How To Generate MQLs That Turn Into SQLs
It can be encouraging and disappointing all at once if your team has worked hard to generate marketing qualified leads (MQLs) but somehow they just aren’t converting to actual revenue. For SaaS stores, this can look like lots of sign-ups but few actual transactions. In a traditional B2B company, you might see a lot of activity — website visitors, webinar attendees, trade show booth visitors, and even direct requests for a quote — but conversion to sales is low. What’s going on? It can be tempting to point fingers, but this is almost always a system problem more than any particular team’s failing. Here’s a checklist to help diagnose.
You Need Data, Quantitative and Qualitative
To truly understand what’s going on in your funnel, you need data of course. SaaS companies tend to have a lot of quantitative data — product metrics and analytics track users’ every move as they browse the website, sign up, pause, click away, back, etc. B2B companies tend to have a lot of qualitative data — the customer said this, the sales team said that, and do their best to track it in a CRM. To really understand funnel conversions, you need both. Quantitative data gives you detailed, objective data about what leads are doing at every stage in the funnel, while qualitative (ie. actually talking to people) gives you more detailed nuance as to their motivations.
Too Much Focus On Short-Term
Sales teams often have intense pressure to close immediate sales, and that can result in the team following up with only immediate opportunities and ignoring MQLs unless they are handed on a silver platter. You get what you ask for.
To diagnose, check your data. What’s the average time to follow up on a lead?
As I argue in Your Funnel, 2 Quarters Out, the medium term is critical too and someone needs to be equally focused on working MQLs that may not materialize for a few more months. Careful sales management and balancing of incentives for the short vs. medium term is essential. Some teams will dedicate personnel to closing immediate deals, with others like inside sales reserved for following up on early-stage MQLs. In other cases, a team outside of sales can be entirely focused on MQLs until they are sales-qualified. It’s less about the org structure and more about ensuring someone is doing it.
What is a ‘Lead’ for you?
Not to be pedantic, but what is the definition of a “lead” or “MQL” for you? It is a vague term, and everyone has a slightly different interpretation. Get specific. Maybe for you, a lead is “a specific individual who has shown an interest to buy, either directly (e.g. by asking for a quote) or indirectly (e.g. by signing up, by spending a lot of time browsing specific material on our website)”. Get specific, and get aligned on this across the teams.
Once you have a clear alignment on what a lead is for your company, you set up a lead scoring system accordingly. Some lead scoring systems cast a wide net, including any repeat website visitors, any webinar attendees, etc. while others are more discerning looking for real clues of buying behaviour. The important thing is that all teams internally are aligned on what a lead means and what behaviour should be triggered when it occurs. In the former case where you cast a wide net, then the MQLs you reach out to will need more time and nurturing.
Watch out for management unintentionally exacerbating a disconnect by incentivizing groups in ways that don’t align! For example, if marketing or whoever is doing your lead gen is simply measured on the quantity of leads generated, you are bound to get some false positives. Again, you get what you ask for.
Not the Right Target?
Assuming you passed all the above — you have measurable funnel data and you have an aligned process to score and handle leads — but somehow they are still not converting… next it’s time to consider whether the leads are actually right for the business.
There can be lots of reasons why someone would attend sign-up to your SaaS site, attend a webinar, let you scan their badge at a trade show, etc. that actually don’t correlate with an intent or ability to buy. Measure on a regular basis what % of leads generated are actually in your target market. What % are actually your target buyer persona or target influencer persona?
If you are not attracting leads from your target market and they are not converting… then find a way to attract the target audience instead :) This sounds obvious but in practice it can be really hard to let go of 100 hard-earned MQLs just because they’re not the right target. But no amount of pitch decks and demos will “convince” the wrong target.
If you are attracting leads from your target market and they are not converting… either your target market is wrong, or there’s something about the conversion process. Let’s move on to the next step.
When Good Leads Don’t Convert
Reasons why good leads don’t convert to qualified opportunities:
- timing is not right — perhaps the product is very innovative and the market is just learning about it and preparing budget for it
- too competitive — inbound leads that very directly ask for quotes are actually not always great prospects, especially in a mature competitive market, because they are often just getting as many quotes as possible. They may even have a preferred solution already and they’re just contacting you to help validate their preferred option.
- no budget or authority — the person is very interested but just not close enough to the decision maker, or even close enough to influencing the decision maker
- lead doesn’t want to talk — some people simply won’t engage until they are absolutely ready to buy
- the “pitch” doesn’t connect — whereas all the above may not be within your control, this one definitely is. Sales is an all-hands-on-deck effort and all teams need to pitch in to prepare the right materials to support conversion from lead to revenue
- pricing — depending on the type of business, particularly in high-volume SaaS businesses, pricing can make a difference. It’s less about lowering your price and making sure you segment customers correctly to apply the right pricing model to the right segment.
- the product isn’t right — your marketing has tapped into a real problem and urgency, but somehow after they evaluate your product, there is a blocker. This is where qualitative data can really help to understand the gaps, whether through win/loss interviews or more informal feedback and conversation.
Lots of reasons why a lead may not convert into actual revenue, even if they are in your target market. This can be very frustrating, but there are also a wealth of intelligence in here about how to adapt your product-market fit. This intel is pure gold for growth, and it is critical to have a person or team on the front lines responsible for directly experiencing it and sharing it with the organization so that we can adapt quickly. If the team is not continually recording and sharing all of this rich intel, change that today. This is what will allow you to nimbly adapt your pitch, timing, product features and overall value prop accordingly.
When it’s Time to Pivot
If everything is aligned process-wise, you have a dedicated team whose primary focus is processing MQLs, a killer pitch deck and product, and the leads are all right in the target audience — but they’re simply not buying — another question to ask if whether you have the right target audience.
For early stage companies that don’t have product-market fit yet, this is a continual process of understanding the market and pivoting until you hit it right (see Do This 1 Thing For Product/Market Fit). Maybe the problem you are solving is not urgent enough, or you’re just ahead of the curve and not yet urgent enough, or what you’re selling is valuable for a different audience, or you need to change something about the offer or the message to better connect. For established companies, it is also possible that the world is changing and your target market that used to be so hot is now too competitive, saturated, or disrupted. Your target market needs a refresh.
It can be encouraging and disappointing all at once if your team has worked hard to generate leads but somehow they just aren’t converting to actual revenue. But somewhere therein lies some golden intel, the key to product/market fit to propel the business forward. Grab the data and stakeholders and start diagnosing!
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