What is lead qualification and how does it impact your success?

Lead qualification is the process of determining whether an “opportunity” is a valid lead. To be valid, it must be worth the cost of pursuing the lead. This should be calculated in steps with qualification criteria to be reviewed at each step to determine if the lead is still worth continued investment. These steps are often referred to as “gates” that must be passed to gain approval to pursue an opporunity.

Most lead qualification criteria look for show-stoppers, or things that would make the company uninterested. These include strategic fit, capability or performance gaps, size (people or revenue), and other considerations like insurance and bonding requirements or unacceptable contract clauses. 

Lead qualification should not be about whether you “can do the work,” but instead should be about whether it’s worth the cost of investigating the “opportunity.” Spending time researching, networking, and talking to your customers gets expensive. That cost is well worth it. For high probability leads. For low probability leads it can be a net loss. 

While at first glance it seems expensive, for unique solutions and complex services relationship marketing can lower the per-pursuit cost by increasing the productivity of your customer outreach efforts while simultaneously increasing your probability of winning. This is why for businesses where customer trust is critical before they will buy anything from you relationship marketing is critical.

What's the difference between lead qualification and bid/no bid decisions?

Regardless of how good you get at pursuing leads, you should not be bidding every lead that you qualify. You should be discovering that some of the leads that were worth looking into are not worth bidding. Lead qualification foreshadows the bid/no bid decision to come if the lead proves worthy of pursuit.

If relationship marketing and researching leads to discover that what it will take to win is expensive, proposal writing is an order of magnitude more expensive. The purpose of lead qualification is not to ensure that pursuits pass their bid/no bid decisions before proposal preparation. The purpose of lead qualification is to remove low probability leads before you even get to a bid/no bid decision. All leads are not worthy of a bid/no bid review, and bid/no bid reviews should not give consideration to everything the company finds.

Lead qualification when searching for opportunities online

When searching online for opportunities, lead qualification is really about creating keyword filters that can distinguish between business opportunities worth considering and opportunities that should be ignored. The challenge is that many words that are relevant to your business that you must use do not on their own indicate whether a lead is worth pursuing. This results in a lot of false hits. Sometimes you can use negative keywords that indicate a lead should be skipped.

And sometimes you have to read them all to understand the context.

This is where having good lead qualification criteria helps. What is the minimum size opportunity you are looking for? Size can be measured in many ways. Consider award value, number of staff required, or number of units produced or delivered. Consider contract clauses that are unacceptable and things like insurance or bonding requirements. The faster you can rule out bids that your company will not want to pursue the better. Those that remain are not qualified leads. But they may be worth putting the effort into qualifying. 

Make sure you collect feedback, regarding both leads that are worth pursuing and leads that are not. Use the feedback to constantly refine your filters. If you really want to improve the future of the company, track your leads all the way to award, and then use correlation with winning and debrief information to further refine your filters. Good lead qualification criteria will increase your company’s win rate.