When we’re conducting a sales and marketing assessment, one of the first questions we ask is, “How do you define a sales qualified lead (SQL)?” The typical response is about five minutes of explanation that basically comes down to, “I can’t quite tell you what it is, but I know it when I see it.”
As we dig deeper into the assessment, we learn that most companies have no formal SQL process and often go to proposal without ever completing a defined qualification process.
Anyone who knows me or who reads this blog, knows that there are three principles I hold sacred when focusing on revenue growth:
- The goal shouldn’t be growing revenue, but growing revenue in a predictable, repeatable and sustainable way.
- The key to making this happen is total alignment between sales and marketing.
- Data should be used when making decisions on how to evolve and improve systems and approaches.
Without clearly defining a sales qualified lead, it is simply impossible to meet any of these principles.
The Three Most Common SQL Definitions
Craig Rosenberg, Chief Analyst at TOPO, a sales development research and advisory company, shares the three most common definitions:
- BANT Key Criteria: Budget Authority, Need, Timeline. The buyer has a defined project with budget and timeline established.
- ANUM: Key Criteria: Authority, Need, Urgency, Money. Buyer does not have a defined project, but the right elements exist to establish one. Focus here is on authority and need, but urgency and money must be at least loosely defined.
- AN: Key Criteria: Authority, Need. This definition eliminates the need for budget and timeline, and instead focuses only on finding the right person and the right company.
The definition you should use is highly dependent on the product/service you are selling, the complexity of the sale, the maturity of your market and how your customers manage their buying processes. While BANT has historically been the most popular definition, that is no longer true.
As solutions become more complex and customers become more sophisticated, it’s often more effective to use a broader definition like AN or ANUM. At Imagine Business Development, we use slightly altered version of AN.
The Implication of Your Sales Qualified Definition
BANT is certainly the simplest definition to use. Once someone has met that definition, it’s an easy all-go decision for your sales efforts. However, as mentioned, if you’re offering something that isn’t purchased frequently, is disruptive, has a very high value, or doesn’t have a large volume of prospects looking for you, then you’re most likely better served with another definition.
When moving toward ANUM, AN or another other broad definition, it’s important to note that there is still qualification to be done by the new business salesperson. It is also highly likely that the prospect will not fully understand their need for your product/service. As a result, you need to make sure that your sales team begins with a discovery approach, and doesn’t jump right into a feature/benefit dump.
The upside is that you are entering the opportunity much earlier in the sales process and you have the opportunity to create demand and move beyond price. That said, your success ratios will appear to be worse because there will be a higher percentage where there’s either not a full fit or the timing isn’t right. An effective nurturing strategy can improve those results.
The Importance of Clearly Defining Your Ideal Client Profile (ICP)
I often liken a growth focus to the bowling alley. Your ideal customer profile represents the “head pin,” and it is crucial that you clearly define the attributes you are looking for.
Your ICP should clearly describe:
- The types of companies you’re pursuing.
- The size and scope of those companies.
- The buyer personas within those companies that you are looking to influence.
A clear ICP allows your lead generation and sales development team to understand whom they should be pursuing, and who they shouldn’t be..
Taking the time to define what an SQL is to your company and understanding your ICPs will help you shorten your sales cycle and allow you to sustainably accelerate profitable growth.