August 10, 2023
July 3, 2023
In the complex landscape of B2B sales, understanding the journey of a lead through the sales funnel is vital for business growth.
But with all the jargon linked to these stages such as lead, MQL, SQL, conversion, lead generation, etc. the typical marketer can quickly feel overwhelmed and lose focus on the critical stages. This can lead to hours spent optimizing the wrong stages of the sales funnel and missed scaling opportunities.
Let’s clear the clutter and put all these terms into perspective.
Conversions – Simple, Yet Misleading
Most B2B marketers are aware of the difference between lead and client/customer. They also understand what conversion and conversion rate are and know that these need to be tracked and optimized. However, the complexity arises when we overlook the fact that conversions occur at different stages in the sales funnel and do not exclusively relate to the final purchase of services or products.
A conversion occurs when a website visitor or potential lead performs a desired action in response to your marketing message or effort. This conversion can happen on your website, ads, social media posts, or any other touchpoint you have with your target group.
There are many actions performed by our leads in their customer journey that can be considered conversions. They could be as minor as downloading your brochure or clicking on a PDF, or more significant and closer to the buying stage like making a call or sending an inquiry via your contact form. And then there is the final purchase where the lead is converted to customer/client.
It is not unusual for a marketer to look into conversion rate optimization focusing purely on one conversion – usually either the contact point or the final purchase. Problems occur, however, when we overlook the fact that we have many conversions and touchpoints during the customer journey. Focusing only on the end of the buying process can easily result in missed business growth opportunities.
Sales funnel stages
By positioning each of the terms into the correct sales funnel stage and explaining the conversions necessary for them to progress from MQL to SQL to client, we get an overview of the buyer’s journey and identify specific points to optimize.
Knowing who is responsible for handling the leads at which stage and which actions are needed to push them further down the funnel will make it easier to increase conversion rates or to scale the number of relevant leads.
1. Lead
These are new visitors in the awareness stage of the sales funnel that just found out about the company via marketing efforts like content marketing, ads, or post shares on social media platforms.
They might have been Googling for information and found your blog article in the search results and then downloaded an e-book, a brochure or signed up for a newsletter. These are soft conversions used mostly for brand awareness which build on the chance of the brand being top of mind when the lead discovers they have a problem and starts looking for a solution (the service or product your company offers).
The leads might also be new website visitors that are already aware of a problem and are actively looking for a solution. They might find your product or service on Google by searching for very specific buyer ready keywords (the ones your landing pages are optimized for). They might click on your e-mail or phone number, but never actually make a call or send the mail in.
At this stage, the marketer is in charge of all the processes and efforts that go into lead generation.
2. Marketing qualified leads (MQLs)
The Marketing qualified lead is actively searching for a solution to their problem in form of a product or service. They evaluate your company based on the marketing messages in your ads and the content on your website. Based on this evaluation, they perform a hard conversion on your website or ad. They call you, write an e-mail or fill out your contact form asking about your product or service.
They have shown interest in what you are selling and have sent you their contact information (phone number, e-mail) or have asked for a meeting.
This is where the sales department makes the first qualification of the leads based on their interaction with them.
Some MQLs will reach out with a mail or contact form asking to be rung up, but for whatever reason, won´t answer when the sales person calls them on the phone. Some might answer, but say that they have already purchased a service from another company. Some might have misunderstood your ads and website content (or didn´t bother reading it properly) and thought you were selling something else. Others are perfectly clear in what they want and what you have to offer but their budget does not match your prices or their expectations don´t match what you are offering. These MQLs are marked as irrelevant leads.
The rest (the relevant leads) get moved further down the sales funnel and become SQLs.
3. Sales qualified leads (SQLs)
The Sales qualified leads (we also call them relevant leads) are in the evaluation stage of the sales funnel. During the first call or initial meeting it was clarified that they understand what you are selling and that your product or service solves their problem. The sales representative and the lead agree on a product, service or a combination of the two that can solve the lead´s problem.
The sales department is in charge of this entire stage. It is up to them to further convert the SQL into client and to inform the marketing department if they can see the same problems popping up with their SQLs.
4. Opportunity
An opportunity is an SQL that is very interested in your service or product, they have been very engaged during your phone calls and meetings and have received a deal offer from you. The only thing that is left for them to do is to say yes or no.
Some companies have a very clear distinction between SQL and Opportunity and some do not. It all depends on the product and service they offer and the decision making process at the company of the SQL.
As an example, your contact might be put in charge of researching possibilities and finding the best service provider or product on the market. This doesn´t mean that they have the power to say yes to the deal that you are offering them and they might have to get approval from the company CEO or a Board of Directors.
5. Client
I guess we do not need to explain this one too much. They received a deal offer and they said yes! The contract is signed and now the ball is at your court. Make sure you deliver what you both agreed on and to nurture the client even after the service or product has been delivered.
Conversion rates: your tool for finding faults in the sales funnel
A high conversion rate indicates that your marketing and sales efforts are working well, leading to more clients and increased revenue. Conversely, a low conversion rate could hint at potential roadblocks in your sales process that need to be addressed.
Analyzing conversion rates at each stage can help identify bottlenecks where prospects might be dropping off before becoming customers. By focusing on these bottlenecks, you can improve your overall business growth by increasing the number of qualified leads who eventually become paying customers.
So, here are the conversion rates for each stage and the problems they could be indicating.
Web visitor to MQL conversion rate
This conversion rate gives you a percentage of your website visitors that made a conversion. A low conversion rate here can indicate problems with your content and your ads (unfortunately in a very general sense).
It is possible that the keywords you use in your SEO and Google Ads have a different search intent than what you expected. As an example, you could be using a keyword like “web development”, which describes a service, but when used on Google returns very informational content mostly connected to educational programs. As expected, the conversion rate of the traffic from that source wouldn´t be very high.
There might also be a problem with the CTAs. Are they clear? Attention grabbing? Do they all work? User testing is your best friend here.
The content is a common issue for many websites. Do you answer any frequently asked questions? How often are the leads confused about or misunderstand your product or service?
The formula of Web visitor to MQL Conversion rate:
Number of MQLs / Number of website visitors = Web visitor to MQL Conversion rate
MQL to SQL Conversion Rate
This metric gives you insight in the percentage of irrelevant leads. It’s one of the best ways to determine lead quality and an excellent indicator of how well your marketing team is at creating content and ads targeted at your relevant leads.
Comparing which sources and channels the irrelevant leads came from is the best way of finding marketing campaigns that are not worth your while. I often use this group to determine which keywords we should remove from our Google campaigns or which landing pages need work.
Finding patterns in this group can be an amazing tool that can help you save money in your ads, but also help you find campaigns that consistently produce high quality, relevant leads which can be scaled if you increase the budget.
At this stage the communication between the marketing and sales departments is of extreme importance. Both the departments need to be on the same page when it comes to the definition of an irrelevant lead. Are irrelevant leads those that wrote to you but never answered when you contacted them? Even when their mail clearly described that what they were after matches your product and service? What about leads that are very interested in your product and services, but do not have sufficient budget?
Ask questions and don´t forget that it is ok to update the lead list if it turns out that the irrelevant lead ended up buying your services in the end.
The formula for MQL to SQL Conversion Rate is:
Number of Sales Qualified Leads / Number of Marketing Qualified Leads = MQL to SQL Conversion Rate
SQL to Win Conversion Rate
The sales metric SQL to win conversion rate is the percentage of sales qualified leads that convert to customers (deals won). By monitoring the conversion rate at this stage, your team will be able to identify potential problems and opportunities to improve the overall sales cycle.
This conversion rate helps you understand the efficiency of your deal closers and find issues in your final sale stage.
If the conversion rate is low here you should be looking into solutions immediately. There is very little point into pouring vast amounts of money into the marketing machine if the leads don´t turn into clients in the end.
Are you asking about the reason for the decline? There is not much to lose there when you already got a decline and it might help you find and fix problems. For example, if the answer is consistently “You are too expensive” you might need to look into your pricing or become more efficient at relating the value of your products or services.
Are they taking a long time to get back to you or do they just disappear without sending an answer? Make sure you have a framework set up for follow ups. Set up a meeting right away when you send a deal or schedule a call with the potential client so you can go through it together.
The formula for SQL to Win Conversion Rate is:
Number of Deals Won / Number of Sales Qualified Leads = Win Conversion Rate
In conclusion, understanding the journey from lead to client is crucial in B2B sales. A clear grasp of the terms and stages involved can help marketers focus on the right stages and optimize their strategies for better conversion rates and business growth.
And if you would like to download the sales funnel map used in the article, you can find it here.