If the C-Suite just happened to stumble upon a genie in a bottle, one of their three wishes would probably be to create a predictable pricing and revenue forecast model. When you can accurately predict your revenue, you can determine if you’re properly staffed, require additional raw materials, have the appropriate equipment on-hand, and so on.
Essentially, what you would need to know is the likelihood of each and every prospect, website visitor or lead becoming a client. Will they take the plunge and purchase your product or service? Or will they leave you bereft and heartbroken, never to be seen again? Once the metrics are worked out, and you know your typical engagement amount, it would only take a simple math equation to project revenue.
When building this revenue model, the importance of understanding the difference between a marketing qualified lead (MQL) and sales qualified lead (SQL) comes to the forefront. You may be asking, what on earth is an MQL and SQL? We assure you we’re not just making up words for the fun of it. But, before we discuss these terms and what they mean, we’re going to explore a couple preliminary stages that potential customers must pass through before they become an MQL or an SQL.
The path a potential client travels through before becoming a MQL or SQL includes the following stages:
Suspect
A suspect is a person who is at the very beginning of the buyer’s journey. At this stage they are simply “perusing,” be it on your website or in the aisle of your retail store. To them, their anonymity is sacred. They aren’t actively seeking out the help of your company representatives because they’re not even sure what product or service they need yet.
Inquirer
We want to make this very clear: someone who makes an inquiry is not a prospect or a lead. Instead, they are at the top of the funnel, or the research phase of the buyer’s journey, and are trying to collect the information they need to determine if they should take the next step and become a prospect. Individuals at this stage are sometimes considered a “contact.” Just because a person asks a question doesn’t mean they are ready to make a purchase. If you want them to advance to the next phase of the buyer’s journey, you should provide them with educational content and not bombard them with your product features.
MQL vs SQL
Once an individual reaches the prospect stage, they first become a MQL and, if they continue to progress through the sales process, they will eventually graduate to a SQL. So, what’s the difference?
An MQL is a prospect who has taken some action, or a series of actions, that indicates they have an interest in your product(s) or services. Perhaps they downloaded several white papers, attended a webinar, watched an online video or passed a lead score threshold. At this stage, the MQL is not ready to buy, and they are still not ready to talk to a company representative. Instead, they are considering their options and determining if they have enough information to start a conversation.
Once a MQL has collected all the information they need to determine your company is the one, they then transform into a SQL. The key indicator that the prospect has advanced to this stage is that they have raised their hand and shown a desire to speak to a member of your team. Examples of a prospect becoming an SQL include registering for a demo, an audit or an assessment.
Now that you have a SQL, this prospect is officially handed off to the sales team whose sole goal is to convert them into a client.
Incidentally, the typical conversion from MQL to SQL is 25%. In other words, for every 250 MQLs in your pipeline, you can expect about 60 to become SQLs. And if your close rate is 40%, you now know that from the original 250 MQLs, you should generate about 25 new clients. To take this example a step further, if your typical annual engagement amount is $5,000 per client, for every 250 MQLs, you can expect to generate about $125,000.
As demonstrated above, when you have a documented sales process with analytics that clearly show the percentage of MQLs who become SQLs and then clients, it’s easier to build your revenue model.
Now that you know your metrics, if you want more revenue, all you have to do is generate more MQLs at a rate that will trickle down to the revenue you desire.
Generating More MQLs
So, how do you generate more MQLs? Remember this axiom and your challenge of filling your pipeline with prospects will become much easier: “More offers equals more conversions. More conversions equals more MQLs. More MQLs equals more SQLs and more SQLs equals more clients.”
There is one other factor we need to address. In order to get you the number of MQLs needed to hit your revenue target, you need to have sufficient traffic to your website so suspects and inquirers can act on your offers and identify themselves as legitimate MQLs. Traffic is the final piece of information you need to plug into your revenue model.
What you’re looking for is the conversion rate of visitors to MQLs. However, because it may take several visits before someone becomes a MQL, this calculation can be tricky. The easiest way to figure out the visit to MQL conversion rate is to use lead scoring. You then want to determine what percent of your website visitors reach the score you determine to qualify a lead as a MQL.
Once you know the number of visitors it will take to generate a MQL, you now know how much traffic you need to generate to get you to your MQL, SQL and revenue number. With the foundation completed, your goal now is two-fold: drive traffic and continue to optimize your offers so it takes less traffic to accomplish your goals.
If you aren’t driving sufficient website traffic and/or not getting enough MQLs and SQLs to meet your revenue goals, you may need to change up your website design or marketing plan. Schedule a session with a Stratus marketing expert to discover areas of improvement for your marketing efforts. They can review your website and provide suggestions for maximizing your revenue cycle and generating more leads.
