Lead qualification and conversion picks up where lead generation finishes. The efficiency with which sale ready leads are converted to sales is a very good measure of the efficiency of both marketing and sales.
An efficient lead generation process provides a stream of high quality sales ready leads to the sales force. A sale ready lead should be an individual or organisation which has been screened sufficiently to enable the vendor to know they have a need or problem which the vendor is likely to be able to address, are actively seeking a solution and have the capability and capacity to purchase. While this scenario is an ideal, it should be the objective of the lead generation system.
When a prospect is sale ready, the responsibility for progressing the lead passes from marketing to sales. Marketing is normally seen as the lead generation process while sales is seen as the transaction and relationship activity. However, these lines will blur from vendor to vendor depending on the nature of the product and service being sold, the extent of assistance the prospect needs to qualify their requirements and the size and complexity of the sale.
In many cases, the marketing process is unable to engage the prospect at a personal level without the assistance of a salesperson or sales consultant. The prospect may need access to different vendor resources, such as estimators, pre-sales consultants, product demonstrators and so on. Sometimes these resources are better managed through the sales force than marketing. The sales person is the relationship manager for the sale and will guide the process through its various qualification and clarification stages until the sale is won or lost.
This process of moving the prospect towards a sale transaction is referred to as conversion. In large complex sales, the probability of reaching a purchase can often be estimated by reference to the stage in the process. Thus a process with 10 stages might increase the probability of the sale by 10% at each stage.
The process of staged conversion represents the information gathering, qualification and decision processes of the customer as well as the vendor. The vendor is also trying to ascertain whether the need or problem the prospect has fits with their own product and service offering. The vendor wishes to discover price expectations and budget availability to ascertain whether there is a fit with the vendor’s offering. The vendor also wants to ascertain customer timescales in order to estimate the amount of vendor resource which would need to be available in order to provide a solution within the timescales of the buyer.
The number of stages and the activities associated with each stage will differ from vendor to vendor, although very similar processes tend to exist within all vendors in the same industry.
The number of steps, the nature of the activity, level of resources devoted to each step will vary by vendor. This will be influenced by the nature of the product and service offered and the type of customer served. Where the vendor is dealing with government or large formal organisations, some of the steps will be dictated by the formal processes of the customer.
The successive steps should improve the probability of a sale. At each step, the requirements for progressing the sale should be clearly understood internally and can often be shared with the customer. In other words, you might state to the customer what the next step is and clarify the timescale and level of commitment to move to the next step. Each step further commits the vendor and the customer.
The purpose of this staged process is to ensure that mistakes are not made by the vendor in progressing the sale, resources are not wasted in unnecessary activity and greater resources are only allocated to the customer when the prospect is more qualified. Too often sales staff offer expensive activities before establishing the ground work. They offer time consuming activities before they have all the information necessary to make the stage effective or without clarifying whether the prospect has the budget or timescales which justify the vendor’s efforts.
This lead conversion process allows the vendor to forecast the level of sales knowing the likely time between each step and the number of prospects who will progress from stage to stage. If there are more prospects than the business can accommodate, the screening can be tightened up so that only the more qualified pass to future steps. If there are too few qualified leads entering the system, the vendor needs to ramp up the lead generation activity.
This process also enables much more formal sales force management where salespeople track progress and report on a frequent basis the stage of progress and the actions they are taking to move prospects along the process. It enables sales management to pick up on salespeople who are not achieving sufficient progress and provides an opportunity for additional training or additional support.
Next we will continue to look at the stages involved in qualifying and converting sales ready leads.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia. A series of free eBooks for entrepreneurs and angel and VC investors can be found at his site here.