What is a Sales Lead?

At Funnel Clarity, we believe a sales lead is defined as someone who is committed to making a change that your product or service can help accomplish. This is not someone who is merely interested in your product but rather goes beyond interest and is committed to action.

Every qualified sales lead should meet the threshold above. Beyond that, however, every company will have to come up with its own standard for what counts as a qualified lead. Let’s explore how you can develop a customized standard for determining a qualified sales lead.

Sales Lead Definition: What Do Sales Leaders Rely On Now?

One of the most common and misguided ways of determining a sales lead is BANT. The acronym BANT (budget, authority, need, timing) is misguided because it is far too limiting and strict of a definition. In many cases, buyers don’t have to have pre-defined projects with set budgets and timeframes to develop a sales opportunity. Therefore the budget and timing standard are far too limiting and could prevent legitimate opportunities from entering the funnel.

Modern sales leaders have addressed this issue by crafting different acronyms. Ken Krogue, founder of InsideSales.com, proposed ANUM (Authority, Need, Urgency, Money). Another popular acronym is by InsightSquared, who proposed CHAMP (Challenges, Authority, Money, Prioritization). These models still look for money and budget, which is important, but it’s not a prerequisite to a sales opportunity. If the leaders of an organization are committed to making a change, the budget will get created.

Instead of focusing on pre-existing budgets, salespeople require the skills to develop need and urgency with the C-Suite at a prospective account. Once you have leadership buy-in and a desire for change, you are able to build urgency and help them figure out how they are going to fund the changes in their organization. There are already a lot of models and acronyms but the best course of action is to learn from them and focus on developing your own customized standards for your team.

Types of Sales Leads

In the realm of sales, leads can vary in their level of engagement and readiness to make a purchase. Here are some common types of sales leads:

• Warm Leads: These leads are more inclined towards making a purchase as they have shown some form of interest or engagement with your brand, products, or services. They might have signed up for a newsletter, downloaded a free resource, or interacted with your content on social media.
• Cold Leads: These are individuals or businesses who have not yet shown any specific interest in your offerings. They might not be familiar with your brand, products, or services. Reaching out to them requires a strategic, tailored approach, turning these unfamiliar prospects into engaged ones.
• Inbound Leads: Inbound leads are generated when potential customers initiate contact with your business. This could be through filling out a contact form, calling your company, or reaching out via email after finding your website, blog, or social media presence. Inbound leads tend to be more receptive as they have taken the first step in engaging with your business.
• Outbound Leads: These leads are generated through proactive efforts by sales teams. Outbound lead generation involves reaching out to potential customers through methods like cold calling, cold emailing, direct mail, or targeted advertising campaigns. This approach involves identifying and reaching out to potential customers who haven't yet shown interest in your services or products.
• Referral Leads: These leads come from recommendations or referrals made by existing customers, partners, or affiliates. Referral leads often have a higher chance of conversion due to the trust established through the recommendation.

Lead Qualification Process

The lead qualification process is a crucial step in determining whether a lead has the potential to become a valuable sales opportunity. Based on the above-listed types, you might be wondering what a qualified lead in sales is. But this type is in a category of its own.
Qualified leads are those that have been assessed and determined to have a higher likelihood of becoming customers based on specific criteria set by the business. These criteria could include factors related to ANUM or CHAMP. To identify a qualified lead, here are some steps to consider:

1. Lead Generation: Leads can be generated through various marketing efforts such as inbound marketing campaigns, content marketing, social media, SEO strategies, paid advertising, trade shows, webinars, and more. Each of these platforms brings in a diverse set of leads, starting your journey towards finding those who might need what you offer.

2. Initial Contact and Data Collection: Once leads are generated, they often enter the company's database through forms, landing pages, or other touchpoints. At this point, contact information and initial data are collected, including details like name, email, phone number, company name, and any other relevant information that can help you understand their needs better.

3. Lead Scoring: Lead scoring involves assigning points or scores to leads based on specific criteria like demographics, engagement level, behavior, company size, budget, or any other relevant factors. This helps prioritize leads and identify those with a higher likelihood of conversion.

4. Communication and Cadence: Sales teams engage in direct communication with the leads to assess their needs, budget, timeline, decision-making authority, and overall fit with the company's offerings.

How To Develop a Sales Lead Definition for Your Team

To do this effectively, you will want to decide how loose or strict you want your sales lead definition to be.

An organization might want to consider a loose sales lead definition if they:

• Are far behind quota
• Have few SDRs
• Have sales teams who only conduct outbound prospecting
• Have few inquiries through marketing
• Sell to senior people at larger organizations who don’t come inbound
• Have a disruptive product that is still unknown by the market

With this approach to a sales lead definition, the goal 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 meetings with people who are interested but not necessarily committed to changing. For the sort of companies described above, it’s more important to develop opportunities rather than figure out who is in an active buying cycle already.

On the other end of the spectrum, you can employ a much tighter sales lead 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 criteria above are met.

Organizations might use a tight sales lead definition if they:

• Have a lot of SDRs
• Have a high volume of sales
• Have a lot of inquiries through marketing
• Sell to junior people at smaller companies that are easily accessible
• Have a hot offering that is creating a lot of organic demand

This strategy for a sales lead definition focuses on passing highly qualified and winnable leads. If you are getting a high volume of inbound inquiries or have a high volume of sales in general, it makes sense that you limit the number of opportunities you focus on. In this scenario, you are not trying to develop a lead but instead, find the deals that are most likely to close now. Therefore, a more rigid threshold for defining a qualified sales lead makes sense.

Finding a Balance with Your Sales Lead Definition

No company wants to keep winnable opportunities from the sales funnel. Sales leaders also don’t want their sellers’ funnels to be larded with junk opportunities. So, you don’t want your companies threshold for a qualified sales lead to be too loose or too narrow.

Using this blog as a 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 for a consultation.