Lead Qualification: Quantity vs. Quality
March 26, 2013
As anyone who works with OpenView or follows our blog has probably realized, a lot of the projects we work on with our portfolio companies here at the Labs focus on the top of the sales and marketing funnel, or as we call it, lead qualification.
Sometimes this means qualifying prospects through secondary research (i.e. company size or industry), sometimes it means qualifying them based on some action they did or didn’t take (i.e. downloading content or responding to an email), and sometimes it means coaching our portfolio how to read a person-to-person communication (i.e. do they have a budget?). In any case, the goal is the same: determine as quickly and accurately as possible which early-stage prospects to spend time and resources on, and which to write off as dead-ends.
The good news is that this process means the leads you do spend time on will be higher quality leads. The bad news is that by definition, it means there will be fewer of them.
“Less Is More” Can Be a Tough Sell
All of the executives we meet with are ecstatic about the first piece of this arrangement. Who doesn’t want better quality? But not everyone is comfortable with the fact that lead qualification means you’ll have to discard some leads if they don’t meet your higher standards of relevance. All too often, executives want better leads and more of them.
Of course, there are other ways to get more leads through SEO, SEM, list scraping, gated content, etc. However, the core function of lead qualification is always subtractive. Don’t ever expect stricter criteria to yield more leads. Expect it to yield fewer, better leads.
Balancing this tension between quantity and quality is a delicate art, which usually requires you to prioritize one or the other. As a sales or marketing executive responsible for the progression of leads through the funnel, you can approach the problem in one of two ways:
1) Fix the Quality
Begin with the premise, “We only want our sales reps to speak to leads that meet X criteria,” or “have Y probability of converting.”
Advantage: You’ll know every lead that comes out of that process is of a consistent quality.
Disadvantage: The quantity of leads that survive will be somewhat unpredictable. If you don’t put careful thought into this, you may get what you think is a great set of criteria, only to wind up with just a handful of super-qualified leads that your inside reps burn through before 10 AM.
2) Fix the Quantity
“We need 2000 leads per month,” or “we only want to call the top 25% of qualified leads.”
Advantage: The next tier in your sales process will have a consistent workload and you won’t ever be stuck with two few leads to pursue.
Disadvantage: The quality won’t always be consistent: a bad campaign or lead list will produce substandard results. You’re less likely to hear complaints about the number of leads you’re generating, but more likely to hear that they suck.
Given the choice between these two less than ideal options, which one should you pursue?
Ultimately, the healthiest thing for your business in the long run is to pursue only quality, profitable leads. If it’s economical to pursue more than you’re currently generating at any stage in the funnel, you’ll eventually have to hire more salespeople, buy more leads, or otherwise spend more resources to expand capacity.
But in the short run, you’ve got to manage your funnel to fit the people and capacity you have right now. If your field reps are able to take six meetings per week, it doesn’t make sense to send them 12, just to have them spend half their time on lower-quality leads.
If you’re consistently finding 12 worthwhile meetings per rep per week, then maybe it’s time for a larger discussion about how many reps you should employ and how to allocate your resources. On a week-to-week basis, however, you don’t have the option of adding or subtracting reps to meet demand, so you should aim to produce a quantity of leads that fits your capacity to process them.