Sales reps don’t want to disqualify leads. Even if a lead doesn’t initially look like a winner, they still want to give it their best shot. They presume they have ability to show the true value of the product, to find the need for the client and — ultimately — close the deal.

Even if they can’t close every deal, the thinking goes that the more opportunity there is in the top of the funnel, the more there will be at the bottom, leading to more revenue.

But this mindset can be devastating for company and reps alike. It means hours of wasted time chasing bad leads, which results in less time focused on each individual prospect, which means less revenue for your company. Chasing every lead means that you aren’t fully focused on making your prospective customers, or your sales team successful, successful.

Here is why it’s crucial that you start a disqualification process within your sales and marketing team, and how you can set it up to make sure everyone wins.

Why It’s Crucial To Disqualify Early

Badly-qualified prospects lead to two significant issues within your company, both of which lose you revenue. By using up valuable sales reps on leads that are going nowhere, you are both wasting their time (and your money), and inflating your pipeline with dead end prospects.

It Takes Up Time

It’s a cliche, but time really does equal money. In sales, in particular, every hour wasted on a bad lead is an hour that isn’t spent moving a viable prospect further along the funnel.

For instance, if a sales rep has a $1M annual quota, then each hour of their time is worth $460. For every hour they spend with a lead that:

  • doesn’t have the budget for your product
  • doesn’t use a workflow that your product fits in
  • doesn’t have a particular need for your product

They, and the company, are losing $460. All these issues could be determined with an effective qualifying process, but if that process isn’t in place, with reps adhering to it, then not only is the company not making money, it is actively losing it as well.

Take the following scenario:

Here there is a nice martini-glass-shaped funnel, with plenty of initial leads being whittled down through the qualification process. But what happens if we allow a few more leads down our funnel; leads that aren’t really qualified and thus are never going to be Closed-Won?

The Effect of Qualification on the Funnel

In each stage, the funnel with 10% more initial “qualified” leads has more opportunities. These get sequentially disqualified in the different stages as the issues that should have been raised at the top of the funnel (or before) are found.

But at each stage they are now using up resources. In particular, they are using up $460-an-hour sales reps. If we use some average numbers for the length of each stage of the sales cycle, we can see how much time and money this is costing:

Stage Extra Opportunities in Stage Average Time in Stage Extra Days in Stage Extra Hours in Stage Extra Cost of Stage Evaluation 63 14 days 882 7056 $3,245,760 Buying Process 18 9 days 162 1296 $596,160 Fulfillment 6 7 days 42 336 $154,560 Total 30 days $3,996,480

From just these small increases in qualification rates in each stage of the funnel, it could be costing up to $4M.

It Can Screw With Your Metrics

When put side-by-side with the headline that your reps could be losing millions due to not disqualifying leads, the fact that it also could put your sales metrics out of whack might seem like a small concern. But again, not having an efficient disqualification process can cost you money.

There is always going to be natural loss in your funnel. Prospects making the informed decision not to purchase, or sudden changes to their company that were unforeseen. But if you allow badly-qualified leads into the funnel, then the likelihood that they are going to end up in Closed-Lost is 1. Therefore, they are skewing your funnel metrics, as they shouldn’t have been there in the first place. If you lose a prospect mid-funnel due to an issue that should have lead to their initial disqualification, it is a sign your qualification process has failed.

Above you can see how this can impact your sales funnel. Having more prospects within your funnel, but not ultimately converting those prospects to Closed-Won leads to a misrepresentation of your conversion rates between stages.

This type of mis-qualifying can bias your sales cycle as well. This can happen in two ways: 1) Sales reps or prospects artificially elongating a stage thinking it can still be converted 2) postponing badly qualified leads temporarily until they meet the qualification criteria.

For instance, if either postponement or indecisiveness lead to an extra 2 days on every cycle, using the average time in stage numbers from above, the full cycle (not including qualification) would go from 30 days to 36 days:

The Effect of Qualification on Sales Cycle

Not only does this take the cycle outside of a neat monthly window, it adds 20% more time on to the entire cycle. This means over the course of a year there are 2 less full sales cycles. Depending on the revenue for each cycle, this could mean further millions lost in wasted time.

By disqualifying early and often, your metrics will more closely track the valuable customers that will eventually convert. This means you can spend more time with them, and allow more time for your reps to be successful.

Setting Reps Up For Success

Getting only the best-qualified leads into your sales funnel means building a company-wide process around disqualification. When everyone in every stage is looking out for only the best customers that you can make successful, it means not only are you in a position to make them successful, but you are also making sure your reps will only be given the highest quality leads and that they are set up for success.

Pre-Funnel Research

The vast majority of disqualifications should come before opportunities get anywhere near the sales funnel. A well-planned research phase can help you identify the prospects that fit your ideal customer profile exactly, keeping the top of the funnel clean for just the most specific questions of the qualification process.

In the research phase, business development reps, or another established role within your company, can pare down possible clients in your target industry to just the potential customers that fit your ICP. They are looking for customers that are:

  • Ready—they have a specific problem that your product can solve.
  • Willing—they are ready to solve that problem and are actively looking for solutions.
  • Able—they have the means to solve the problem.

This is where alignment between sales and marketing is crucial. Once potential customers that fit your profile are identified, marketing can start a targeted campaign aimed directly at them. This has the effect of driving home the qualifying criteria, emphasizing to the potential customer that they have the need for your product, and that your product specifically is the solution.

If the BDR discovers potential customers just outside your ICP—perhaps with a need, but not actively chasing a solution, or currently without the funds to solve their problems—marketing can tailor specific messages to these prospects as well. Your BDR can then check in with these prospects again in a determined time frame (every 3 months), or when there is impactful news (the company received funding).

By defining a specialized phase to effectively pre-qualify your ideal customers, you can reduce the size of your funnel to only the very best possible prospects before they even reach the top of your funnel.

Disqualification Stage

Once the lead has reached the top of the sales funnel they will then go into the sales-specific qualification stage. As your sales reps pick up the lead from marketing/BDR, they need to immediately adopt a disqualify-first mentality: expect the lead to not be good enough and only move them on to the next stage when the rep is completely satisfied they could take them all the way to Closed-Won.

It’s at this point that the acronyms start flying around: BANT, CHAMP, FAINT, GPCTBA… there are plenty of choices. They all come down to expanding on the issues your BDRs identified that should make these ideal customers. At InsightSquared, the sales team uses RAMPACT. This allows the reps to dig much deeper into the pain points and abilities of a prospective client. It means they can find out everything that they need to know about a prospect quickly, and that they can qualify or disqualify them easily:

RAMPACT stands for:

  • Requirement—Does the prospect have a real, genuine need for your solution. This is the backbone of the whole deal, so finding out as much as possible is vital.
    • Questions to Ask: Is this solution a nice-to-have, or a need-to-have? What will happen if the problem is not addressed? What are the implications to the company if this problem is addressed?
  • Authority—No one makes a decision in a vacuum. In any large company, even the CEO might need legal or finance to sign off on a purchase. Beware getting caught with just a single contact at the company.
    • Questions to Ask: After your decision, what happens next? At what stage does legal and finance get involved?
  • Money—Obviously this is a vital piece of information. If there is no money available then, no matter what else, they won’t be buying your product.
    • Questions to Ask: How do you prove ROI? How did you set up your budget?
  • Priority—Any growing company is likely to have a number of competing projects running at once. Finding out where this particular project will rank within internal priorities can help you judge whether this is something they are going to take seriously or not.
    • Questions to Ask: Is solving this issue something you consider urgent? Where does this project rank in importance?
  • Action (Mutually Agreed Next Action)—This is an oft-missed step but one that can really help to reduce your sales cycle. Deciding with the prospect exactly what is going to happen next takes any ambiguity out of the equation. If you get mutual agreement on the next steps, then everyone has a clear objective.
    • Questions to Ask (In this case a statement rather than question): We’ll talk again this time next week, when I will have got you that extra material, and you’ll get your CEO on the call.
  • Competition—If your prospect is savvy, you won’t be the only solution they’r looking at. Know who or what you are up against so you can devise an appropriate strategy.
    • Question to Ask: Who else on the market are you looking at for this type of solution?
  • Timelines—Another step which is all about getting your sales cycle shortened and moving prospects between stages. It’s important that everyone knows what the timeline should be at at what stage a) you are at now, and b) which stages key decisions have to be made.
    • Questions to Ask: When is the earliest you’ll be able to make this decision? When do you want us to meet your key objectives?

Rest Of Funnel

Once an opportunity has passed the qualification phase, it should only be a matter of demonstrating the value of the product. If you’ve performed the (dis)qualification process properly, everything else should be in place for success. But that doesn’t mean reps shouldn’t be wary of any signs that the prospect could still be Closed-Lost. Warning signs might be:

  • A change in your contact within the company
  • Suggestions that the budget might need to be lowered
  • Less contact overall

Spotting these signs comes down to the individual reps own acumen, and the sales leaders ability to coach reps successfully.

No rep, nor company, wants to turn down opportunities. But by building a concrete disqualifying process you allow yourself more bandwidth for high-value opportunities, ones you know will end on closed-won conversions. Not only does it lead to more revenue, but it also means your metrics will be on-point, giving you a more realistic version of your sales pipeline.