"Most companies are either under-qualifying or over-qualifying leads," PointClear's Dan McDade told me during this week's episode of the Marketing Smarts podcast (you can listen to it above).

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On the under-qualification front, the culprit tends to be the "cost-per-lead" mentality. "Every year the demand for leads goes up," Dan said, "and the budget for leads goes down. So the quality of those opportunities continues to kind of go down and down."

Why? Because the easiest way to save money on leads is to spend less time qualifying them. However, when you pass along under-qualified leads to the sales team, reps get more and more picky about which leads they choose to pursue. As Sales acts on fewer and fewer leads, the value of Marketing's lead gen efforts declines in the eyes of company leadership, which increases the demand for more leads at lower cost. Thus is a vicious circle (or "death spiral") born.

On the over-qualification front, Dan points to the popularity of BANT-qualified needs. BANT, as you may know, stands for budget, authority, need, and timeline. The idea is that if you identify a prospect who has a need that your company can address, and that person has the authority and budget to act, not to mention a clearly defined timeframe within which he'd like to act, then that's a super-qualified lead.

To Dan, however, that's an overqualified lead that might not be a real opportunity at all. From his standpoint, all you really need is AN, authority and need—and for one big reason: "By the time a company has a budget and a timeframe in place for an opportunity, the chances are it's too late. The chances are you've already lost the business." 

How so? Well, it turns out that companies don't budget for all their purchases up front. Citing a report published by DemandGen, Dan pointed out that "at the beginning of any given quarter, about 27% of any kind of significant purchases over the next year or so have been budgeted, which means 73% have not."

Furthermore, if the company has already set a timeline for a significant purchase, then it is probably pretty far down the road toward making it. In that case, even if it does consider what your company has to offer, it may be merely using you as "column fodder" to demonstrate that it has considered all its options before going with the one it had already chosen. 

So what is the solution? Dan recommends three things.

1. A Common Market Definition

To make sure that you are qualifying leads properly, you first have to have a very clear idea of what you are trying to sell to whom. According to Dan, you need to say, "Here's the market we're selling into, and here's what we're selling into that market." 

2. A Common Lead Definition

Most problems arise because Sales and Marketing do not agree what constitutes a lead, qualified or not. Developing and adhering to a common market definition can go a long way toward remedying that issue. The leaders of the company must also agree on that definition and actively work to ensure that Marketing is delivering properly qualified leads—and that Sales is acting on them in a timely manner.

3. Measuring the Metrics That Matter

In the end, no system or process can be improved if its performance is not being measured and its components are not being adjusted based on those measurements.

In the lead management process, Dan says, you need to monitor what's happening every step of the way as a suspect becomes a Marketing-qualified lead, is then accepted and qualified by Sales, and is finally closed, either as a win or a loss (or "no decision"). 

By defining your market and what a "lead" means to your company, then measuring and analyzing the process as it is really functioning (or not), you will end up in a position where you can say, "Here's where we are; here's why we're where we are; and here's where we want to get."

As mentioned, you can listen to my entire conversation with Dan above or download the mp3 and listen to it at your own convenience. Of course, you can always subscribe to the Marketing Smarts podcast in iTunes and never miss an episode!

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Published on July 3, 2012