Tl;dr - Sales qualified leads are the nexus of manufacturing marketing and industrial sales. Not only is it a performance metric for marketing and a predictive metric for sales, but accurate tracking informs other important management metrics.
What are Sales Qualified Leads?
A sales qualified lead (SQL) is a prospect who has met certain criteria that generally indicate they are at a stage in their buying journey where it's appropriate for sales to get involved.
This doesn't necessarily mean they want to have a discovery call or meet with a rep.
In some cases, it might. For instance, if they complete a "Request for Quote" form, they probably expect some sales follow-up.
However, independent of an explicit prospect request, you may determine they're an SQL. For instance, that judgment could be based on the number of people from the company visiting your website, the specific site activity of a prospect, or other intent factors.
Each company's definition of sales qualified leads will differ. It's important that the definition is thoughtfully established, agreed to by everyone, including manufacturing marketing, sales, and management, and all participants harmonize the language they use around leads.
Managing sales qualified leads is a great example of the challenges, and the importance of sales and marketing integration.
Cost per lead data will inform marketing budgets but hinges on sales' success. Sales enablement content and intent data will guide the sales team's follow up. Great sales coaching is critical to success as well. Since prospects are likely to resist intrusive sales outreach, reps will have to be well-trained in using intent data insights and sales enablement content to engage prospects successfully.
If the definition of a sales qualified lead is carefully and appropriately established, and sales engagement is well-coached and effective, sales qualified leads can be a meaningful predictive KPI.
The Role of Technology and Sales Process
No prospect should be categorized as a sales qualified lead without a clear definition and careful qualification against the criteria.
When the process of hand-offs between marketing and sales is agreed upon and followed, then data on sales qualified leads is dynamically available from an integrated marketing automation / CRM tech stack. It should be captured in appropriate dashboards for management, marketing, and sales. If you rely on a spreadsheet to consolidate these types of statistics, your data will be wrong and your process inneficient.
The value of sales qualified leads as a meaningful performance metric for marketing and predictive metric for sales hinges on repeatability. Just as the definition must be clear and agreed, so must the mutual expectations of marketing and sales.
Marketing, who generally creates sales qualified leads, must have confidence that sales follows up appropriately in order that metrics on meeting, project, and revenue conversions are accurate. Sales must have confidence that the leads marketing identifies as sales qualified actually are.
In addition to technique coaching, sales process must be properly defined and accountability to the process enforced. Material differences in outcomes between sales reps generally indicate gaps in coaching and application of sales process.
Correlating Sources and Outcomes
When a sales qualified lead is properly defined, marketing faithfully adheres to that in categorizing the leads, and sales is diligent and consistent in follow-up, then there's a lot of additional insight that companies can extract from the lead statistics to guide marketing investments and sales staffing.
Companies should know not only how their SQLs convert to meetings, projects, and closed/won deals, but also to margin and lifetime value (reorders, spare parts, service, etc.)
They should also know those numbers for each lead source. For instance, by each trade show, organic search, referrals, social media, paid ads, partnership marketing, media & trade journals, etc.
Too many manufacturing marketing decisions are made based on gut feeling without a clear understanding of what investments drive meaningful revenue.
When a company can connect cost per lead (CPL) to those other metrics, it can decide which sources merit more or less investment. Sometimes the insights may be surprising. High-cost leads may generate little, and low-cost leads may be very fruitful. On the other hand, high-cost leads may perform so well that increasing investment, although alarmingly expensive, is justifiable.
It might also emerge that certain reps are particularly effective at converting leads from certain sources. And the answers may well vary by ICP and geography.
In other words, with these insights companies can make decisions based on metrics as they're accustomed to doing elsewhere in their business.
Lead Management and Scoring
But let's go back to the definition and designation of sales qualified leads.
This process rests on effective lead management, which is a complex undertaking. Even with agreement on the definition and actions that sales will take to follow up, there's work to manage a large volume of contacts and leads at various early stages in the buying journey.
Like so much in marketing and sales, this has changed over the years. When lead engagement was a live activity, reps with good organization, files, and ticklers could manage it.
Today, though, much of the engagement happens virtually - with email, documents, and web pages. Those are engagements that are often not carefully monitored by busy reps. So increasingly, lead management is a function of marketing automation software and lead scoring models.
Using the sales qualified lead definition, companies can assign values to different activities for rolling scores (which include velocity and decay values) to automatically trigger an SQL rating. Then automation can notify sales reps of a newly identified SQL, prompt management coaching by creating a task or note, consolidate activity observations, and even recommend outreach approaches. (More here on ways to unlock the value of marketing automation.)
And the elevation to sales qualified lead isn't permanent. Scoring should also include factors to relegate leads to earlier stages if the definition is no longer satisfied.
This requires an adequate sales and marketing tech stack.
Propensity to Close Modeling of Sales Qualified Leads
As time passes and more sales qualified leads are created, worked and tracked, companies will develop insights into which lead generation channels provide the best ROI.
But the analysis can go further.
What if you knew when you generated a lead, or when it reached SQL status, whether it would later close? Think of the efficiency that would come with that knowledge and the ability to allocate resources accordingly and adjust forecasts accordingly!
That's the promise of propensity to close modeling, a reasonable extension of the lead tracking and management outlined above. Using machine learning, which companies are gradually incorporating into marketing and sales force automation, you can automatically consider a full constellation of contact and company properties to identify any correlations between any of those properties, or particular combinations, and closed-won deals.
You might find, for instance, that if at least five members of the buying team are engaged within the first two weeks, deals close at a 50% higher rate. Or if the finance contact consumes a particular content piece on financial justifications, the rate is 27% higher than otherwise.
Those insights can help prioritize resources, inform sales process, guide sales enablement content creation, and improve forecast accuracy. Imagine if you had a pipeline reporting property that provided a probability range for projects to enrich traditional forecasting....
The Sales Qualified Lead - Atomic Unit of Revenue Growth
Lead generation is an important area in which many manufacturing marketing teams lag, and lead generation is an understandable performance metric. But lead generation can be easily distorted and misunderstood.
Sales success measured in close rates, sell cycle, competitive knockouts, and new logos and target accounts won is critical. The resulting revenue sustains a company, creating a vibrant and healthy environment.
Between the two are sales qualified leads. When properly defined, carefully managed, and rigorously followed up on, these are a key KPI and building block of revenue growth. Not only are they a leading indicator of revenue, but cascading from the SQL count is a variety of other vital management data and insight.
Getting this right requires mindset, attention to detail, integrated marketing and sales, technology and a culture of excellence and collaboration.