In a previous post, we talked about what makes an Extraordinary Marketing Qualified Lead (MQL). If an MQL is the Yin, then the Sales Qualified Lead (SQL) is the Yang. The only real purpose of generating MQLs is to convert as many to SQLs and then to closed deals as possible. That is why management should pay close attention to the conversion ratio between MQLs and SQLs. To get a fair assessment of this ratio, you want to be careful there aren’t other factors at play here such as a KPI targeting an unrealistic number of MQLs, independent of how well they convert to SQLs and ultimately opportunities.
Before we get too deep on how to create predictable SQLs, let me revisit a definition from an earlier post:
- Sales-Qualified Lead (SQL): Leads that have evolved to the point where the sales organization can engage with the prospect with a high probability of converting them to an opportunity with a good chance to close a deal
I want to make a key distinction, an SQL is not equivalent to an opportunity. This is really important because SQLs are often generated outside the sales organization or not directly by the sales rep that receives them and who is responsible for closing them. My preference is to allow the sales rep to decide if the SQL is qualified and worthy of being converted to an opportunity. Ultimately each sales rep is responsible for their pipeline and forecast, so I am not an advocate of allowing other people to create opportunities for them without their stamp of approval.
In many organizations, the MQL is automatically generated with the help of Marketing Automation Software that scores each lead and ultimately converts it based on a pre-defined mix of demographic and behavioral considerations. Many companies have a team focused on the conversion of MQLs (and/or other leads) to SQLs. This role is often called a Sales Development Rep (SDR) or Business Development Rep (BDR). The SDR is where the rubber meets the road in terms of qualifying and deciding the conversion of MQL to SQL. For more on MQLs, see our post Creating the Extraordinary MQL.
The primary job of the SDR is to make contact with the person who has been designated as an MQL and qualify them. In addition to MQLs, SDRs may also be instructed to develop their own leads by targeting other marketing leads and even individuals working in target companies that haven’t demonstrated the necessary activity to be designated MQL automatically. There are many acronyms used for labeling the qualification process, but probably one of the most common is BANT. Here is what a good SDR does to ensure they are handing over a fully qualified sales lead to sales:
Budget: They find out if the company has the necessary funds to purchase your product or service. If there is no budget you will have no deal. Many times a lower level employee won’t know definitively if there is budget and budget approval may vary greatly depending on the company, product or service price, etc. The SDR has to do their best to uncover how much the company is willing/able to pay for your product/service.
Authority: The primary contact may not have the authority to make the decision, but the SDR quickly needs to figure out who does along with the process to get the decision made. Failing to determine who has the power to make the purchase decision is a recipe for disaster and for missing your forecast.
Need: This is arguably the first thing the SDR needs to understand because if there isn’t a significant pain or challenge that needs to be solved there is no point putting in all the time to figure everything else out.
Timing: I further like to define a Compelling Event for each SQL. A compelling event is something that is forcing a decision maker to act. You can ask, “what happens if nothing changes or there is no decision?” Most forecasts are plagued by opportunities that do not close at the forecasted time and the date gets pushed out again and again. This usually happens because there is no compelling event. A good SDR will determine whether or not there is a compelling event and document it.
If a lead is BANT qualified and the SDR feels it is worthy of effort and focus by the sales team, they should convert it to an SQL. There may be situations where sales reps do not convert SQLs that ARE qualified because they think the dollar value is too low, they don’t like the industry, they don’t want to add additional opportunities to their pipeline, etc. This is why sales management needs to stay closely involved in the collaboration between SDRs and sales reps. If an SQL is rejected by the sales rep, the SDR manager, SDR and sales rep should discuss why the sales rep felt the qualification process and the designation of SQL is not justified. This critical moment when/if an SQL converts to an opportunity can be a complicated scenario that will be the subject of a future blog post.
One final thought about optimizing SQL quality is about compensation. SDRs should only get compensated for SQLs that are accepted by the sales team. If sales engages with the prospect and discovers that the lead is NOT qualified they should work with the SDR to communicate what additional information is required. Or, worse yet, the sales rep believes lead not a fit. In addition to SDRs being compensated for the number of accepted SQLs they generate, they should receive additional compensation for SQLs that convert to sales opportunities and ultimately become a closed deal. This keeps SDRs invested in the process and keeps them motivated and rewarded for creating the best kind of SQLs.