We have run into a bunch of clients lately who ask questions like this:
- “Why can’t I attach Opportunities to Leads?”
- “I am using Contacts for my Employees and partner Contacts, not Prospects, how do I do an Email campaign?”
- “How do I attach sales history to Leads?”
The answer to all of these questions is the same: “It is simple–you don’t”
Questions like this point to one thing: Non-standard use of CRM sales vocabulary. If standard sales vocabulary is used, the answer to these questions would be obvious. It isn’t a recipe for disaster per se, it is a recipe for an ongoing pain in the butt because an organization using non-standard sales vocabulary will:
- Confuse every new employee hired
- Have CRM problems because even if they can get your CRM to support your private methodology and vocabulary, no third party tools will work properly.
- Confuse any partner organizations because their definitions won’t match yours
Here are the standard definitions in the CRM world (if not the world at large).
Leads are unqualified prospects; Leads are converted to Accounts, Contacts and Opportunities (sometimes called Deals in certain CRM packages) when they become qualified prospects. Therefore, Accounts are not just customers, they are prospects we have applied our full sales resources to and some of whom become customers and some become qualified prospects who did not buy anything (at least, not yet).
Someone fills out the form on the website and hits submit. A Lead is created in the CRM. The Lead is then goes through a process of qualification, either formally or informally–it remains an unqualified prospect until it is qualified. The process of lead qualification is the process of determining whether the prospect has budget, decision making authority, a need your company can address and a timeline to solve the problem (also known as BANT–an old school sales methodology term but it works in this example. Look it up.). Leads don’t get proposals. Leads get vetted. We vet leads to determine whether they are worth our time/resource investment (proposals, high level meeting, demos, etc.). Often, a company will have a junior salesperson qualify leads to determine whether the high priced sales resources should be applied. Once a Lead is vetted favorably (as a qualified Lead), it is then converted. If the Lead is determined to be unqualified, for example, if they don’t have budget, the Lead is closed as unqualified and it is not converted. Keep in mind, a Lead can be closed with an activity scheduled for it so that they are put on the newsletter list, or that a sales rep contacts them in the future to see if their qualification status changes (for example, that they have budget).
Lead conversion converts a Lead’s information into Account, Contact and Opportunity (and the Lead is set to Closed Converted state or deleted depending on the CRM). Generally speaking, the Lead fields are simply divided up amount Account, Contact and Opportunity on conversion. This means that the newly created Account represents a qualified prospect company, the Opportunity represents the specific sales opportunity and the Contact is the initial individual involved. At this point, the prospect is determined to be ripe (check marks in all the BANT areas) and it is up to our sales team and sales methodology to win or lose.
Opportunities track the sales process, typically going through stages like Requirements Gathering, Proposal Preparation, Proposal Submission, Demo given, etc. and they have two possible end stages. Closed Won and Closed Lost. An Opportunity with a Closed Lost end stage is sales department failure. We were in dialog with a qualified prospect and we failed to close them. An unqualified Lead, on the other hand, is a marketing department failure. Marketing has brought us in a Lead that wasted the Sales Department’s time/resources. If Opportunities should reach the end stage of Closed Lost because we find out after expending resources on them that they didn’t have budget after all, that is a failure of Lead vetting. Understanding the root cause of these failures can guide management to optimize their processes–maximizing return on marketing to provide qualified Leads, not just the most Leads, and enhancing Sales training, hiring and sales tools to maximize Opportunity Closed Won rate.
We can easily write a report or use a workflow so that Accounts with Closed Won opportunities have a “customer” flag. Accounts with only Closed Lost Opportunities can have a different flag. Management reports should highlight qualified prospect close ratios including those that are Closed Lost for poor lead vetting.