Whether you work in sales or marketing, a portion of your job boils down to building your business' database. To be more specific, it comes down to building your quality database.
But here's the hard truth: Most organizations don't have an agreed-upon definition of what a quality lead means. In fact, according to the 2016 State of Inbound, only 22% of companies have a formal, documented quality lead definition. So even if you're doing a great job building your database, segmenting that database in a smart and marketable manner is probably causing you some frustration.Luckily, there are few things you can do to slice and dice your database in a more structured way to uncover your business' quality contacts.
First, we need an effective way to define what a quality leads is for both the marketing and the sales sides of the house. Defining and tracking how many quality leads are being generated by each team is the first step to building a successful marketing and sales service level agreement, or SLA. This SLA, alongside quality lead conversion rates, will give the teams early indications of how they're doing that month/quarter/year on their lead generation and sales goals.
The most basic way to identify these high-quality leads is by defining your lead funnel with lifecycle stages.
Defining the Lead Funnel
For all organizations, a well-defined lead funnel is crucial to laying the groundwork of identifying your most qualified contacts and to determining at what point a lead will be handed to sales.
To uncover the most qualified leads, each contact in your database should have a denotation that describes where in the lead funnel they're located. The HubSpot recommendation is to define a lead funnel based on the standard contact property: lifecycle stages. The lifecycle stages are as follows: subscriber, lead, marketing qualified leads, sales qualified leads, opportunities, customer, evangelist, other.
You can read more about how HubSpot defines lifecycle stages, but when it comes to surfacing sales-ready leads, we'll focus on marketing qualified leads (MQLs) and sales qualified leads (SQLs).
Marketing qualified leads are defined as leads that marketing has qualified as sales ready. This status triggers the lead hand-off from the marketing to the sales team. Your MQL stage should be well defined and include data points that indicate a lead that has met your sales teams' minimum viability threshold. This minimum viability threshold should be defined with both company engagement criteria — like form fills, page visits, and trade shows attended — as well as prospect fit criteria — like demographic and firmographic information. It may look something like this:
Once you've defined your MQL stage, you need to set up a feedback loop that tells marketing how well they're doing. This is where the SQL comes in. Sales qualified leads are defined as leads that have been qualified for sales and accepted by sales to begin being worked.
This is an important stage to use because it provides a point where sales can know a contact is ready to be worked. Plus, marketing can learn from their oversights and continue to refine their MQL strategy. This will be a central data point in any effective SLA. Most organizations using HubSpot will manually mark contacts as SQLs, though a workflow can also automatically set that stage.
Why Use Lifecycle Stages to Define a Funnel?
In most instances, lifecycle stages and clearly defined contact properties will be the most effective way to uncover your highest quality leads.
One common mistake organizations make is assuming a lead score is necessary to surface sales-ready leads. In many cases, lead scoring can introduce complexity that is unwarranted, especially when a score is used to determine when a salesperson should reach out.
At one point, HubSpot used a lead score threshold to assign contacts to our sales representatives. We found this to be ineffective because of the potential for unqualified leads to slip through with a high score. For instance, college students who were doing research would download ebooks and visit our site pages. Sometimes, they even filled out our contact us form. All of this engagement tallied up and gave us a score that met our threshold even though college students are not a quality lead for us.
This experience caused us to re-evaluate our use of the lead score. After interviewing sales reps and running reports on our highest close-rate prospects, we discovered we could concretely define high-quality leads with our lists and workflows tools. But we didn't want to abandon lead scoring because it generally surfaced great leads. So, ultimately, we decided to define a quality lead using lifecycle stages and pass it to sales at that time. We then used lead scoring so sales could prioritize their daily work and reach out to the right people at the right time.
We explain this concept further in this video.
Ready to Set Up Successful Lead Scoring?
When using the HubSpot software, you'll want to keep in mind three tenets to make sure you stay on track:
- Lead scoring should be used to prioritize the quality leads you've identified using lifecycle stages. The score should not determine in which stage they're located. An added benefit to this method is that a score limit is not needed since it's just being used to surface the highest score. This means you can spend less time working on how much an activity is worth and more time identifying the right activities.
- Evaluate lead fit and online engagement on two axes. Including both types of data points will ensure you have a well-rounded score that truly represents your best leads.
- Lead scoring must be developed with input from both the sales and marketing sides of the house AND should be revisited often. The HubSpot lead scoring tool works continuously based off the rules you've set. This means the tool encourages you to continue to make small changes over time to surface the highest quality MQLs.
According to HubSpot's State of Inbound report, the top marketing priority in 2016 was converting contacts and leads into customers. The best way to increase your lead-to-customer conversion is to become a pro at identifying the top-quality leads and making sure the sales team sees those first.
A well-defined funnel using lifecycle stages, an agreed-upon lead hand-off based on those stages, and a lead score to help prioritize will lay the groundwork to improve your lead-to-customer conversion.
Need help identifying the lead fit and engagement data points you track in HubSpot? Check out the following tips for improving your contact database segmentation.
Ready to get started in your HubSpot account? Let the lifecycle stages project guide you.