- leads that require additional nurturing
- wins that can be celebrated
- things being done right
- things that can be improved



Companies that make closed-loop feedback work have higher lead conversion rates than those that do not. Ultimately, companies that “huddle” more frequently improve all phases of the sales and marketing continuum and their ROI.



More Is Not Better

Many marketers believe generating more sales leads is the key to hitting revenue targets. That’s not always true. In fact, most companies need to do a better job managing and qualifying the leads (or more likely the inquiries) they already have.

Effective lead qualification is key to building a reliable sales pipeline. And the phone is a requirement for gathering the type of information required to qualify leads and inquiries. If organizations can’t find effective ways to include the phone in a systematic qualification process, then any investment in lead generation activities likely will produce little or no return in the long term.



Brian Carroll is CEO of InTouch Inc. and author of “Lead Generation for the Complex Sale.” His lead generation blog (blog.startwithalead.com) recently was selected “Best B-to-B Marketing Blog” by the readers of MarketingSherpa. Contact Carroll at bcarroll@startwithalead.com.

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