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Whether your sales and marketing teams are crushing their numbers or they are struggling to generate sufficient pipeline, there is always a desire for more leads at the top of the proverbial funnel. As the head of an inside sales team or a demand generation leader, you’re probably having frequent discussions about increasing lead volume or improving lead quality. At better-aligned organizations, you’re likely having conversations about improving the conversion rate of your leads. However, the best organizations are figuring out how to maximize the yield on their lead flow.

If you are coming from a SaaS background you won’t need to be reminded of the importance of lowering CAC (cost of acquiring a customer). Or, if you are simply conscious of operating margins, then you probably realize that marketing spends a lot of money to acquire leads and the entire organization needs to do everything to maximize the yield from that spend.

There are a lot of strategies that can be employed to maximize funnel yield. One often overlooked area is getting the most out of your disqualified leads. That’s because there is often value to be found in disqualified leads, but you may be losing them in what Duck Duck Go founder, Gabriel Weinberg calls a “leaky bucket.”

As an inside sales or demand generation leader, there are some considerations for tracking and then acting on your disqualified or rejected leads. But first, let’s get some things straight.

What are Disqualified or Rejected Leads?

So, what is a disqualified lead? In a nutshell, once your sales team starts working a marketing qualified lead (MQL), they either qualify the responders, or they discard or disqualify the leads after a certain number of failed attempts to elicit a response from that person. The flow of leads could look something like the visual below.

Top Stages of a Typical B2B Marketing Funnel

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Use Disqualified Reasons To Understand Why Leads Qualify Out

One theme you will notice throughout this article is that the devil is in the details. Our friends over at RingDNA agree and wrote this awesome blog post about the importance of call disposition for inside sales teams. In a similar, granular way, when a lead has been unresponsive, or for some reason their contact information in your CRM is invalid, they should be properly disqualified with a reason attached.

I’ve seen many organizations use a disqualified status without capturing the reason, leading to contentious conversations between Sales and Marketing about lead quality. However, capturing the exact reason why a lead was disqualified can be very helpful. Here are a handful of common disqualified reasons I’ve seen used at companies. Please note, some of these reasons can vary based on your industry or specific sales process.

Example of Disqualified Reasons

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Salesforce and other CRMs can use validation rules to ensure a reason is required if a sales rep selects disqualified as the disposition status on the lead.

Train Your Sales Team On the Correct Usage of Disqualified Reasons

In addition to creating the fields to capture the disqualified reasons, it is critical to train your entire sales team on the correct usage of those fields. Don’t assume the shorthand definitions are intuitive. And, while I am not a fan of having too many reasons in your list, the more specific you are, the better. A lead tagged as having “bad info” should have both an invalid email AND invalid phone number. We should encourage our reps to try to get hold of a lead from all avenues possible.

At a previous company, the disqualified reason “competitor” was interpreted in different ways. Some reps used it to tag competitors who were entering the funnel, while others were disqualifying leads because they were using a competitive solution. What a huge difference! If all reps were using the latter definition, that would’ve been a gold mine for a competitive campaign at some point. Instead, we ended up with a mix of competitors with really good targets.

As you learn and iterate on your lead process and change definitions, it’s important to revisit this often. It should be part of every new rep’s onboarding process.

Track Disqualified Leads Coming Back Into the Funnel

Another important consideration is figuring out which of your disqualified leads are worthy of coming back into the funnel and which should remain out of the funnel forever. For example, a lead who indicated their name is Mickey Mouse with phone number 123456789 should be trashed. A term I’ve used in the past for this is the “graveyard.” You never want your graveyard leads coming back into the funnel, wasting the time of your sales team.

At the same time, you want to tag the leads that are worthy of re-entering your funnel in the future. As they mature, they may become sales-ready. You might want to bucket those into a “nurture” group. For example, below is how you might bucket all your disqualified reasons into graveyard and nurture.

Hypothetical Tagging for Your Disqualified Leads

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Understand Your True Rejected Lead Rate and Add that Metric to Your SLA

Now that you’ve figured out your true graveyard (junk) and separated out the leads with future potential (nurture), you can calculate your true rejected rate which is your disqualified leads sans the nurture. While many organizations have a service level agreement (SLA) around lead volume (MQLs delivered), it is a good idea to build in an SLA around the number of rejected leads. In order to keep your sales teams productive, you want fewer leads going to them that will be rejected. In the below example you can see the volume of non-workable (rejected) leads going down over time. This is partially due to improvement in lead quality and partially due to better filtering out of junky leads.

Rejected Lead Rate Over Time Shown in Blue

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Sub-Segment Your Disqualified Leads

And finally, the part I enjoy the most. Once we have a good process for tracking disqualified leads, we want to be able to slice and dice all of our segments to see where the worst leads are coming from. Which regions, campaigns, or channels are driving the least qualified leads? If you have a complex portfolio, you might want to breakdown the disqualified leads by product or by sales team. It helps to do this by sales rep as well to see if maybe a newer rep needs more training, or in some cases, reps are not fully trained on a new product and are inclined to qualify only the leads they know how to sell.

In this example, one specific product group had a higher reject rate allowing both sales and marketing to fix the issue in one specific area rather than make it a global problem with all leads.

Rejected Lead Rate for Different Products Versus Overall Rejected Lead Rate

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In this next example, we were able to monitor the rejected rate of leads for a specific channel where we were spending a lot of our marketing budget, and a high reject rate was an inefficient use of our dollars. By going granular with the disqualified tracking, we were able to isolate the issue to specific campaigns and improve the ROI for PPC driven leads.

Rejected Lead Volume and Rejected Lead Rate for the PPC Channel

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Use a Disqualified Leads Dashboard

As you read so far, there’s a lot you can do to maximize your yield on disqualified leads. A final critical factor is having one version of the truth or single pane of glass that inside sales and demand generation leaders can use to align. I highly recommend using a dashboard built in your CRM, Marketing Analytics, or BI tool that has select views for daily, weekly and other periodic retrospectives on how disqualified leads are performing. Remember, it’s not just about focusing on what is effective, but also cutting out what is ineffective that helps maximize your margins and reduce CAC.

What are some ways that you manage your disqualified leads? How are you trying to extract the maximum yield from the leads that have entered your funnel?

mm
Head of Demand Generation at InsightSquared
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