Lead Qualification: Definition & How It Works

Lead qualification is the process of identifying, organizing, and nurturing incoming leads so you can focus your efforts on those that are best suited to the products your business offers. It involves collecting leads, evaluating them, and moving them through your marketing and sales process in order to produce the highest-quality prospects to pursue.

Customer relationship management (CRM) tools like Freshworks CRM can help you qualify leads quickly so that you can spend your time closing more deals instead of chasing dead ends. Freshworks CRM offers a free-forever plan that includes lead scoring, making it a great choice for small teams looking to better organize their lead qualification. Visit Freshworks CRM to get started.

Visit Freshworks CRM

How Lead Qualification Works

Qualifying leads works by creating a process that lets you quickly assess incoming leads, organize them based on their potential, and automates follow-up designed to nurture leads into qualified customers. Lead qualification is about understanding the traits and characteristics that make a good customer and creating a process to evaluate incoming leads from your website or through prospecting in order to focus your sales resources on the most qualified leads.

Most marketing and sales organizations use specialized tools to help qualify leads. These tools can include website landing page builders that collect leads, customer relationship management (CRM) software to organize and score leads, and marketing automation tools to nurture leads through the marketing and sales process.

In addition, one of the most important reasons to create a lead qualification process is to avoid spending time on unqualified leads that simply use up time and resources that are better dedicated to higher-quality opportunities. Creating a process that filters out these leads means that your sales team is more efficient and will be more effective at closing sales opportunities.

The Difference Between Marketing & Sales Qualified Leads

Lead qualification happens at two distinct points in the new customer journey, and the difference is important in understanding how to make your marketing-to-sales-funnel work effectively. Usually, the two different types of qualified leads are known as marketing qualified and sales qualified, and they represent milestones in the overall sales process.

Here are the differences between marketing and sales qualified leads:

Marketing Qualified Leads (MQL)

Marketing qualified leads are leads that your team has determined are a good fit to begin a lead nurturing campaign. These leads are a fit with your target audience, though you may not know whether they are actually interested in making a purchase, or whether they have the resources to do so at this time. Since marketing qualified leads are usually nurtured through automated campaigns, they require far less effort and fewer resources to continue to develop.

Ultimately, the goal of nurturing marketing qualified leads is to determine if they should move forward in your sales process. At that point, they are considered sales qualified leads and are handled by your sales team.

Sales Qualified Leads (SQL)

Sales qualified leads have been through a lead nurturing campaign in order to determine that they are likely to become a customer and are worth having a sales representative spend time conducting outreach. Usually, sales qualified leads not only fit the profile of your target customer, but have also expressed that they are interested in making a purchase, are planning to do so in a timely manner, and have the authority to make such a decision.

Since salespeople, like everyone else, have a limited amount of time, allowing them to only focus on the highest-quality leads makes your team more efficient and profitable. Instead of wasting time on dead-end leads that aren’t likely to buy from you, this lets your salespeople dedicate their time to building relationships with leads that are likely to convert to satisfied customers.

How to Qualify Leads

This is often referred to as the lead “funnel” because the goal is to take a large number of incoming leads, filter them through your process, and produce only the leads most likely to become customers at the other end. That saves your sales team time and effort by not pursuing every lead, but rather only those that meet certain criteria.

A few of the steps that help you qualify leads include:

Capture Incoming Leads

Before you can start to qualify leads, you have to somehow collect them into a system that you can use to evaluate and organize them based on whether they are a good fit. Most businesses use a combination of incoming leads (through a website, email, or phone inquiries), or use outbound prospecting. Regardless of which you depend on most, making sure that you capture them in an organized manner can help you make sure none of them falls through the cracks.

Pro tip: A CRM like Freshworks CRM can help you keep track of leads and organize them based on territory, lead score, or industry. Freshworks CRM allows you to capture leads through forms on your website or via the Gmail plugin that lets you directly import your leads from email contacts. The user-friendly mobile app also makes it easy to add leads as you encounter new prospects on the go. Visit Freshworks CRM for more information or to start a 21-day free trial of any plan.

Evaluate Leads Based on Qualification Criteria

One of the most important aspects of lead qualification is to know what makes a lead “qualified.” While the criteria vary depending on whether you’re trying to evaluate marketing qualified leads vs sales qualified leads, you are usually trying to answer a few questions that let you know if it’s worth moving forward. One common way to evaluate the value of a specific lead, and whether or not it is qualified, is to conduct a BANT analysis.

BANT stands for Budget, Authority, Need, and Timeline, and represents the characteristics needed for a lead to be considered ready for a salesperson’s efforts. You don’t want salespeople to spend their valuable time on leads that are never going to become a customer because they don’t have the budget, or even worse, the need for your product. That’s an expensive mistake that is easily avoided by asking a few questions early on.

For example, a few of the questions you would ask during this phase include:

• Is this lead in an industry that utilizes the product or service we offer?
• Is this lead located in our current service area?
• Does this lead have the authority to make decisions about purchases related to our product?
• Does this lead intend to make a purchase in the foreseeable future?
• Is this lead currently experiencing a pain point that can be addressed by our business?
• Does this lead have the budget and other resources necessary to make a purchase?

Move Leads Through the Lead Nurturing Process

As you answer those questions, you’ll filter out the leads that don’t meet your criteria. That makes it easy to see which leads justify being moved through your lead nurturing process (the process of beginning a relationship by communicating with, listening to, and providing content that helps move a lead closer toward a buying decision).

Lead nurturing allows you to educate prospects and create awareness of how you can solve their particular problems before exerting energy and resources on each individual lead. Usually lead nurturing is an automated process, often via email drip campaigns, which consist of a series of messages and calls to action that increases your prospect’s engagement. The goal is to nurture, or “ripen,” leads to the point where they are ready to begin a sales relationship.

For example, when I ran a marketing agency, whenever a potential client sent an email inquiry, I responded with an introduction email and then proceeded to ask a few questions to help me better understand their needs. Depending on their answer, they might receive a series of emails offering a free downloadable social media guide. If they engaged, I knew they were interested and might follow up with an offer to conduct a free social media analysis.

Each of those steps was designed to move the lead closer to a buying decision by educating and informing them, while also evaluating whether they would be a good fit for my business. In the end, we only met face to face with the leads that fit our ideal customer persona and were likely to become a customer.

Send Sales Qualified Leads to Your Sales Team

Leads that end up nurtured to the point that they justify a salesperson’s involvement are then considered “sales qualified” and are assigned personal contact by the appropriate team member. It’s important to have a process and system in place to facilitate the transfer of leads from the qualification process into a salesperson’s action list.

By utilizing a CRM platform that includes marketing automation, you can ensure your sales and marketing teams are on the same page and managing all of your lead and contact information in one place. In fact, many CRMs will actually allow you to automatically assign qualified leads to the sales reps who are best suited to build a customer relationship.

Earlier in my career, I managed a field sales team that was responsible for connecting with and building relationships with leads that were provided by a business development team. The business development team’s job was to evaluate and qualify leads based on their needs and fit with the company so that my team had the best chance of building a long-term customer relationship without chasing down bad leads.

Move SQLs Through Your Sales Pipeline

The final step in lead qualification is to move those you determine to be qualified through your sales pipeline. While the sales pipeline is its own separate subject, it’s important to understand your lead qualification process is meant to feed the best sales opportunities into your pipeline. The better qualified the leads are, the more likely they will continue to move through your pipeline and become customers.

Ways to Manage Your Lead Qualification Process

Lead qualification depends on a variety of components that sales and marketing teams use to move leads through the sales process. Each of these components is an important aspect of capturing, evaluating, and determining the probability that a lead is a good fit for your product or service.

Here are a few ways to manage your lead qualification process:

Landing Pages

Landing pages are a common way to gather leads on your website. A landing page can be as simple as a page with a contact form, or it can be a targeted page that visitors encounter when they click on a digital ad. Often those landing pages will present visitors an offer related to your product like a free trial, a piece of content that adds value by educating the lead about a specific area of their business, or a sign-up form for more information.

Building an effective landing page is both an art and a science in itself. The important thing to know is that it plays a critical role in your lead generation process since it is often where visitors first encounter your business, and is one of your best tools for generating leads that can be qualified and nurtured into customers.

Lead Funnel

A lead funnel is the set of stages you use to filter leads, ending up with those that are the most likely to become customers. It is similar to the sales pipeline, except that lead qualification doesn’t always result in new customers—only prospects that are the most likely to become customers. While the specific stages vary based on your business and types of leads you are qualifying, the lead funnel is what helps you identify where each lead is in the process.

Lead Scoring Model

A lead scoring model is an important aspect of lead qualification because it assigns a point value to incoming leads based on a variety of characteristics and activity. This allows you to quickly assess which leads should be followed up, and which are worth nurturing. Lead scoring might assign points based on proximity to a location, type of business, whether the lead has responded to your emails, or the specific pages a lead has visited on your website.

Lead scoring in Freshworks CRM

Pro tip: CRMs like Freshworks CRM will score leads automatically, or based on criteria you specify. It will also flag highly qualified leads to help you identify which should be your top priority for follow-up. Freshworks CRM will also allow you to automatically assign leads that meet a certain score to sales reps so they can initiate contact and begin a personal relationship with that prospect, making it easy to focus on the highest-value leads. Visit Freshworks CRM for more information.

Lead Qualification Costs

Most of the costs associated with qualifying leads fall into one of two categories: human efforts and software tools to automate the process. While there are a lot of free tools available, as a general rule, the less you spend on the software, the more you can expect to have to invest in time and effort to get the results you want.

Some of the common costs to qualify leads include:

• CRM software: This is the most common form of tool used to help qualify leads since it allows you to collect, score, organize, and communicate with your leads. Costs range from free to as much as several hundred dollars per user, per month.
• Marketing automation software: This software lets you create automated processes to evaluate and nurture leads, usually through email drip campaigns. While this is often a feature of CRMs, many standalone tools range from free to $200 per user, per month.
• Buying business leads: Verified databases like UpLead allow you to search for contacts by criteria like industry, company, title, or location, and download contact information directly into your CRM for anywhere from $2 per lead to subscriptions that range from $79 to $399 per month.
• Sales support team: In addition to software, it’s not uncommon to have sales support team members whose job it is to help assess and qualify inbound leads. Even when these individuals aren’t in a customer-facing role, you can expect to spend $20 to $40 per hour.

Lead Qualification Tools

Fortunately, there are a variety of software tools that you can use to qualify leads quickly and with a high degree of accuracy. In addition to CRMs, there are lead nurturing tools that make it easy to create drip campaigns and score leads based on their activity. There are also high-quality databases that offer the ability to purchase verified leads that allow you to confirm that a contact is a good fit before you ever reach out to begin the qualification process.

Here are a few software tools that can help you better qualify more leads:

1. Freshworks CRM

What it costs: Free to $49 per user, per month

What it does: User-friendly CRM that makes it easy to collect, organize, score, and convert leads.

Freshworks CRM contact profiles

Freshworks CRM offers a free-forever plan that allows you to add unlimited users and unlimited contacts. It includes the ability to manage leads, customers, accounts, and sales opportunities. Freshworks CRM also allows you to customize your sales pipeline and includes basic lead scoring, which helps users identify the most qualified leads based on whether or not the lead is a decision-maker and their overall engagement with your email campaigns.

One particular benefit of Freshworks CRM is that the free version integrates with Freshchat, making it a powerful way to connect with new leads and existing customers through web-based chat. Freshworks CRM also integrates with Freshdesk and Freshcaller, making it a robust, end-to-end tool to manage the entire customer relationship.

Freshworks CRM is a great choice for business-to-business (B2B) sales teams that generate leads through their website or prospect by phone and want to integrate those features into a free, easy-to-use CRM. In addition, Freshworks CRM offers a free trial of their paid plans, which start at $12 per user, per month. Visit Freshworks CRM to create your free account today.

2. UpLead

What it costs: $49 to $299 per month

What it does: Allows users to search its database for verified contact information based on company, industry, geographic location, or role, and download them directly to your CRM.

UpLead verified contact database

UpLead is a lead-purchasing database that describes itself as a “real-time, verified B2B database that helps you find new customers and accelerate growth.” It helps enable your sales team by providing lists of email addresses in a searchable database that they have verified for accuracy. UpLead verifies these contacts upon export, ensuring that users won’t end up with large lists of bounced emails or take a hit to their sender reputation due to bad email addresses. UpLead is a good fit for businesses looking to purchase qualified leads to move through their sales process.

UpLead charges a monthly fee based on a number of credits, which can be used for contact downloads. Pricing starts at $49 per month for 200 credits. Plans are also available at $149 a month for 1,000 credits, and $299 a month for 3,000 credits. UpLead also features the ability to integrate with Salesforce, which allows you to export contact directly to your CRM to manage.

3. HubSpot

What it costs: Free to $800 per month (depending on plan and number of contacts)

What it does: Offers complete lead generation and nurturing tools that help small businesses better qualify incoming leads.

HubSpot lead profile and activity interface

HubSpot is a popular lead generation, marketing automation, and lead nurturing platform that provides the ability to create landing pages, lead generation forms, lead nurturing email campaigns, and lead scoring. It’s ideal for businesses looking to generate leads on their website with content marketing and robust lead management.

More than just email subscriptions, HubSpot incorporates a complete content management software (CMS) that lets you publish landing pages, blog posts, and contact forms for the purpose of capturing new lead information. In addition, unlike many other standalone lead generation tools, it features a free built-in CRM that houses all of your lead information and updates it based on your contact’s activity.

While HubSpot’s free CRM allows you to collect lead information and manage your sales process, paid plans are also available at $50 and $800, and include advanced automation features like drip campaigns that help you convert leads into paying customers.

Benefits of Lead Qualification

The primary benefit of lead qualification is that it allows you to focus your sales efforts and resources on the leads that have the highest potential to become customers based on their fit with your product and services. As a result, lead qualification saves time, money, and creates a higher degree of customer satisfaction since it helps you determine which leads will be most likely to benefit from the solutions you offer.

A few specific benefits of qualifying leads include:

• A more efficient sales team: Your sales team can focus its efforts on only the most qualified leads.
• More profitable sales: Since your team is focused on the prospects and leads that are the best fit, you end up with more profitable customers since their needs are more closely aligned with your products and services, and require less sales effort to convert.
• Increased business revenue: By qualifying leads, you can be sure to tailor your sales process to focus on moving the right type of customers into your sales funnel, meaning that you should end up winning a higher percentage of deals.
• Satisfied customers: Focusing your sales efforts on the most qualified leads means that those who end up as customers are likely to have a higher rate of satisfaction since they are, at least in theory, the best fit for your business.

Frequently Asked Questions (FAQs)

What is the difference between a lead & a prospect?

Generally, they are the same, though a prospect is sometimes considered to be a pre-lead contact, meaning that it’s a potential lead. Prospects are often contacts that your sales team will reach out to because they appear to fit a specific customer persona, but aren’t yet formally in the lead qualification process.

Do all qualified leads become customers?

Definitely not. In fact, in some industries, the closing rate—even for qualified leads—can be as low as 15% to 20%. There are a variety of reasons why, not the least of which is that just because a lead is qualified doesn’t mean they won’t choose your competition instead of you. That isn’t a problem with how you qualify leads, but rather with your sales process.

If I primarily sell to consumers, do I still need to qualify them?

While the qualification process might look slightly different, in many cases you would still want to qualify leads before you spend effort trying to convert them to customers. For example, if you’re a lawn care service, it’s helpful to know if a homeowner is currently using another provider, is looking to make a change, or if they have a specific problem that you can address.

Bottom Line

Lead qualification is the first step in most marketing and sales processes. The reality is that if you want to end up with high-quality customers, you have to start with the right leads. Learning to qualify leads means that you can focus your efforts on only those that are most likely to become customers, saving your sales team time, energy, and resources. That also means more profitable revenue, which is a win for the entire business.

Freshworks CRM helps you qualify leads so that your sales team has the best information to pursue sales opportunities. With contact management, lead generation, and scoring tools, Freshworks CRM is a great option for small businesses wanting to make lead qualification a part of its sales process. Paid plans starting at $12 per user, per month. Visit Freshworks CRM to start your free trial today.

Visit Freshworks CRM