Lead generation is important, but qualifying your leads to determine which ones are worth pursuing can save you time and money.
- Lead qualification involves determining how likely a prospect is to buy from you.
- Popular lead qualification frameworks include BANT, GPCTBA/C&I, CHAMP and MEDDIC.
- To score leads whom you have qualified, you should consider demographic and engagement characteristics, then use your data to draw conclusions.
- This article is for business owners who want to learn about lead qualification and scoring.
Successful business owners know how to focus on providing great products services and finding new customers at the same time. Generating new leads is the first step to driving new business, but it's important to determine which leads are more likely to pay off.
Qualifying your leads can increase the number you convert to customers. Doing so is no small feat; only 1 in 5 leads ultimately becomes a customer. This means that for every new customer you get, there are four who were not persuaded to use your products or services. That's a lot of time and money lost, but smart lead qualification can minimize this concern.
What is lead qualification?
Lead qualification is the process of predicting the likelihood that a sales prospect will become a customer. To inform this prediction, you'll need to gather data about your prospects through lead capture forms and other processes conducted in the lead generation process. And while lead qualification begins at the top of the sales funnel, it doesn't end there – it continues up until your prospect becomes a paying customer.
Key takeaway: Lead qualification is the process of predicting how likely a prospect is to become a customer.
Why should you qualify your leads?
Qualifying your leads is more complex than predicting how likely one prospect is versus another to become a customer. It's also a matter of determining which leads are and aren't worth pursuing.
You should qualify your leads, comparing them to your target audience or ideal customer. Just because someone has visited your website doesn't mean they're automatically a lead. If they lack the qualities of your ideal customer, you're better off pursuing leads who do match.
Qualifying your leads may involve disqualifying other leads. At first, this may seem risky, since smart business is largely about finding new customers wherever you can. However, when you can predict with a high degree of certainty that a lead is unlikely to convert, your sales team saves money and time not pursuing that lead, so disqualifying poor leads is actually good for business.
Key takeaway: Qualifying your leads reduces the money and time that your team spends chasing leads who ultimately don't become customers.
How does lead qualification work?
Lead qualification typically occurs within one of four frameworks:
BANT stands for budget, authority, needs and timeline. Sales teams commonly use this framework, which tech giant IBM first developed, to answer these questions:
Budget: How much budget does a prospect have to address their current need?
Authority: Does the prospect have the authority to make purchases?
Need: What is the nature of the need that the prospect hopes to address? Why has the need not yet been addressed?
- Timeline: Does the prospect hope to make a purchase sooner or later?
BANT is a popular lead qualification framework, but it's not the only option available for your lead qualification efforts.
HubSpot developed the GPCTBA/C&I (goals, plans, challenges, timeline, budget, authority, consequences and implications) lead qualification framework to address modern changes in buyer behavior. The GPCTBA/C&I framework addresses buyers' increased knowledge in the digital era, given the wealth of information available on the internet. Its goal is to align your company with the prospect's goals and resources. Here is the information you want to find out from prospects with each step:
Goals: Ask your prospect about their biggest short-term and long-term objectives, whether those goals are revenue-based or otherwise.
Plans: Ask prospects how they plan to achieve their goals and how their plans are similar or dissimilar to previous actions.
Challenges: Inquire about what makes now the right moment to address the challenge they hope to solve with your product/service. You should also ask whether the prospect's team is equipped to face this challenge.
Timeline: Ask your prospect how soon they want to implement their plans and how you can help. (Note that you may want to deprioritize prospects who plan to buy from you later than sooner, but you should not entirely disqualify these leads.)
Budget: Ask your prospect how they perceive your products' or services' return on investment. You should also ask whether they are paying for other solutions and whether their budget for those solutions is similar to that for your company.
Authority: Ask your prospect whether they have purchasing authority or if they represent someone who does. If they're representing someone, ask further questions about the actual buyer and what concerns and challenges they might have that could prevent them from making a purchasing decision.
- Consequences and implications: Consequences and implications concern the possible outcomes if a sale is made. Ask your prospect how these outcomes would affect them and their company. Ask what comes next for them if your products and services allow them to successfully reach their goals.
CHAMP is the reverse of BANT in that it focuses on the prospect's challenges and then the actual purchase. It stands for challenges, authority, money, and prioritization and involves the below questions:
Challenges: What is the prospect's need, and how do their current solutions fail?
Authority: Does the prospect have purchasing authority, and, if not, how can someone with authority be brought into the conversation?
Money: Does the prospect's budget accommodate the prices at which you offer your products or services?
- Prioritization: How soon does the prospect plan to act, and are other possible solutions on the table?
MEDDIC (metrics, economic buyer, decision criteria, identify pain, champion) is the work of Jack Napoli of the Sales MEDDIC Group. This qualification process involves becoming intimately familiar with how the purchasing process works at the prospect's company and finding someone at the prospect's company who can vouch for your products or services.
The MEDDIC framework can be especially helpful when pursuing leads with complex purchasing processes, namely enterprises. Enterprise sales can be huge revenue drivers; losing the sale can be devastating, and MEDDIC can more accurately forecast enterprise purchases.
The six letters of MEDDIC and their corresponding questions are:
Metrics: How does the sale affect both parties' finances?
Economic buyer: Who creates the prospect company's budget?
Decision criteria: What does the economic buyer need to know to approve company purchases?
Decision process: How does the economic buyer approve purchases?
Identify pain: Which of your prospect's needs does your product or service solve?
- Champion: Who at the prospect's company will vouch for your product or service, and how can you collaborate with them to make the sale?
Key takeaway: Lead qualification works through processes such as BANT, GPCTBA/C&I, CHAMP and MEDDIC.
What's the difference between lead scoring and lead qualification?
Lead scoring is a subcategory of lead qualification – it happens after a lead is qualified. Whereas qualifying leads involves predicting whether a prospect is likely to become a customer, scoring leads involves comparing all qualified leads against each other and assigning that lead a score, usually on a scale of 0 to 100. You'll score your leads using demographic and engagement information – we'll walk you through the process below.
How to qualify leads using lead scoring
To qualify leads using lead scoring, take the following steps:
1. Develop your ideal buyer profile and demographics.
As mentioned earlier, sometimes, you need to disqualify leads. A disqualified lead does not fit your ideal buyer profile, sometimes referred to as a buyer persona. You'll know you need to disqualify someone if their characteristics don't make them a realistic prospect.
Developing an ideal buyer profile gives you a frame of reference for your potential prospects. In creating your ideal buyer profile, you should determine your target audience and market, as well as the pain points and spending abilities that qualify someone as a potential customer. For B2B sales, you should also factor company size into your ideal buyer profile.
Whether your company is B2B or consumer-facing, your company's ideal buyer profile should also be based on demographics. Depending on whether you are dealing with a consumer or another business, these may include:
- Age group
- Marital status
- Education level
- Employment status
- Income level
- Company size
2. Track leads' engagement.
A higher lead score corresponds with greater online engagement by a prospect with your company. Keep the following considerations in mind when using engagement to score your leads:
Email engagement: An opened email is far less meaningful than one in which a lead clicked on links. And an email list signup is far less meaningful than an opened email.
Social media engagement: More likes, retweets, shares and clicked links indicate a more engaged customer.
- Validity: Although lead capture forms are the bread and butter of lead generation, they're imperfect at weeding out bots. You should look closely at all the information your form captures before scoring leads. Although you might question whether names entered with lowercase letters or personal, non-work emails are bots in disguise, you can give them a lower score until you contact the lead. If the lead is found to be an actual person, you can then give them a higher score.
3. Interpret your data.
Once you have ample demographic and engagement data on your leads, you must interpret it to adequately score your leads. To do so, take the following steps:
Establish a control value. Your control value should be the ratio of all new customers acquired last quarter to all leads generated last quarter. You will need this number for comparisons toward the end of the data interpretation process.
Prioritize certain demographics or engagement types. You should use your information from last quarter to correlate certain demographics or engagement types with an increased likelihood of conversion. For example, if leads who clicked on links in at least 20% of your emails became customers, then you should prioritize leads with high click-through rates. Likewise, if leads who only sign up for your email list rarely became customers, then you should not prioritize leads who only sign up for your list.
Calculate the rates of high-scoring activities. After the above step, rate each activity to determine how closely the activity correlates with successful sales. For example, to estimate email click-throughs, divide the number of customers who clicked links by the number of all leads who clicked links, including clickers who did not become customers. This ratio is your benchmark for click-throughs. Every activity should get a rate, and a higher rate should mean a higher score.
- Compare rates to your control. Let's say you calculate an email click-through rate of 36%, and your control rate is 30%. Since email click-throughs more strongly lead to conversion than the combination of all possible lead activities, you should score leads who click links in your emails especially high. And since most lead scores exist on a scale of 0 to 100, you can add 36 points to the lead score of a lead who clicks through.
Alternatively, you can use your customer relationship management (CRM) software to automate your lead scoring practices. Although you and your team still need to determine the prospect demographics and behaviors you care the most about, your CRM can handle the math involved in lead scoring. Your lead scoring process will thus be far less error-prone, not to mention quicker – and with less time spent estimating which of your leads is worthwhile, you can free up more time for generating leads in the first place.
Key takeaway: By learning to score leads, you can predict which ones are more likely to convert to customers and which ones are likely not worth pursuing.