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Expanding your existing customer base is critical to the growth and survival of your business. At the same time, it can often seem like for every real prospect, there are another dozen or more that ultimately prove to be fruitless.
That's why you need to employ a formal lead qualification process to improve your conversion rate. This five-step guide will show you how to qualify a lead or prospect.
Lead qualification is the process of determining how likely a lead is to ultimately make a purchase. While this process is applicable to high-dollar individual purchases -- for example, houses and cars -- it’s more commonly seen in business-to-business (B2B) sales.
As such, qualifying sales leads is a critical part of your sales process and overall business development plan.
Success in any business consists of working both smart and hard. To that end, lead qualification will allow your sales and marketing teams to make the sales pipeline as efficient as possible. However, there are several more reasons lead qualification is important.
You have to move beyond informal sales comparisons such as "salesperson A regularly outperforms salesperson B." Using a lead qualification system will allow you to generate more granular and actionable data.
What is each salesperson's lead conversion rate? How is this conversion rate tied to the number of total sales and revenue generated?
In addition, by using a win rates chart like the one below, you can understand the effectiveness of each type of marketing and sales campaign you deploy.
More than 75% of generated leads never convert into sales, and the most common reason for this drop-off rate is a lack of lead nurturing, the process of developing relationships with prospects by providing them with ongoing value and information.
Lead nurturing is an important activity to build into the customer life cycle that will help you convert leads into future sales.
You can look at failure as simply the production of unexpected knowledge. While some potential customers will never be a good fit for your products and services, what overall patterns can you identify in these lost opportunities?
For example, if you're consistently losing sales to companies of a certain size -- say, under 100 employees, or over 500 -- why is that the case? Which of your competitors are they using instead? What can you do to retool your marketing efforts or products and services to more effectively appeal to them?
When you begin formally prospecting for customers, consistency in your efforts is key because what you're doing is formalizing your sales process, and that requires valid data. In the end, you'll have a system for sales that isn't dependent on a few gifted salespeople but can be applied across your entire sales team.
Sure, it would be nice to think that everyone everywhere is a potential customer, but that's just not the case. Instead, each product and service has a primary customer as well as secondary customers.
Identifying the characteristics of your customers -- both existing and desired -- will allow you to tailor your marketing efforts to those groups as well as quickly determine if a new lead is likely a viable prospect.
Before a potential customer reaches out to you or shows interest in your offerings, you can assume they've done some research about your company and products. That is not, however, a one-way street, as successful lead qualification requires you to do your homework, too.
Taking the time to do some initial research on your leads will not only aid the chances of a future sale, it will also allow you to quickly disqualify leads that are not a good match, freeing you up for the next best opportunity.
Everyone's time -- both yours and the person you're talking to -- is valuable, so you need to ask the right questions to determine as soon as possible if there’s a deal to be made. We'll go over some specific question methodologies below, but here are a few general principles.
Your initial conversation shouldn't come off as an interrogation, but the combination of thoughtfully worded open-ended questions and close listening on your part will allow you to quickly learn what you need to know.
Business intelligence and metrics thrive on hard numbers, so implementing a lead scoring system will produce the data necessary to improve your sales figures.
You'll need to score the answers to each of your questions in the previous section. In addition, score both demographic (job title and department of contact, company and size, and industry) as well as behavioral information at your website (web pages viewed, number of views, emails opened, and webinars attended).
The days of conducting sales via Rolodexes and notes scribbled on the backs of business cards are long gone. In the modern business environment, one of your essential lead prospecting tools will be a customer relationship management (CRM) system for lead management.
You want to use the best CRM software for your needs. This will be particularly important so you can capture customer information over time about sales as well as construct an ongoing narrative of communication no matter who at your company interacts with a client.
There are different methodologies you can use to generate the specific information you'll need to determine each qualifying lead. You should be familiar with the most commonly used frameworks available to decide which one is best suited to your company, customers, and sales.
First developed by IBM in the 1960s, the budget, authority, needs, and timeline (BANT) method identifies promising leads by asking the following questions:
BANT's simplicity and success has made it the de facto standard for decades. Still, it's been gradually overtaken by other methodologies, such as the two below. That's due to its emphasis on seller-side concerns and the assumption that buyers already know the solution they need and are ready to make a purchase.
Developed by InsightSquared in direct response to BANT, the challenges, authority, money, and prioritization (CHAMP) method begins with the customer's need, their biggest concern, as opposed to the budget, your primary interest:
While CHAMP is more customer-centric than BANT, it doesn't dive particularly deep into how the customer will define success for the project, which can leave your sales team scrambling at the proposal stage to demonstrate the value that will come from choosing you as a provider.
Even more focused on the customer's needs is HubSpot's goals, plans, challenges, timeline budget, authority, consequences, and implications (GPCTBA/C&I) framework. More specifically, each area employs the following questions:
While the strength of this method is the depth and breadth of the information generated, that can also be a weakness as inexperienced sales team members may struggle to cover all of these topics in the course of an organic conversation.
The saying that "time is money" is a cliche, but it's become a cliche because it's true. If you're not already qualifying sales leads -- or are using an informal, ad hoc system -- there's no time like the present to implement this important process into the customer acquisition efforts of your sales and marketing teams.
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