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In last month’s blog post we introduced the five core marketing processes essential to effective and efficient marketing operations. This month we will delve into the first, and most important of these processes, the lead management process.

I believe it is the most important because, if poorly designed and executed, marketing cannot accurately determine how many quality leads it is passing to the sales channels, and how much influence its activities are having on revenue. What could be more important than that?

List of Ingredients for an Effective Lead Management Process

The lead management process outlines the steps for tracking and reporting on leads as they are created and move through a funnel. During this process leads become qualified or disqualified, and eventually pass on to a lead development team and finally onto sales or channel partners.

A typical lead management process includes the following six components:

  • Definition of a sales ready lead
  • Definition of the various lead statuses in the CRM defined funnel
  • Design of the lead processing, routing, and related notifications
  • Design of the lead scoring algorithm
  • Development and agreement on a service level agreement (SLA) between sales and marketing
  • Establishment of funnel metrics

In the process of adding more detail behind each of these, I will include examples of these 7 egregious errors in each, and how to avoid them.

  1. Failure to involve sales in defining a sales ready lead
  2. Failure to add lead status values for purchased list imports
  3. Inclusion of call dispositions as lead status values
  4. Failing to create and use a contact status field
  5. Failing to periodically review and refresh the lead scoring algorithm
  6. Failure to measure and enforce the sales and marketing SLA
  7. Funnel metrics that fail to account for unusual lead flow patterns

Definition of a Sales Ready Lead

Simply put, if you are in demand generation, your output is largely sales ready leads that have the potential to become opportunities for the sales channel. As such, you absolutely require an agreement between sales and marketing as to what constitutes a sales ready lead. And the error too many firms make is allowing marketing to decide what constitutes a sales ready lead all by themselves.

The result is that junk leads from events and the website are tossed over the fence to sales, who quickly recognize them for what they are, and learn to ignore leads from marketing.

It is very important to get sales people and sales management in the room with marketing and knock out a definition that both can live with. Marketing may not be able to get the B.A.N.T. criteria (budget, authority, need, time frame) without the help of lead development reps (LDRs). So what info can marketing solicit through forms, data appending, firmagraphics and observed behavioral data? What info does a LDR have to add? All of this info will inform the lead scoring algorithm discussed below.

Definition of Lead Statuses

Ah yes, you might think this one is easy, take the standard set of values including Inquiry, MQL, SAL, SQL, and Disqualified, and we’re done … right? Wrong. There are a couple of errors here that I see too often.

First, people forget that if you buy a list, or otherwise get a set of leads that have had no communication with your firm, don’t even know how to spell your company name, you cannot import them as “Inquiry.” You need a lead status to reflect individuals who have had zero interaction with you. “Raw” is a good value for that. And whatever you do, do not market to them like they are in any of the other statuses. They are different and need special treatment.

The other error I see is that people put call dispositions into the lead status field for the LDRs; things like “Attempting Contact”, or “Left Vmail.” These are call dispositions, they are not lead statuses. If you have a LDR group, whose output is the MQL passed to sales, then the lead statuses you can add are MAQL (Marketing Automation Qualified Lead from your marketing automation lead scoring algorithm), LAL – LDR Accepted Lead, and lastly “Re-Market” – a place where the LDRs can send the leads when they are not ready to move forward. Do not put the LDR reviewed leads back into Inquiry.

Lead Processing and Routing Flow Design

So check out the graphic below; looks pretty solid right? You’ll probably tell me that Opportunities and Won aren’t actual lead statuses and so don’t belong on here, and they don’t have arrows of lead flow coming out of them really. OK, I get that, but this graphic represents how most people believe lead processing happens, and it is wrong in an important way.

How People Think Lead Processing Happens

How people think lead management happens.

The big error in the single funnel view is that it overlooks the funnel of SQLs that marketing helps produce from “Contacts.” In the most common CRMs, Dynamics and SFDC, you have a concept of Leads and Contacts. They are different objects within the CRM, and a person’s information should be stored in one or the other but not both simultaneously. Shifting a person’s information from the lead object by creating a contact to store the data is called “lead conversion.”

In the flow above people typically convert a lead in the SAL status to a Contact as it changes lead status to SQL, i.e. the final converted lead status is SQL, and it will remain as such forever since the person no longer exists as a Lead in the system, they are now a Contact.

Many companies neglect to create Contact status fields, or build a funnel, just like the one above, for Contacts. This is a big mistake, since many SQLs, who are Contacts, not Leads, will cycle back to being in a “Re-Market” state, and marketing will nurture them, warm them back up to MQL and want to pass them to sales again. Without the contact status field, which mimics the lead status field, you cannot do this, and marketing may be greatly underestimating their SQL production and consequent influence on revenue.

One last problem with the funnel metaphor is that the funnel ends in a purchase. The reality of lead management is that when a person becomes a customer you continue to market, and sell, to them, nurturing them to repeated sales and hopefully making them a customer for life. Your lead management model has to account not just for the first sale, but for the entire customer lifetime. We call this the customer infinity loop and we will cover it at a future time.

Lead Scoring Algorithm

The lead scoring algorithm is built into the marketing automation platform after sales and marketing have had their meeting to agree on what constitutes a qualified lead.

The big mistake people make here is thinking this is a “set it and forget it” situation. It is not. You will want to all agree on how many points from demographic, firmagraphic and behavioral data combine to yield a qualified lead.

Let’s assume for a moment that 100 points is the threshold for MQL status. Don’t change this bar. It will get locked into people’s heads and you don’t want to mess with it. However you can and should alter how many points are given to which attribute or behavior, thereby making it easier or harder to achieve the 100 point level. You can vary the rate at which points from behaviors decay back to zero. You are highly unlikely to get the lead scoring perfect right out of the gate, so be prepared to dial it in over the course of a year or more.

Document a Service Level Agreement (SLA) With Sales and Marketing

So you got agreement with sales on what constitutes a qualified lead, and they agreed to follow up on MQLs within 48 hours. Fantastic! Did you document this? I know you can measure MQL quality because that is what lead scoring helps do. You can measure the effectiveness of the lead score based on how many leads your LDRs or Reps are converting to SQLs vs sending to Re-Market or Disqualify status. But the error many firms make is that they don’t measure how long the leads sit in MAQL or MQL status, i.e. they don’t measure if sales is holding up their side of the bargain and following up promptly on leads. This is not hard to do. It could be as simple as adding a field to track “age in stage” in the lead status field, and it will show how long your hot leads have been sitting there. Failure of sales to follow up on hot leads is a tragic error.

Establish of Funnel Metrics

If you have implemented a suite of lead status and contact status values that are MECE (mutually exclusive and collectively exhaustive), then you are well on your way to being able to do funnel metrics with ‘no lead left behind’! The error that we see happening here is that people expect their funnel to operate in a nice linear fashion … leads progress from Inquiry to MAQL, to LAL, to MQL, to SAL and onto SQL. Good luck with that. They don’t.

For a start, you will have LDRs pulling leads forward when they (the LDRs) are idle, so they pluck the warmer ones out of Inquiry and make them LAL or MQL. You will run an ABM campaign that generates new leads in existing known accounts, and the best thing to do with them is convert them from leads to contacts and in so doing move them from being in Inquiry as a lead, to Inquiry as a contact. No, they are not automatically made into SQLs. These are just a couple of examples. These are tractable issues, you just need to prepare for them in your funnel metrics.

Next Steps

You probably already have a lead management process, and perhaps this litany of errors has inspired you to take a second look at it. Here is the priority order for your audit:

  1. Review the qualified lead definition with sales and marketing in the room together.
  2. Review your lead status values to ensure they are MECE and remap the values in any leads in your system that have deprecated values.
  3. If you haven’t set up contact statuses to measure SQLs generated from contacts, now is the time, especially if you are planning ABM campaigns.
  4. Examine the efficacy of your lead scoring. Plan a quarterly tweak.
  5. Start measuring the “age in stage” for leads.
  6. If you are not already doing it, start measuring not just the quantity of leads flowing through the funnel, not just the stage conversion rates, but the velocity (you will need “age in stage” for this). You’ll be surprised by which leads from which lead sources are slow movers…

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