Let's Talk About Lead Categories: Why They Matter and What Are The Most Common
Lead categories are the foundation of your sales process. If you don't define your lead categories well, you risk having a fragmented or misaligned sales team. Your ability to define and use lead categories effectively will determine how successful your organization is at generating leads, converting those leads into customers (or opportunities), and managing them throughout their relationship with your company. Lead categories aren't always easy to define—especially in the early days when many companies have been working without a formalized system for years. But if you can get alignment on these definitions early on, it'll pay off in the long run by helping keep everyone organized and focused on their true priorities: selling more stuff!
Lead categories
Lead categories are the primary categories in your business. They're the categories that bring in the most revenue and have the highest potential for growth. Let's look at an example:
You own a small clothing store with five locations, four of which sell clothing for babies and toddlers. The fifth location sells children's toys, but it isn't doing as well as you'd hoped it would be.
In this case, your lead category is children's apparel because it makes up 80% of your total sales volume and has shown consistent growth over time (as opposed to toys).
Why they matter
Lead categories help you to better understand the data in your system, and a well-defined set of lead categories is one of the cornerstones of good lead generation.
Lead categories are a way of organizing leads in your system. They give you another level of organization at which to look at your data, allowing you to see patterns that might otherwise be hidden by more general categories like "customer" or "prospect."
Lead categories are also useful because they help you to better understand the sales process—and thus how leads move through that process. For example, if most of your sales people are using Quora as part of their outreach strategy (and if most of those prospects aren't responding), then there may not be much point in continuing this type of engagement with them. By understanding how leads fit into specific sales processes and where they fall short, we can make better decisions about what works for our companies and what doesn't work so well.
Why they can be so difficult to define
The first step in establishing a lead category is to make sure it's easy to understand. This means two things:
It needs to be clear and unambiguous, so that anyone involved in the process will know exactly what they're dealing with.
It needs to be flexible enough that it can accommodate changes in a business environment, especially during periods of rapid growth or decline.
The importance of agreement
The first step to implementing a lead category strategy is aligning your team around a set of definitions. This may sound simple, but in practice it’s important to get everyone on the same page. You need to agree on what “lead” means, and how you define each type of lead so that everyone knows what they are working with.
Next up: the importance of agreement!
How to align your team around a set of definitions
Once you’ve identified and defined the key metrics for your company, it’s time to align your team around a set of definitions. This is a critical step in making sure that everyone understands their role in implementing the strategy and is able to be effective at it.
Here are some things you can do:
Make sure all team members understand what each definition means. If there are terms or concepts that are new to them, ensure they have time in meetings or one-on-one discussions with colleagues who have already had these conversations before.
Ensure each definition has been clearly articulated and visualized so that everyone understands how they will be used across the organization (e.g., on dashboards).
What lead categories to use
Lead categories help you organize leads in a way that makes sense for your company. They’re a way to group leads based on common goals, interests or behaviors. Lead categories allow you to view and manage your leads in different ways, so they can be used as a tool for segmenting and targeting your marketing efforts.
Lead categorization is not mandatory, but it’s highly recommended because it helps businesses like yours create more effective marketing campaigns.
Here are some guidelines on how to define lead categories:
Think about what people want when they contact you—what their goals are for reaching out, whether it's a demo or quote request or something else entirely. This will help you decide what types of activities each lead category should cover so that when someone reaches out via social media or email (or even via phone), the person on the other end knows exactly what kind of response is needed from them at that moment in time based on those initial interactions with potential customers/clients/audience members etcetera etcetera etcetera...
Marketing Qualified Lead (MQL)
The lead has been generated by marketing.
The lead has been assigned to a sales rep.
The lead has not been closed in the past 24 hours.
The lead is not currently in the sales process (no active campaigns or deals).
Sales Accepted Lead (SAL)
Sales accepted lead (SAL)
A SAL is a lead that your sales team has accepted. In other words, it’s a company that has agreed to purchase from you and will pay for it upfront or over time.
SALs are usually your best leads because they have already expressed interest in your product or service, with payment terms already agreed upon. This makes them easier to convert into customers than any other lead category. For example, if SALs make up 50% of all leads in your pipeline and 10% of those become paying customers, you would have twice as many paying customers compared to the rest of your pipeline combined!
Sales Qualified Lead (SQL)
A Sales Qualified Lead (SQL) is a lead who has expressed interest in your product or service, or it’s something you know they will need. A SQL is someone who has already done some research on your company and/or has approached you directly with questions about how to solve their problem. They may also have purchased from you before.
To qualify a lead as a SQL, ask yourself these questions: Has this person asked for more information about our products? Do they seem like the perfect target market for what we offer? How much does it cost them to buy from us?
Product Qualified Lead (PQL)
Product Qualified Lead (PQL) is a lead that has been qualified by the sales team as a potential fit for the company’s products. PQLS are the most valuable leads because they have been pre-qualified by the sales team. If you see a high number of PQLs in your funnel, then it means that your marketing strategy is working well and your product is being perceived as relevant and useful to customers.
How you define your lead categories will have a huge impact on your organization's sales process and lead management system.
Lead categories are a key element of the sales process. They help you to define your ideal customer and also drive the focus of your marketing and sales activities.
When defining lead category definitions, be sure to consider:
What is your current or planned organization structure?
What are the specific requirements for each role within that organization?
How do you plan on supporting those roles with your marketing and sales teams? If there are multiple people in these roles, how do they work together as a team?
Conclusion
As we’ve seen, the lead category that you choose to use can have a huge impact on how your sales team manages leads. If you don’t have agreement around what qualifies as a MQL or SAL and how those two different types of leads should be handled differently, then you risk confusing or frustrating your salespeople. This means they won’t be able to sell effectively because they won't know which type of lead they're dealing with when it comes time for them to close deals.
