It’s easy to get overwhelmed with trying to generate a higher volume of leads. But how can you tell which ones are likely to convert? Having more isn’t always better. In fact, bad leads are just a waste of time and money.
The difference between good leads and bad leads
Differentiating the good from the bad is one of the most important skills required for lead generation. When it comes to nurturing the sales funnel, a lot of time is wasted chasing prospects that turn out to be futile.
Generating quality leads is one of the biggest challenges that companies face. Whether your messaging is too vague, your reach too wide, or strategy too aggressive, bad leads can cost. You don’t have to look too hard before finding reports detailing the billions of US dollars lost due to bad data and ineffective lead generation tactics.
But beyond basic economics, bad leads are also damaging to your business because they can harm the customer experience. With efforts focused on the wrong buyers, it can be easy for customer service levels and aftercare to flag behind.
Being able to tell whether a lead is worth pursuing is the key to business growth and success. Here’s a guide to spotting those ‘good quality’ leads from substandard ones.
Suspect vs prospect vs lead: know the difference
Before launching your lead generation game plan, you have to understand what a lead is. Quite often, it can be confused for a ‘suspect’ or a ‘prospect’. When these are thrown into the mix instead of legitimate leads, it can result in the loss of precious time and resources. Here’s a quick breakdown:
A suspect is an individual or organization that could buy your product or service, but hasn’t shown any indication of doing so. They may stay in your sales funnel for a long time, without any means or intention to spend money.
A prospect is someone who is actively searching for a solution (product or service) to a problem they have (a need or desire). They have engaged with your brand, and may have shown a moderate level of interest in what you’re selling.
A lead is someone who meets all the specific criteria (the right fit, behavior, interest and intent). They have the means to buy and are considering your product or service.
True leads are the most lucrative of course, and being selective in deciding what qualifies can help to boost conversion rate. Capable leads already need your service, have shown interest in you as a brand, and have the budget to buy. In many cases, they just need a little encouragement.
This doesn’t mean that suspects and prospects aren’t worth your time though. A prospect in particular is already interested in a certain type of product or service, and is already engaging with you (such as signing up for your newsletter).
Suspects could be people who simply follow you on social media, but haven’t shared their data with you yet. As a rule, they are generally interested in what you know, not what you sell. And this is where content marketing comes in. Blogs and whitepapers are an important part of any marketing strategy, and can turn suspects into prospects, and prospects into genuine leads.
Learn more: How to Use Infographics to Generate Leads
MQLs vs SRLs vs SQLs: defining criteria
In order to tell if a lead is good quality, you’ll need to look at what type of lead it is. Consider where the lead came from, how they have engaged so far (did they call you?), and how likely they are going to progress to the bottom of the funnel.
Marketing Qualified Leads (MQL)
This is a lead that came from marketing efforts, such as an event, social media campaigns, your blog or video marketing.
Sales Ready Leads (SRL)
This type of lead is more direct, and requires the lead to request a call-back, meeting or conversation with a member of your sales team.
Sales Qualified Leads (SQL)
The stage that follows the initial conversation is when a sales representative qualifies the lead as a valid customer with intention and means to buy.
When it comes to quality, MQLs are deemed very likely to become customers. But unlike SQLs, there’s no guarantee that they fit the buying criteria. That’s why it’s important to focus energy on contacting SQLs.
For SQLs, various studies have shown that the faster the follow-up, the higher the closing rate. This is because it’s important to strike when the iron’s hot. In today’s digital world, filled with distractions and choices, sales teams need to act fast. These are the quality leads that companies cannot afford to miss.
A recent blog post on Hubspot even suggests that a successful closing rate can be affected by mere minutes, stating companies that contact customers within the hour are 7 times more likely to close.
Understanding your leads better
Lead measurement matters, and by using metrics, you can sift through the garbage quickly and effectively, and decide which leads are worth the time.
One basic way to measure lead generation efforts is BANT:
These are fundamental gauges that should be applied at a very early stage, used to determine whether someone is a valid lead or simply a prospect.
A more advanced method is CHAMP:
In B2B sales, CHAMP is often the most effective; for example, the critical first stage is establishing any CHallenges for the client. Without a problem, a solution is pointless – and would therefore render your services pointless!
Next comes Authority, where you map out the company’s structure and who’s responsible for spending. Followed by Money, where the company’s budget is concerned. Finally Prioritization is where you establish how far on the list they rank in terms of importance. The more urgent their need, the more they’ll be prioritized, and the more likely you’ll close the sale – giving you a better quality lead.
Generating the best, high-converting leads is all about understanding your customer and knowing how to measure their actions. With today’s advancements in AI, getting to know your leads is more accessible than ever.
What is lead scoring?
Lead scoring is a joint sales and marketing process that evaluates the 'sales-readiness' of your leads, allowing you to make an informed judgment on which prospects are ready to be passed on to the sales team, and which require more nurturing along their buying journey.
There are various criteria you can use to rank leads, such as:
- Interest they have already shown in your business
- Their current position in the buying cycle
- How closely they match your target audience
- Geographical location
You might find that a combination of demographic or (in the case of B2B sales) firmographic data and behavioral indicators proves particularly effective in helping you evaluate your sales prospects.
Implementing lead scoring
One of the most common and effective lead scoring strategies is to analyze the information you have about past leads - looking at those that became customers, as well as those you weren't able to bring onboard.
Examining the shared attributes of leads in these two groups and applying that knowledge to your existing leads will help you identify those that are most likely to convert. It could also help you improve your overall conversion rates by understanding why some leads are falling by the wayside.
Assigning value to leads
When it comes to actually assigning value to your leads, there are various ways to do it, from using general terms like 'cold', 'warm' or 'hot', to awarding numerical points on a scale of 0 to 100.
Under the points system, you can add or subtract points based on a particular lead's demographic or behavioral indicators.
If a contact has made a special effort to get in touch on social media, for example, you can add points to their score to signify their level of interest and engagement.
Other positive behavioral signals might include:
- Downloading assets from your website
- Signing up to email newsletters
- Retweeting or sharing your social media posts
If you're a B2B organization, you can gather basic information about potential leads - like company size, industry and location - via landing page forms on your website. Those that match your target customer profile will receive extra points.
On the other hand, leads whose characteristics make them less suitable - being outside your target geographical region, for instance - will lose points, reducing the risk of your sales team wasting time on unlikely prospects.
For more research and statistics about the current state of Marketing, click here.