Improving pipeline quality: what constitutes an “A” lead?
Posted by Geoff Alexander on Mon, Jul 26, 2010 @ 10:02 AM
One of my inside sales training course clients had a real dilemma a couple of weeks ago. Since her Lead Qualification reps were being compensated on appointments being sent to the field, she was finding that there were a significant number of unqualified appointments being made, and the Field salespeople were beginning to complain.
One of the problems was that there wasn’t a lead grading system in place, so a lead was characterized as either being an appointment or a non-appointment. This is not an isolated incident, and I see this quite frequently. Naturally, if no lead grading system is in place, Business Development reps will create as many appointments as they can, because that’s how they’re measured and compensated.
To fix this, a lead grading system should be put in place, and compensation should be adjusted accordingly. My feeling is that unqualified leads should never be part of a compensation package, and the best place to start is by defining what constitutes an “A,” or fully qualified and compensated lead.
One of the concepts I teach is that there are six basic qualification question types, and each question should be asked on every qualification call. Here they are, along with my ideas on the responses that might constitute an “A” lead:
Requirements: The prospect has defined at least one technical or product/service requirement that links to an element of the proposed solution.
Timeframe: The prospect intends to buy within 90 days.
Decision Tree: The decision process is defined, leading up to the appropriate VP or CXO.
Scope: The potential size of the opportunity is defined, encompassing all individuals, departments, and divisions within the enterprise that will be eventually using the solution.
Business/Consequence: A business problem is identified that links to the proposed solution, as well as the consequences of not solving the problem.
Budget: Has a budget been allocated for the solution in question? This question must always be asked, but a “no” answer is not necessarily a deal-breaker, as budgets can be allocated if the Business/Consequence, Requirements, and Timeframe answers constitute a qualified lead.
This is a model, and it’s going to vary somewhat depending on your product. For transactional sales, maybe the “A” lead timeframe is 30 days. For large enterprise deals, maybe it’s 3-12 months. You can craft your own “B” and “C” categories after you’ve determined what an “A” lead is, and perhaps tweak your comp plan to reflect that as well.
Although the issue on the table is sales leads going to Field reps, the case for ranking lead qualification categories is critical for all Business Development teams. Asking the Field for input regarding what they think constitutes an “A” lead is important too. After all, the Field is the customer.
If you’re a Business Development manager who hasn’t yet implemented a lead ranking system, now’s a good time to start. And if you already have, it’s worth a check at least once a year to ensure that youre ranking system is giving the Field what it needs, and you’re compensating your team members on the activities that best reflect on the profitability of the company. And be sure to add Lead Ranking development and maintenance to your Best Management Playbook.