What are Unqualified Leads: Identification and Management

Unqualified leads in a sales funnel can hamper advertising budgets, waste sales rep’s time, and impact the marketing team’s KPI reports. As marketers, we have often heard that not all leads that enter the funnel will convert.

It is harsh but the truth. A lot of leads doesn’t mean many conversions until you nurture and focus on the right ones. If unqualified leads are reaching the marketing team’s sales rep, businesses must look into their lead qualification method and optimise it.

According to research, 67% of lost sales are because of businesses not correctly qualifying their potential customers. There can be many reasons behind weak lead qualification methods, one of which is a need for a deeper understanding of what is an unqualified lead.

In this blog post, I will explore what unqualified leads are and how businesses can identify leads and deal with them.

Let’s get started with the basics.

Unqualified Leads vs Qualified Leads

Though both are part of the sales funnel, unqualified and qualified leads differ greatly in user behaviour during the buying cycle. Businesses must create a buyer’s journey to understand high-intent buying behaviour and integrate it with the lead qualification system.

Let’s understand the difference between qualified vs unqualified leads through definition.

Suggested Read: What are the Three Stages of the Buyer’s Journey?

What are Qualified Leads?

Qualified leads are individuals that have been identified as having a higher likelihood of becoming paying customers. They meet certain criteria of the ideal customer, such as having the right budget, authority, need, and timeline to purchase a product or service. In short, they are closest to one of your buyer’s personas.

But a close approximation of a buyer’s persona is not enough. A lead becomes qualified when it fully understands its pain point and what could be various solutions available for it.

Therefore, marketing-qualified and sales-qualified leads both come under the ambit of the qualified lead category. On the other hand, an information-qualified lead, though considered a warm lead, doesn’t pass as a qualified lead.

Some common user behaviour showcased by qualified leads is:

• High email open rate for email nurturing campaigns.
• High CTR for marketing campaigns.
• Download lead magnets.
• Attended a webinar.
• Booked and attended a discovery call.

What are Unqualified Leads?

Unqualified leads are potential customers who do not meet the criteria or standards set by a company for their ideal target audience.

For example, if a company sells enterprise-level software solutions to large corporations, a lead who is an individual freelancer would be considered an unqualified sales lead. Similarly, if a lead has shown no interest or engagement in a company’s products or services, they could be considered unqualified.

Such leads can enter the sales funnel at the awareness stage and are termed information-qualified leads. They are still in the research phase and do not fully understand their pain points.

Some common user behaviour showcased by unqualified leads is:

• Lack of interest or engagement with your product or service.
• Failure to provide accurate or complete contact information.
• Unresponsiveness to your communication attempts.
• Lack of understanding or knowledge of your industry or offering.
• Limited budget or resources to invest in your solution.
• Inability to make a decision or commit to a purchase.

The distinction between qualified and unqualified leads is essential in the sales cycle and marketing, as it helps companies prioritise their efforts and allocate resources more efficiently. Pursuing unqualified leads can be a waste of time and resources, so identifying them is crucial.

Understanding Reasons Behind Unqualified Leads

There are several reasons why a lead may be unqualified, including:

1. Budget constraints: If a lead does not have the financial resources to purchase your product or service, they may not be a good fit.

2. No decision-making power: When the lead does not have the authority to make purchasing decisions, they may not be able to move forward with a sale.

3. Wrong industry or market: If a lead is not in the industry or market that your product or service caters to, they may not be a good fit.

4. Poor timing: If a lead is not ready to make a purchase or is currently tied up with other commitments, they may not be a good fit.

5. Misalignment with your company values: If a lead’s values do not align with your company’s values, they may not be a good fit.

Identifying unqualified leads early in the sales process can save time and resources, allowing your sales team to focus on leads that are more likely to convert into customers.

How to Identify Unqualified Leads?

Here are some ways to identify unqualified leads:

1. Glued to Awareness Stage

The awareness stage of the sales funnel is the first stage in the customer journey, and having a solid content strategy is vital to effectively guide potential customers toward the consideration stage.

It is where potential customers are just becoming aware of their pain points and are seeking a solution. At this stage, the primary focus of the marketing efforts is to educate the new leads. This education process can take many forms, such as blog articles, social media posts, videos, webinars, whitepapers, and other types of content.

But if a user is stuck in the awareness phase for a very long time, it can be said that they are either conducting content research or unable to understand the content being shared with them.

2. Reluctance to Involve Decision Makers

If a prospect is hesitant to involve decision-makers in the buying process, it may indicate that they are either seeking a free solution or are not yet fully aware of the problems in their business.

While nurturing such leads can be a valuable way to build advocacy, it’s essential to ensure that decision-makers are involved in the conversation to address the organisation’s needs effectively and reach a conclusive point.

3. Check their Lead Scores

Lead scoring is a highly efficient part of lead qualification. It is a method through which scores are awarded to leads based on their interactions and behaviour with the brand. It is to be understood that some user actions are considered high value and some not so much.

For example, signing up for the newsletter and reading blog posts are positive actions but aren’t huge indicators of buying intent. Hence, such user behaviour ranges between +2 to +5 lead scores. Whereas booking discovery calls and a high email CTR indicates high buying potential and range between +10 to+20 lead scores.

By studying the way, a lead has acquired points and become qualified can reveal a lot about their buying intent. If a user has qualified but with a maximum of +2 or +5 actions and a minimum of +10 or +20 actions, they should not be considered a qualified lead.

A better way to sort this issue is by using negative lead scoring. You can read more about it in this blog post: How to Create a Lead Scoring Model.

In this way, we can effectively manage our lead scoring systems for better lead qualification.

What Should You Know Before Pursuing Unqualified Leads?

Before pursuing unqualified leads, you should keep a few things in mind:

• Time and resources: Pursuing unqualified leads can drain your sales team’s valuable time and resources. It’s vital to assess whether the potential payoff is worth the investment.
• Define your ideal buyer persona: Before pursuing any leads, ensure you clearly understand your ideal client. It will help you identify which leads are worth pursuing and which are not a good fit for your business.
• Qualify leads: Develop a clear and consistent process for qualifying leads. It assists in determining whether a lead is a good fit for your business and whether they are likely to convert into a paying customer.
  
  Suggested Read: 5 Steps to Build a B2B Lead Qualification Checklist

• Establish communication guidelines: Set clear guidelines for communication with unqualified leads. It will help you avoid wasting time on leads that are not ready to engage in a meaningful way.
• Keep track of your data: Keep track of your lead generation and conversion data. It helps refine your lead qualification and targeting processes over time and make more informed decisions about which leads to pursue in the future.

By keeping these factors in mind, you can approach unqualified leads more strategically and efficiently while maximising the potential return on your sales and inbound marketing efforts.

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Get Rid of Unqualified Leads

Unqualified leads can significantly impact the sales funnel, resulting in wasted resources and lower conversion rates. To avoid this, businesses must understand what constitutes an unqualified lead and how to manage and identify them.

By better understanding qualified and unqualified leads within the sales process, businesses can prioritise their efforts and allocate their resources more efficiently, resulting in higher conversions and overall sales success.

A robust lead nurturing system can help you persuade quality leads towards conversion; check out my guide to learn about it: B2B Lead Nurturing: The Ultimate Guide

Also, Check:

B2B Startup Marketing Guide: Key Elements and Strategies
Lead Nurturing Email Examples: Successful Samples to Follow
Proven Techniques for Generating Inbound Leads