How to Qualify Leads and Prospects

Not every potential buyer who walks through the door will become a paying customer. That’s why sales professionals need to qualify their leads and prospects, ensuring the person ticks all the boxes for an ideal customer before spending the effort to pursue a sale.

Lead qualification might sound like an arduous process, but it doesn’t have to be a brain-drainer. Follow this guide to accurately qualify leads and prospects for your business, bolster your conversion rate, and close more sales.

What Does it Mean to Qualify Leads and Prospects?

First off, what are leads and prospects?

To start simply, a lead is any potential customer for a business. Companies research and reach out to leads in hopes of pitching to them and making a sale.

But not all leads turn into paying customers: some might not see an immediate need for the product or might not have the budget or authority to make a purchase.

Preemptively checking a lead for these traits is called lead qualification. It occurs during the initial sales prospecting phase, determining whether a company will pursue a lead further.

Some leads come to the company with a few qualifications already, such as a marketing qualified lead who interacted with the company’s marketing materials or a sales qualified lead who wants to purchase already. Leads who are partially qualified like this are called prospects. 

The term “prospect” technically applies to leads at any degree of qualification, but we’ll assume that your company still needs more info on a prospect.

Whether a potential client is a prospect with one or two qualifications or a lead with none at all, they will nevertheless need to be qualified further to determine their sales readiness.

Why is it Important to Qualify Leads and Prospects?

Qualifying leads and prospects as early as possible saves a company from wasting time and money on pitches that go nowhere. 

First, by objectively ranking which potential customers are most likely to close a sale, reps can make a few sure sales to meet their quotas, then try their luck on the more tenuous leads. This boosts a company’s conversion rate between sales funnel stages and total sales volume.

Two out of three lost sales occur because sales reps jump the gun and push leads through the whole sales process without qualifying them, according to sales engagement software company Spotio. 

For example, a sales-qualified prospect might have a real pain point, but might have misunderstood what your product actually does and the finer details of the purchase agreement. If they make it all the way to checkout and realize your product’s not what they need, your sales rep would have wasted quite a bit of time and effort. 

Alternatively, if the misunderstanding prospect doesn’t catch their mistake and the company sells to them without verifying their need-product fit, it might profit in the short run but pay in reputation as the customer decries being “scammed” in a review. Slowing down and fully qualifying leads and prospects prevents hasty purchases and future buyer’s remorse.

Qualifying leads and prospects is doubly important for B2B businesses. B2B industries have fewer leads overall, so reps need to quickly sift through the crowd to catch the most qualified ones before a competitor steals them away. The purchase amount is also much larger, so companies want to avoid the financial headache of unhappy customers and returns.

In short, qualifying leads and prospects generates more money, saves time, and protects the company’s reputation.

How to Qualify Leads and Prospects

With that in mind, how do you qualify leads and prospects to ensure your efforts aren’t wasted on an unfit customer? Let’s take a look below at the specific things your leads and prospects should be qualified for.

1. Ideal Customer Profile

Your company should already have an ideal customer profile (ICP) in place, representing your product’s dream customer: their demographics, psychographics, buying habits, budget, and pain points. This is also called a buyer persona.

Your ICP will look different depending on your business and whether you’re B2B or B2C: if you’re selling high-end furniture, your ICP might be an upper-class middle-aged man without children and an annual income of at least $100,000. If you provide logistics consulting to businesses, your ICP could be a Rust Belt shipping company with at least 100 employees and more than $5 million in annual revenue. 

If you’re a B2B company, industry and strategic fit should also be a part of your ICP: does it make sense for your industries to partner together? Or are you hoping to use this deal to break into a new industry? While companies selling CRMs could theoretically sell to any industry, a steel supplier shouldn’t waste their time selling to an antique furniture store.

While there are exceptions, it’s likely that the closer your lead or prospect fits with your ICP, the more likely they are to appreciate and enjoy your product.

2. Budget

The next four are collectively known as the BANT criteria, standing for Budget, Authority, Need, and Timeframe. To remember these criteria, BANT sounds like banter, which is what you’ll likely do to get this information from the lead.

First up is budget, which is fairly straightforward: does the lead or prospect have the money on hand to pay for your product? If not, they’ll never purchase it no matter how hard you sell. 

It might feel awkward to bring up money at the start of the conversation, but it works wonders in getting a deal closed faster. With a solid idea of the lead’s budget, a sales rep can steer the conversation toward products or deals that the customer can afford rather than wasting time on pipe-dream high-ticket products. 

Here are some questions sales reps can use to gently inquire about the lead or prospect’s budget:

1. “What price range are you looking at?”
2. “About how much were you hoping to spend on [product]?”
3. “Has pricing been an issue with other solutions on the market?”

3. Authority

Next up is whether the potential buyer has the authority to make the purchase; the last thing you want is to waste your time sweet-talking an intern!

B2B business researching a target company should pick a target employee who’s high enough in the pecking order to influence purchasing decisions: a manager, department head, or an executive. 

Even so, over half of B2B businesses (59%) report that there are at least three stakeholders in the purchasing process, according to marketing consultancy Weidert. While this means your lead might have a say in the buying process, there might be other employees you or your lead will need to convince before making a purchase.

Even for B2C selling, there are always cases when a customer needs to run a larger purchase by a spouse, family member, or friend before making a final decision. 

There’s no point in selling to someone who has no control of the purse strings, so here are some questions to test if you’re speaking to the right person and if there are others you’ll need to talk to:

1. “Are there any other people whose opinions we should consider for this purchase?”
2. “What’s your usual decision-making process for purchases such as these?”
3. “Which team members will be using this solution the most often?”

4. Need

Need is by far the most important sales qualification for a buyer: do they feel like they have a pain point that your product or solution can solve? The more specific and poignant the need, the better a sales rep can tailor their pitch to bring that issue to the forefront of the discussion and highlight the product’s value in solving the client’s problem.

On the other hand, if a prospect is dodgy about what they’ll use the product for, they’ll likely never buy; after all, why waste money on a solution they’ll never use?

Remember our eager sales qualified lead from earlier, who expressed a desire to purchase? This is the part where you check to see if their perceived need is the same as the need your company’s product is supposed to solve.

Though a silver-tongued salesperson might be able to convince a lead that they have a desperate need for a product, this will only lead to impulse buys and regrets in the end – though the probing questions might vary by company, here are some general questions reps can ask to check if the prospect is aware of their problem:

1. “Can you tell me more about the issues you’re facing at the moment?”
2. “What key outcomes are you hoping to achieve with this purchase?”
3. “What made you decide to look for this solution?”

5. Timeframe

Finally, the last sales qualification is a sense of urgency for the solution: though a qualified lead or prospect may have the need and budget, if they don’t need to buy it now, they won’t.

Usually, this means that your client has a specific timeframe they need to make a purchasing decision by, there was a catalyzing event to convince them of a need, or a situation is rapidly declining to the point of no return. Here are some questions to check a lead’s timeframe for your solution:

1. “Is there a specific date we should aim to sign the contract by?”
2. “Why did you choose to pursue a solution now?”
3. “How soon are you looking to start implementation?”

Luckily, even if the lead doesn’t need the solution now, they might develop a sense of urgency down the line – if their need isn’t urgent yet, take a rain check on this lead, put a pin in their file, and check in with them periodically to see if their situation’s changed. Once their pain point exacerbates, you can skip the rest of the qualification and close the sale immediately.

Best Practices for Qualifying Leads and Prospects

Beyond checking for the right criteria when qualifying leads and prospects, here are some other tips and tricks to help you out.

1. Use lead scoring

You can have the most rigorous lead qualification process in place, but it won’t mean anything if your reps can’t make heads or tails of it or quickly communicate with each other about leads. A lead scoring system will help you keep all of your information in order.

In lead scoring, the lead scores points on a scorecard for every criterion they meet, alongside other metrics such as whether they’ve visited your website or talked to a rep. This gives a numerical value for how qualified each lead is, which is easy to compare and communicate.

A CRM can help you tabulate lead scoring automatically.

2. Build qualifying questions in your sales script

Then, as sales reps go prospecting and canvassing for leads, send them out with a sales script that naturally guides the conversation through points of qualification.

While a sales rep might be able to pitch wonderfully by themselves, it’d be awkward for everyone if, after a wonderful sales pitch, the lead was disqualified because the rep forgot to check for a certain company-mandated criterion. Naturally working qualifying questions in the script ensures each rep covers all their bases from the get-go.

3. Prepare to handle objections

More than half of potential customers say “no” at least four times before saying “yes,” meaning that reps need to be prepared to handle all the “I’d love to, but…” comments. 

Rather than bulldozing over a “no,” an objection is when a customer has a valid concern over their ability to purchase, usually relating to the BANT criteria: a lead has an issue with the price, can’t make the purchase by themself, don’t perceive a need, or don’t need the solution now.

Listening to and alleviating a customer’s concerns is called objection handling, and a rep’s skill at it is usually the deciding factor for a sale: a lead might be in the perfect position to purchase, but psych themself out of the final decision. It’s up to reps to overcome their objections and guide them to buy.

To help overcome objections, sales reps should remind the customer of their pain point and focus on the product’s value proposition and how it could solve the customer’s problem. 

Conclusion

A well-designed sales qualification framework keeps sales professionals efficient by helping them quickly identify the potential customers most likely to purchase. By tagging the most qualified leads and prospects early on, sales reps can focus their attention where it matters, bolstering the business’s conversion rates and turning more leads and prospects into happy customers.