J. David Green

Why the Term “Marketing-Qualified Lead” Creates Serious Confusion – Part I

SiriusDecisions made a brilliant contribution to B2B marketing several years ago when they created their Demand Waterfall. That “waterfall” is a metaphor for key funnel stages. It seems like everyone I talk to who works in the technology industry, which is an early adopter of marketing innovations, uses the Demand Waterfall framework. The concept is useful for any B2B industry with complex sales.

Part of the beauty of the demand waterfall vernacular is that it added descriptive language to the word “lead.” All too often, sales and marketing have very different definitions of what a “lead” is. With its Demand Waterfall, SiriusDecisions created a common language between sales and marketing by labeling key funnel stages. By benchmarking industry funnel conversion rates, SiriusDecisions provided B2B marketers with a powerful framework for evaluating their own conversion rates from one funnel stage to the next, identifying funnel leakage and best practices, and forecasting results.

The problem with the SiriusDecisions model is one of language. 

 What Does “Marketing-Qualified Lead” Mean to You?

To apply benchmarks to funnel stages, you need an apples-to-apples comparison. The problem is that “marketing-qualified leads” has two distinct meanings. For some marketers, “marketing-qualified” includes telequalification. For others, it doesn’t. In fact, the same marketer might very well route some leads to a telequalification function and other smaller, transactional leads directly to sales. This problem is further compounded because, as revealed in the 2012 B2B Benchmark Report, sometimes sales owns the teleprospecting function and sometimes marketing does.

Obviously, filtering leads through a telequalification process greatly reduces the number of marketing-qualified leads and improves the downstream conversion rates. So what are you really benchmarking? 

That’s why I break “marketing-qualified leads” into two funnel stages: “phone-ready leads” and “sales-ready leads.” 

  • Phone-Ready Lead:  Marketing has done whatever it can to suppress duplicates and enhance, score and nurture the lead until the lead is ready for a phone call – that call may come from an inside sales rep or a telequalification professional. 
  • Sales-Ready Lead:  The lead has been qualified via a phone conversation. In such cases, the teleprospecting rep has typically confirmed that the person participates in the decision process, has a relevant pain, and wants to talk to a sales person.  In short, the lead is ready for sales engagement.

Lack of clarity around funnel stages will lead to misunderstanding, muddled benchmarks, funnel leakage, and the adoption of sub-optimal practices. Do you think the terms “phone-ready” and “sales-ready lead” are an improvement?  Do you have a suggestion for more precise language? I welcome your feedback and will share additional thoughts in future posts on a new funnel paradigm for the complex sale.

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Lead Management, Lead Qualification, Marketing Strategy, Sales, Thought Leadership

  1. Ona Koehler
    | #1

    David, this is a very good observation. Without a clear definition of what an MQL is, benchmarking a company’s conversion rates would make very little sense.

    That’s why a central piece of the SD Waterfall model is the Level of Qualification (level 1 to 5) that marketing is responsible for before handing leads over to sales. This is what defines the MQL and the model is sensitive to how this definition varies from business to business and how it affects the conversion rates. The level of qualification, and in turn the definition of an MQL, depends on the type of demand, average selling price, length of the sales cycle etc. Often times the question becomes: “What is the most effective lead level qualification that a company should adopt”?

    Once the definition of MQL is established and agreed upon, it can unlock the power of the waterfall model as a performance measurement.

  2. | #2

    Thanks for joining the conversation. I agree and understand your point but still believe the phrase is imprecise, and imprecision is no friend of metrics or benchmarking.

  3. | #3

    What matters is identifying your funnel stages, assigning simple and descriptive names, socializing the construct with sales and marketing teams, and then sticking with it in execution. Every organization will have nuances which the construct and terms will need to adapt to.

  4. | #4

    Interesting points Dave. Clarity and alignment in the definitions are key. Conversion Rates may be a topic for future conversations. What should be the target “sweet spot” for a conversion rate from one stage to the next and is it possible for a conversion rate to be too good or too high. -MC

  5. | #5

    @Max Kalehoff
    Great points. Thanks for joining the conversation.

  6. | #6

    @Mike Clifford
    Great hearing from you and great questions. There’s definitely the potential that a conversion rate that is too high is negatively impacting downstream conversions and costs. The sweet spot conversions vary by industry. The best thing is to define the key funnel stages, measure your own conversions, and then set up experiments to optimize the funnel.

  7. | #7

    Hi David! This reminds me of the old school telemarketing terms, cherries and pits. Whether past or current tools used, everything starts with the marketing group whose task is to qualify the funnel, to produce an accurate list of potential customers to give to the sales group. This is made easier now with the help of automated tools like Audience Builder. The accuracy makes it easier for both sales and marketing to agree if a lead is totally sales-ready. http://bit.ly/ayeen2

  8. | #8

    Hi Ayeen! You’re absolutely about everything starting with marketing. Thanks for joining the conversation.

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