Regardless of whether your company is using inbound marketing approaches, or relying upon conventional outbound marketing approaches, it’s essential that your marketing department clearly distinguish between qualified and unqualified leads. Why are qualified leads important in marketing and sales? Simply put, working on qualified leads means that the sales team is more likely to close orders. The question then becomes, what does your company consider to be a qualified lead?
Distinguishing Between a Qualified and an Unqualified Lead
For marketing to be successful means a company must provide a clear distinction between a qualified customer lead and an unqualified customer lead. For the most part, these criteria are typically the same from one competitor to the next. However, on some occasions, a company may choose to target a different audience than its competitors, or put differently, it may decide to target a different portion of its market.
Every company must decide for themselves what constitutes a qualified lead. In this case, they alone should decide what criteria fits their model of the ideal prospect. They must then use that criteria to decide upon the most proactive marketing strategy that will help them locate, identify and close these potential customers.
The above video explains inbound versus outbound marketing and is from the post: Sample Marketing Budget Excel Sheet: Graph & Pie-Chart of Expenditures
Focusing on Qualified Leads
Clearly defining the criteria behind a qualified customer lead is the essential first step in deciding how best to focus the company’s marketing efforts, how the company tracks its marketing expenditures and budget, and finally, how the company measures its marketing ROI (return on investment). So, what are some questions a company might ask itself when looking to establish its criteria for a qualified customer lead?
- Are there any credit restrictions to be considered a qualified lead, or is any customer, regardless of their credit worthiness, a possible customer? Is this approach in line with the company’s competitors and what customers expect as a good supplier within the market?
- Where do customers congregate – online, trade shows, conferences, events, or fundraisers and does one area attract a more qualified lead over the other? If so, what distinguishes a more qualified lead and how can the company reach these leads?
- Are there any volume requirements or minimum order quantities (MOQ's) that customers must adhere to when making a purchase? If so, what does it mean for those customers that can not purchase the minimum quantity? Are they immediately rejected or does the company try to work with them?
- What is the company’s sales cycle – short, medium or long? If the company’s typical sales cycle is short, then it must consider their qualified leads to be those customers willing to make an immediate purchase.
- What is the size of the company’s sales force? This is important because a company must ensure that there are enough qualified leads to keep its sales force occupied, but not so much that they’re working on unqualified leads unlikely to place an order. It’s a balancing act for sure!
- Are there any geographical limitations or considerations the company must consider? For example, can the company sell outside its own borders or are the costs of international customer too high for the company?
The Impact of Qualified Leads
Let’s assume a company services an extremely large industry that is known as a credit risk for banks and financing companies. Within that industry are customers that are high credit risks, and ones that don’t even qualify for credit. The company wants to avoid these customers because it raises the cost of their receivables insurance. In addition, they know that banks won’t extend these companies the line of credit needed to run their day to day operations. In a sense, these un-creditworthy customers are likely to close and don’t represent any long-term future opportunities.
However, there is a considerable number of customers who have both the credit and volumes needed to qualify. The question then becomes, where are these customers? How does the company reach them? Do they attend exclusive clubs, fundraisers, events or trade shows? Are they spread out across a large geographical area, or more likely to congregate in a specific location? If so, what does the company need to do to reach them?
Answering these questions will allow the business to focus its marketing dollar on those strategies most likely to reach their target audience. Companies must clearly identify what constitutes qualified vs. unqualified leads in order to make sure their sales team is working on those customers most likely to buy.
Most of us are familiar with the saying “time is money”. This is especially the case when a company needs to close business. To do that means to identify those customers most likely to make a purchase. When it comes to answering why are qualified leads important in marketing & sales, it simply boils down to shortening the time it takes to identify and close on opportunities.
However, companies must remain vigilant with respect to those customers that don’t qualify or meet their initial criteria. Some smaller enterprises may lack the volumes and ability to purchase the company’s MOQ, but that doesn’t mean the customer should immediately be turned away. Discretion is essential in these situations. After all, that potential customer has aspirations of growth and could one day become a vital partner.
Learn about five low-cost marketing strategies for small businesses.
Comments