The sales lead definition doesn’t have to be complicated. A sales lead is someone who is really considering buying your product or service. They're a potential customer because they're expressing interest in what you have to offer.
Unfortunately, too many organizations lack a clear definition that can be used across marketing and sales. In the absence of this critical understanding, a gap can quickly form in the funnel. The leads passed from sales development reps (SDRs) to quota carrying sales reps is either too fast or too slow. Much like a car, your revenue engine either gets flooded with gas or chokes from lack of fuel. Either way, the engine is not running efficiently.
Sales and marketing leaders at our client organizations frequently ask us,
“How should we define a qualified lead?”
The classic answer of “it depends” is never more applicable than when defining leads. Despite what you hear from some “experts,” there is not and should not be a universal definition of a qualified lead. There is too much variability in organizations and their sales cycles for that.
Let’s explore some of the variables that impact the definition of a qualified lead.
Developing Your Sales Lead Definition
How you determine your sales lead definition depends on:
- What you are selling and who you are selling to
- Your sales cycle times and average deal sizes
- If the sales team functions as inbound/outbound or outbound only
- The sizes of the teams who qualify leads, do outbound prospecting, and carry quotas
- The number of inbound leads that marketing generates
- The number of highly scored sales-ready leads that marketing generates
- The gap to quota faced by the individual sales rep
Before we get into how these variables affect your sales lead definition, we first need to revisit our old friend BANT.
The acronym BANT (Budget, Authority, Need, Timing) is used by many organizations to gauge the of qualification of a lead. There are many debates over the efficacy of BANT in the modern selling environment. A Google search of the phrase ‘BANT is dead’ will tell you all you need to know. And the debate make sense. In many cases, buyers no longer have pre-defined projects with set budgets and timeframes anymore. This change eradicates the first and last principles of BANT, and weaken the middle two. As a result, asking SDRs to BANT-qualify every inquiry from marketing means that few will pass, and the sales team probably won’t get a lot of leads.
Modern sales leaders have addressed this issue by crafting different acronyms. Ken Krogue, founder of InsideSales.com, proposed ANUM (Authority, Need, Urgency, Money). This has also been adapted by InsightSquared, who proposed CHAMP (Challenges, Authority, Money, Prioritization). The subtle difference from BANT is that absent of projects, marketing and sales teams need to create demand higher within the organization. You need to start by building need with the authority figures in a prospect account. Once you have authority and need, you are able to build urgency and help them figure out how they are going to fund it.
Not too long ago, Ash Alhashim wrote a guest post for us advocating for using GROW-ROI instead of BANT. This model prioritizes discovery instead of qualifying or disqualifying. It’s an approach for finding common ground with the prospect to develop opportunities, and it can be highly effective if you are speaking with the right person. These alternative models are important to keep in mind as you continue to refine your own definition of lead qualification.
The most important element to decide on, is the amount of rigidity you use to define a qualified lead.
Organizations might use a loose sales lead definition if they:
- Are far behind quota
- Have few SDRs
- Have sales teams who only hunt
- Have few inquiries through marketing
- Sell to senior people at larger organizations who don’t come inbound
- Have an evangelical product that is still unknown by the market
The goal here is to let a lot of leads through and give the sales team lots of ‘at bats’ to build their opportunity pipelines. A heavier focus on outbound prospecting will yield more people who meet this definition of a qualified lead.
On the other end of the spectrum, you can employ a much tighter definition. We have a client organization who defines a qualified lead as meeting with the right person (C-Level) at the right account (shares characteristics with target accounts) as well as having a specific need, urgency to take action, and an understanding of the source of money to fund the purchase. This organization doesn’t define a lead as qualified unless all of the variables from Krogue’s model, ANUM, are present: Authority, Need, Urgency, and Money.
Organizations might use a tight sales lead definition if they:
- Have a lot of SDRs
- Have sales teams who hunt/farm and are too busy for new opportunities
- Have a lot of inquiries through marketing
- Sell to junior people at smaller companies who more easily accessible
- Have a hot offering that is creating pull demand
This strategy focuses on passing only the most highly qualified leads. This keeps the sales team focused on the best deals. Companies on this end of the spectrum might dispense with outbound prospecting altogether and instead rely on marketing automation like Oracle Marketing Cloud, Marketo, Pardot, HubSpot, or Silverpop to do system automated lead qualification and scoring.
Most organizations find themselves somewhere in between the two extremes. The B2B sales and marketing analysts from SiriusDecisions tell us that a balanced mix of inbound and outbound is always present in healthy sales funnels. This may be counter-intuitive to the “cold calling is dead” crowd, but the SD research to back it up is very clear.
Using these points as guide, take some time to reflect on what the right definition of a qualified lead is for your organization. If you have any questions, we’re always available on social media and for a direct conversation.
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