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The Modern Guide to Lead Qualification

A successful SaaS company can have thousands of potential leads at the top of their sales funnel. But only a fraction of these leads will become customers.

The process of filtering through those thousands of opportunities to find the best ones is called lead qualification. This is an integral part of the sales process. Without it, your sales and marketing teams won't be able to prioritize their activity and will waste time on leads who will never convert.

In this post, we will take you through the basics of lead qualification, show where some of the traditional approaches are failing, and show you some new techniques that are enabling modern companies to quickly and effectively score leads. We've even included a bonus lead qualification formula at the end for Salesforce users.

What is lead qualification?

Lead qualification is the process of determining whether a prospect fits your ideal customer profile (ICP), has a high chance of becoming a customer, and most importantly has a high chance of being a successful long-term customer.

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Sales funnel: Your qualification process is part of your sales funnel and determines which leads turn into prospects.

In order to effectively qualify and score your leads, you need to know as much as possible about each one. You are essentially gathering data and insights that will help you pick the leads to focus on.

On the surface this seems like you might be leaving money on the table by not pursuing all leads. But in reality, your sales team should only pick up the phone for people who have a strong likelihood of becoming a successful customer.

Successful is an important qualifier in that phrase. There are costs to acquiring non-ideal customers that can easily be overlooked in the race to acquire more customers. Increased churn, support costs, and unhappy users are all side effects of selling to non-ideal customers.

Without proper qualification, your sales and marketing team will spend equal time on all leads, whether they are a good fit for the company or not. With qualification, your teams can be confident they are prioritizing the best potential customers for your product.

How lead qualification works

Traditionally, lead qualification has been a manual task performed by Sales Development Representatives (SDRs) in the early stages of the sales process. Reps would reach out to any and every lead coming in, asking them pre-determined questions to assess if they were a good fit for the product.

There are a number of different frameworks created to help reps qualify prospects.

  • BANT (Budget, Authority, Need, Timing)—devised by IBM. This is the original lead qualification framework and is still used widely today. Potential BANT questions are:
    • Do you have a specific budget allocated for this acquisition?
    • Do you personally have the authority to make the buying decision?
    • What are the top challenges, needs, and pain points that your team is facing at the moment?
    • Is this a priority acquisition for your team at this time?

  • GPCTBA/C&I (Goals, Plans, Challenges, Timeline, Budget, Authority, Negative Consequences and Positive Implications)—devised by HubSpot to put the sales rep in a more advisory role for informed buyers. Potential questions are:
    • Do you have specific company goals?
    • Are the resources in place right now for you to implement this plan?
    • How are you currently dealing with these challenges?
    • What's the timeline for implementation of this plan?
    • Is the budget already being used to solve the problem we’ve discussed?
    • What concerns do you think the company's authoritative decision makers will raise?
    • What are the personal consequences or implications for you hitting your goal or not?

  • CHAMP (Challenges, Authority, Money, Prioritization)—devised by InsightSquared (https://www.insightsquared.com/2014/03/dont-bant-just-champ-sales-qualification-questions-for-champions/). CHAMP starts with the challenges, the needs and pains, that the prospect is experiencing. Potential CHAMP questions are:
    • What objectives are you looking to achieve by solving this pain? (Challenges)
    • How are purchasing decisions made for products like ours and who is involved in looking at this solution? (Authority)
    • What are your expectations for the investment necessary to purchase the solution? (Money)
    • When were you planning on starting the implementation? (Prioritization)

Each of these pros and cons: BANT is simple and quick, but misses some modern aspects of the buying process, such as the increasing number of stakeholders involved in each decision. GPCTBA/C&I takes into consideration the sophistication of the modern buyer, but is a complex qualification process not optimal for smaller teams. CHAMP puts the emphasis on the problems the buyer is facing, but can potentially slow down your sales cycle.

Though there is still some need for a manual component to lead qualification, modern lead qualification looks to automate as much of the process as possible. To do this you can compute a lead score based on data available about the lead. There are two ways to do this:

  1. Data enrichment in sales and marketing CRMs allow you to build lead scoring models using the specific data points important to your company and customers.
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  2. Predictive lead scoring tools, such as Infer or MadKudu, use thousands of different indicators (including 3rd party enrichment), to assign a lead score to each new lead.

The one downside of these predictive tools is that they are “black box” software. You are unable to see exactly what activities and attributes are used to formulate your lead scores.

Often, building your own simple model within your CRM will give you better insight into your scoring, and more control over tweaking your model over time. Though this may seem difficult, it is actually quite easy to set up a simple model in your CRM.

The individual components of a lead score

A lead score is a numerical expression of a prospects potential. It quantifies behavior and information into a single number that can be used to automatically channel leads to the right team.

Though a lead score can potentially include dozens of data points, it effectively consists of three core components:

1. Behavioral attributes

These are explicit actions that indicate interest or lack of interest in your product. Consider two visitors to your marketing site:

  • Visitor A lands on your site through a Google search for your company name. They visit “Product”, “Pricing”, and “Customers” pages, read three articles on your blog and enter their information into a lead form for an upcoming webinar.
  • Visitor B comes to your site through a keyword search, visits your “Pricing” page, reads a single blog article, then leaves.

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Lead scoring through behavior

From these descriptions it is clear that Visitor A has a higher interest in your product than Visitor B. This component of lead scoring quantifies this activity. If in the above example each page visit was worth +1, a direct referral +2, and form submission +3, visitor A would score +11 while visitor B would only score +2.

If you set your threshold for contact at +10, your sales team could then be flagged about interest of visitor A. They could then reach out immediately with the information from the lead form.

2. Demographic components

Not all visitors to your site are equal. Not only the actions but also the discoverable attributes of the visitor are important to factor into your lead score. Consider two visitors to your marketing site:

  • Visitor A, a CEO of a 100+ employee fintech company, lands on your site through a Google search for your company name. They visit “Product”, “Pricing”, and “Customers” pages, read three articles on your blog and enter their information into a lead form for an upcoming webinar.
  • Visitor B, a sales rep from a 5-person marketing startup, lands on your site through a Google search for your company name. They visit “Product”, “Pricing”, and “Customers” pages, read three articles on your blog and enter their information into a lead form for an upcoming webinar.

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Lead scoring through behavior and demographics

The activity is the same, the person is not. Lead scoring has to over-weight the CEO in this scenario so that this prospect is quickly brought to the attention of the sales team.

This demographic score is the most important part of your lead score as you can assign large weights to your ICP criteria. If your ideal customer profile is a large fintech company, then it's important that no matter what their behavior, your sales team is alerted to interest of a qualified lead. In this scenario you might score large companies +10 and fintech companies + 10 so that these always push you over your threshold.

You can obtain this demographic information either through long and detailed lead forms or third-party enrichment solutions.

3. Sales components

Finally, once the lead has been contacted by your sales team, you should continue to add to and update their lead score.

You can include sales activities such as emails, conversations, and meetings in your scoring model. For instance, every successful contact through phone or email could elicit a score of +5. This makes sure that interest from the prospect continues to equal stronger scoring in your model.

Combining components

When you have your behavioral activity score, your demographic/firmographic fit score, and your continual sales touch score you can add them together into a single lead score for that prospect.

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Lead scoring model: Each individual component can go into your lead score, which in turn will automatically tell your sales team whether the lead is worth reaching out to or not.

While this is the ideal way to score, there can be some significant hurdles to implementation without engineering support. Luckily, there are some simple alternatives that can be built within your CRM or Marketing automation system.

Alternative scoring models:

  • If you have a well-designed ICP, you can score just on related demographic criteria. This allows you to establish a base model where only attributes that fit those criteria will be positively scored and each lead will need all attributes to reach threshold and go through to the sales team. This can be done directly in Salesforce, Marketo, or most other systems.
  • The next option is as described above plus behavioral attributes. Within your marketing automation system, you can combine demographic, firmographic, and behavioral attributes to create a close to perfect scoring system.

Where to start

If you're new to lead scoring, we suggest going for the first (simpler) option and building a demographic / firmographic scoring system. It will produce a score that closely matches your successful customers. It also requires little set up, whereas the other version will require some instrumentation of your site / system to capture behaviors.

Lead qualification isn't particularly difficult, but it is extremely important. When you aren't qualifying leads, you are wasting time and money. But more importantly, if you aren't qualifying leads efficiently, using automated lead scoring or basing your process on your ideal customers, you are also wasting time and money.

If you're using Salesforce, checkout our tutorial on building your own lead scoring system right within SFDC.

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