Lead Qualification: The Ultimate Guide to Getting More Conversions

Benjamin Babb
lead qualification

Capturing leads is one thing, but determining which leads deserve more of your time and effort is something else entirely. Knowing how to improve your lead qualification process is essential for improving conversion rates, growing pipeline, and closing more deals. 

It is one area where companies can sharpen the focus of their marketing efforts to improve return on investment (ROI). A Rakuten survey found that overspending on ineffective marketing efforts is disturbingly common. Marketing managers admitted to wasting 26% of their budgets on unproductive endeavors, specifically investing in the wrong channels or strategies and inefficient performance tracking. 

Here is a closer look at how establishing a lead qualification process helps your company target leads who are ready, willing, and able to purchase your product or service and become customers. 

But first, let’s start by clarifying the term “lead.”

What is a lead?

A lead is any person (or person representing a business) who expresses an interest in your product or service. Leads are a broad category that include a wide range of people, many of whom are unlikely to ever become customers. 

While some leads are very likely to make a purchase, there will be some leads who might not be ready to make a purchase despite their interest. These leads could be good candidates for your product or service in the future. 

The trick to closing a sale is determining which leads fall into each of these categories. That’s where lead qualification comes into play. 

What is lead qualification?

Lead qualification is the process of categorizing and prioritizing leads based on the likelihood that they will make a purchase. It uses information about the lead to determine if and when the lead is likely to convert into a sale. 

Take the most basic example of lead qualification in action: a salesperson handing out coupons. Let’s say the salesperson works for a boutique that sells children’s clothing. They are trying to increase sales by offering coupons to people walking past the store.

The salesperson is more likely to greet and offer a coupon to an adult with children than to an adult without children. By distinguishing between customers with children and those without children, the salesperson is qualifying their leads. 

For most businesses, it is much more complex than storefront marketing. That’s because leads can come from a variety of channels and — thanks to the internet — marketing teams have access to a lot of information about the lead as soon as they engage with a website, email, or social media post. 

Lead qualification is important for marketing and sales teams because it conserves resources and prevents waste. When leads go through a qualification process, it helps teams direct their time and effort toward people who are most likely to make a purchase.

Put another way, it helps sales and marketing teams improve their conversion rates by prioritizing leads that are the best fit for the product or service they are selling. 

How are leads qualified? 

The criteria for a qualified lead varies depending on the product and industry. It will also be different for B2C and B2B business models. In general, the kind of information that can be used to qualify a lead includes: 

TypeExample
Demographic informationAge, location, gender
Professional informationIndustry, company size, job title
BehaviorWebsite engagement, event attendance, browser history, previous purchases

Types of leads

During the qualification process, leads may be organized into different categories. These categories rank the quality of the lead (sometimes called a “lead score”) and help marketing and sales teams target their strategies for the specific type of lead. 

Marketing qualified lead (MQL)

A marketing qualified lead (MQL) is someone who expresses interest in your marketing materials or someone who is part of the target market. The goal of defining MQL is to target your marketing efforts at people who are most likely to be interested in your products. AN MQL needs to meet basic criteria, such as visiting a specific landing page, signing up for an email newsletter, or clicking through a link to your site.

Sales accepted lead (SAL)

A sales accepted lead (SAL) is an MQL that meets additional criteria to enter the sales pipeline. These criteria usually include input from both the sales and marketing teams. The goal is to find SALs that are most likely to respond to the specific offers, strategies, and materials they will encounter once they enter the sales pipeline.

Sales qualified lead (SQL)

A sales qualified lead (SQL), also referred to as an opportunity, is someone that has passed through the lead qualification process for both marketing and sales teams. The major feature of these leads is that they display an intent to purchase products or subscribe to your offerings. Typically, SQLs have already taken multiple steps that prove intent, such as signing up for a newsletter and clicking through links once they receive a marketing email.

Qualified leads vs. unqualified leads

Now that we’ve reviewed the lead qualification process, let’s consider some of the most common lead characteristics used in lead qualification to see how qualified vs. unqualified leads compare: 

Qualified leadUnqualified lead
Decision makerNot a decision maker
Controls spendingDoes not control spending
Has identified a specific needHas not identified a specific need
Product or service meets the needProduct or service does not meet the need
Familiar with the product or serviceUnfamiliar with the product or service
Has engaged with marketing activitiesHas not engaged with marketing activities

Why is lead qualification important?

Lead qualification is important because it improves sales and marketing efficiency and leads to higher conversion rates. It helps sales and marketing teams build strategy and allocate their resources wisely. Most importantly, it prevents sales and marketing teams from wasting their time on prospects who are not likely to make a purchase. 

Lead qualification also delivers benefits like: 

  • Improving ROI on marketing and sales initiatives
  • Boosting confidence in the quality of the sales pipeline 
  • Enabling marketing and sales personalization
  • Containing costs and preventing waste
  • Reducing churn

How to efficiently qualify leads

Your lead qualification process should assess all leads and identify those with the highest potential for purchase. These qualified leads should then be routed to the appropriate stage of the funnel. Here are the steps to follow to build a sales qualification framework:

  • Assess the customer and their needs
  • Ensure purchasing ability
  • Gauge activity
  • Identify potential challenges

1. Assess the customer and their needs

The first qualifying factor is whether the lead fits your target market. During this step, get to know the lead to understand their pain points and needs to answer questions like:

  • Will they be able to use your product or service?
  • Are the problems they are trying to solve possible with your offerings?
  • Is this need met by your solution?
  • What solutions (if any) are they using now? How and why are yours different and a better fit?
  • How soon do they need the problem solved? If it is urgent, can you deliver on time? If it is not, will they put off making a purchase until it is urgent?

Once you are done with this step, you also need to check on the practical aspects of a potential sale.

2. Ensure purchasing ability

Confirm that the lead can make a purchase. This step requires you to check two things. First, determine whether the lead has control over spend. If they do not have direct purchasing power, you will need to adjust your marketing and sales strategy to include the decision maker. 

Second, confirm that the lead has room in their budget for the purchase. If the lead signals that they do not have any available budget or that a spending freeze is in place, you may want to consider them disqualified, at least for the time being, and shift your focus to other leads. 

3. Gauge activity

You can use customer relationship management (CRM) tools to track the lead’s activity. For example, you can measure how many times they visited your website, clicked on newsletter or marketing email links, reached out to you with questions, or responded to your requests for input or information. The higher the lead’s interactivity and interest is, the more likely they are to make a purchase.

Reading recommendation: What Is CRM Automation? The Ultimate Guide

4. Identify potential challenges

The last step in lead qualification is to identify potential pitfalls that could derail your sales efforts. Avoid this by learning as much about the lead’s current situation as possible. For example, if you are selling a SaaS product, ask the following questions: 

  • Does the product meet technical and security requirements? If not, can this be corrected? 
  • Are there developer constraints that could prevent implementation? 
  • Is your product compatible with the components of the existing tech stack? 

Potential challenges or objections will vary depending on the business model, industry, and product or service. No matter what product or service you are selling, try to anticipate any possible obstacles to the sale.

Common lead qualification frameworks

There are several different methods for qualifying leads. Choosing the right framework that’s right for your business will depend on a number of factors including your industry, sales strategy, and internal resources. Below is a summary of five of the most common lead qualification frameworks: MEDDIC, CHAMP, BANT, ANUM, and FAINT. 

MEDDIC

MEDDIC (Metrics, Economic Buyer, Decision Criteria, Decision Process, Identify Pain, Champion) is an approach that requires the sales team to perform a deep dive on the target company and find out all necessary information about their operation, decision makers and decision-making process, and current problems and pain points.

This in-depth approach is typically for businesses that sell services to enterprises and large corporations. In-depth research is necessary because of the cost and effort of pitching to these firms. It could also be beneficial to selling high-value products or services.

CHAMP

CHAMP (Challenges, Authority, Money, and Prioritization) uses many of the common lead qualification steps, such as ensuring the customer has the funds to make the purchase and that your offering meets their needs. There is one unique aspect of the CHAMP approach. Instead of disqualifying leads with non-decision-making contact, you take specific steps to identify and contact someone with the authority to make the purchase.

BANT

BANT (Budget, Authority, Need, and Timing) is a time-tested sales qualification framework from IBM. This method will seem familiar to people who use other frameworks. However, this framework works best if you want an efficient sales cycle. The focus on the lead’s decision timeline allows sales teams to set aside those who do not have an immediate need.

If you create shorter sales cycles, you can place these non-immediate leads into a later cycle instead of disqualifying them.

ANUM

ANUM (Authority, Need, Urgency, Money) has a similar approach to BANT, but uses different terms. The framework uses “urgency” instead of “timing,” and “money” in lieu of “budget.”

ANUM has one different step when it comes to authority. Unlike CHAMP, which allows sales reps to use the first contact to build rapport and learn about decision makers for later contact, ANUM focuses on connecting with decision makers before making any additional efforts.

FAINT

FAINT (Funds, Authority, Interest, Need, Timing) is another common framework for lead qualification. It offers more flexibility in terms of funds than some of the other options. FAINT allows you to vet leads even if they do not have a set budget. That’s because many purchases under FAINT may take place without pre-planning. This approach works best with products or services that do not require a major investment.

FAINT also has a unique category for “interest.” Interest measures how responsive the lead is to the new ideas, changes, and improvements that your sales team will propose.

Also read: Sales Analysis 101

Improve your lead qualification process with low-code

Lead qualification is a crucial component of your sales and marketing processes. An effective framework can improve the quality and volume of your sales pipeline, increase conversion rates, and amplify your ROI for marketing and sales efforts. 

One tool that can bring structure and visibility to your lead qualification process is low-code process automation. Low-code makes it easy for marketing and sales teams to organize and prioritize leads, and to collaborate on building a full sales pipeline.

Pipefy’s low-code software provides a customizable template that allows teams to start qualifying leads right out of the box. Form fields bring simplicity and consistency to the process, and can be quickly adapted using a visual interface. 

Best of all, low-code automation helps your business conserve IT and developer resources by standardizing processes and integrating with your existing systems and apps. Security and governance features are baked-in, so implementation can take place in hours or days, not weeks or months.

Ready to get started? Optimize your sales process with Pipefy’s customizable lead qualification templateTry template
Written by
Benjamin Babb
Senior Writer at Pipefy, where I focus on helping businesses manage workflows, optimize processes, and deploy automation. I'm also a ghost story aficionado who listens to more Enya than anyone should.

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