Leads are the fuel in your sales funnel, but not every person in your sales funnel is a lead. Wasting time on unqualified leads that never materialize into paying customers is one of the biggest marketing & sales problems emerging tech services founders face. In this article, we’ll take a look at some of the common reasons why tech services sales funnels fail to properly qualify leads and how fixing it can make the difference between a sales pipeline that converts and one that drains your resources.
Every organization is different, and there can be myriad reasons why a particular organization struggles with a sales funnel that seems to fill up with unqualified leads. But, across several such organizations, a few common patterns emerge.
Sales & marketing teams in startups often rely on their gut instincts - or those of their founder - to evaluate leads. Startups are often in the process of developing operational processes as they go along, and lead-scoring mechanisms are part of that. But without a well-structured and clear lead scoring mechanism, your sales team can end up spending time on prospects who aren’t the right fit.
Buoyed by enthusiasm and the potential of your chosen emerging technology, a lot of startup founders mistakenly believe everyone could benefit from their services. This is not true. Emerging tech services often cater to niche markets, meaning your outreach must be highly specific to attract the right people. The best-fit or ideal customer profile goes hand in hand with your company’s positioning. If a marketing strategy targets too broad an audience, it will attract unqualified leads that don’t align with that ideal customer profile.
If your Sales and Marketing teams aren’t tightly integrated and working together, it will show up in a number of things - including lead qualification. Your Marketing team might bring in leads that Sales find unqualified, and vice versa. A problem like this points to a lack of clear definitions for Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs), which can lead to confusion, friction between the teams, and loss of productivity.
Once you’ve identified the problem, there are a few best practices you can put in place to resolve lead qualification issues.
We’ve talked about the importance of a CRM as part of your toolchain before. Your CRM is the key to insights into funnel performance. What sort of customers have you sold to in the past? Which ones were the best to work with? What needs did they have? You can review your CRM data to identify characteristics that define high-quality leads for your business and adjust your lead qualification criteria accordingly.
Make sure there’s no confusion when it comes to evaluating leads. Establish clear criteria for what makes a lead worth pursuing. Consider factors like budget, decision-making authority, need, and timeline. A standardized qualification checklist ensures consistent handling as opposed to ad hoc decisions, preventing your team from chasing low-value prospects.
A robust lead-scoring mechanism should assign weighted numerical values to different factors, such as company size, engagement level, and previous interactions. It needs to reflect the lead qualification criteria you decided on earlier, including the fact that different factors have a different impact on lead quality. But it should also be adaptable to accommodate changes as you iterate over the sales process and learn more about your ideal customer.
If your marketing efforts are casting too broad a net, you need to rectify that. Fine-tune your messaging and tactics by using detailed segmentation. Incorporate personalized messaging wherever possible and make sure your strategy is aligne with your ETS’s positioning. If you’re worried about fewer leads, don’t be - it’s a better use of your company’s time and resources to focus on the right people who are looking to buy from you, even if there are fewer of them, than to squander those efforts on the wrong people who are not going to convert.
Keep your Sales and Marketing teams functioning smoothly in close collaboration. Schedule regular meetings between them to discuss lead quality, share feedback, and make necessary adjustments in the approach either team takes. Go over your lead qualification criteria and scoring mechanisms to ensure they not only understand them but also actively use them in their everyday operations. Over time, build up a shared understanding of lead characteristics and remember to evaluate your criteria regularly as your understanding of your market, your ideal customers, and your own positioning shifts.
Keeping your sales funnel flowing isn't just about attracting more leads—it’s about attracting the right leads. There is an opportunity cost associated with focusing on the wrong people, and it directly eats into the bandwidth you have to focus on the right people. Fixing this requires evaluating where your lead qualification process is breaking down and taking deliberate steps to fix it. The right approach can transform your sales pipeline from chaotic to high-performing, setting your company up for long-term success.
At Vixul, we spend a large part of our time reviewing the forecasts created by the founders of our portfolio companies. It is amazing for us to see our founders mature as executives and be able to answer questions they couldn't in the past. Unfortunately, most founders struggle with these issues until we point them in the right direction. We believe the lack of guidance on forecasting is a primary issue for early-stage tech services founders.
That's why we're working on an eBook with detailed instructions on how to set up forecasts for sales pipelines. This will help you plan your new year with better foresight. The book will be free for people on our mailing list when it is published, so please subscribe now to ensure you receive it.