What is lead disposition?

Sales

by   Val Riley August 14, 2023

Lead disposition is a set of rules that govern how the sales team moves a sales qualified lead (SQL) to an opportunity, disqualifies it as inappropriate, or returns it to marketing for further nurture. It is a critical process in creating efficiency in your marketing and sales organizations, and in optimizing both inbound and outbound demand generation in companies of all sizes. 

If lead disposition rules and processes are not optimized and adhered to rigorously, you’ll run into the following issues:

• Clogged, inefficient pipelines
• Inaccurate forecasting 
• Poor data insights for marketing ROI

Simply put, lead disposition is a true point of intersection for marketing and sales and plays a crucial role in growing your business revenue.

Why is lead disposition important?

According to most sales experts, lead disposition is the single most important task for a sales person to perform. Simply put, qualifying a prospect out is nearly as important as qualifying a prospect in since it helps you maintain a clean pipeline. A clean, decluttered pipeline eliminates confusion as to what deals are moving and likely to close, thus helping sales leaders forecast revenue. 

A second benefit of keeping your lead queue clean is that it enables a continuous feedback loop so that the marketing team quickly gets the data they need to improve lead quality. They can tell if a lead is qualified, unqualified, or in need of additional nurture. 

Try this visualization: Think of the bucket of leads as a place that is not a permanent location. The goal should be for the marketing team to fill the lead bucket as quickly as possible and for the sales team to empty it as quickly as possible by moving leads into an opportunity, unqualifying them, or sending them to marketing for nurture.  

Lead disposition example

Let’s look at a basic example to illustrate how lead disposition works in an ideal world.

Step 1: A new prospect raises their hand

In this example, let’s say a prospective customer visits your website and requests more information by completing and submitting a form. She provides her name, email address, phone number, and company name, which is sent to your CRM via a web-to-lead form. This is a lead.

Step 2: Your sales team engages with the lead

Depending on your organization and the roles within it, that lead could be handled by a sales development representative (SDR) or an account executive (AE).  Either way, a member of your sales team follows up to learn more about the lead’s needs. After a brief discussion, the AE realizes that the lead is not actually interested in what you offer (now or in the future)  and does not fit your company’s ideal customer profile (ICP).

Step 3: The AE disposes of the lead record

Considering that the lead is not a fit now and will not be a fit in the future, your AE marks the lead as unqualified and then removes the lead from the CRM. Although this example seems rather straightforward, the reality is that most lead disposition scenarios are not so cut and dry. Most leads are not uninterested parties who mistakenly fill out forms. 

“Disposing” of qualified lead records

Many leads fit with your ICP but lack interest at this time. Others are highly engaged but do not directly align with your ICP, creating an overflowing list of quasi-qualified lead records. In short, knowing when to dispose of a lead record is rarely obvious—especially without the right set of rules and processes.

There are two ways to dispose of qualified leads:

1. Convert the lead to an opportunity in your CRM

The most common way to dispose of a qualified lead record is to simply convert it to an opportunity, contact, and organization. If you’re an Insightly customer, here’s how to convert a lead in a few clicks.

2. Revert the lead to a prospect in your marketing system

Another more likely scenario is that the lead is unqualified to move forward in the process now, but could in the future. If there is a possibility that the lead may be a fit for the future, the AE can return the lead to marketing for additional, long term nurture. Marketing teams accomplish this by sending out periodic, relevant messages like ebooks, webinar invitations, research reports, etc. that might pique the interest of the lead and keep your company top of mind for future needs. 

Perhaps the lead isn’t ready to move forward but wants to stay in the loop. Or, maybe the lead unexpectedly went ice cold. Having your sales team continuously reach out is a waste of time, and converting the lead to an opportunity does not make sense. If you’re using a marketing automation system that’s tightly coupled to (or is part of) your CRM, you may be able to dispose of the lead by moving the person back to “prospect” status. That way, the prospect will continue to receive your nurtures and communications without clogging up the lead queue.

Sales and marketing agreement on lead disposition

A key to setting up a lead disposition program is getting the sales team and the marketing team to agree on the program criteria. The marketing team may get frustrated if generated leads are seemingly tossed aside quickly as unqualified. The sales team may feel pressured to work leads  that they know are not going to turn into opportunities because the marketing team spend money and effort generating them. 

The answer lies in having a clear, agreed upon plan from the leadership of both teams that is understood and followed consistently. Many businesses accomplish this by creating a Sales and Marketing Service Level Agreement, often referred to as an SLA. According to Indeed.com, an SLA is defined as “an internal agreement between the organization’s sales and marketing departments that outlines and clarifies the responsibilities and goals of each department.” This detail of goals and expectations in a lead disposition SLA can head off any concerns and ensure marketing-sales alignment. 

Setting up lead categories

Part of your marketing-sales SLA should be the definition of lead stages. For example, when a lead comes in, it is often called an MQL or marketing qualified lead. When the lead is agreed to be worked by sales, it can be called a SAL or sales accepted lead. When the lead is determined to be qualified, it becomes an SQL, or sales qualified lead. With these distinctions in place, you can set benchmarks for performance, e.g. we expect 40% of MQLs to become SALs, 60% of SALs to become SQLs, and 70% of SQLs to generate opportunities. These can be solid data points to measure since they indicate the health of your lead generation motion, your sales-marketing alignment and your sales team effectiveness.

Benefits of a lead disposition program

Implementing a lead disposition program requires close alignment between sales and marketing along with buy-in from senior level staff. Agreeing on a shared set of definitions, rules, processes, data, and technology puts an organization in the best position to reap the full benefits of a lead disposition workflow. Such benefits include the following.

1. Clean pipelines

Lead disposition keeps sales pipelines clean and allows sales reps and their managers to focus on the right leads and opportunities. With a lead disposition process in place, sales teams can streamline their process, prioritize leads, and make data-driven decisions on how to best engage with prospects. 

2. Feedback loop for marketing campaign performance

Marketers cannot guarantee ever-increasing levels of return on advertising spend without outcome-based feedback from sales. Disposing of lead records (either through qualification, reversion to prospect, or deletion) provides marketers with the data-driven intelligence that’s necessary for making prudent advertising decisions.

To simplify it, here is an example of how the marketing team could use the lead disposition data. Leads that are being converted into opportunities quickly represent quality sources that should be a focus of the marketing team. Leads that eventually become opportunities represent a quality source as well, but would be prioritized lower than those moving quickly through the funnel. 

This example could be overly simplistic, though. For example, if the leads taking longer resulted in deals that were 2-3x the value of the faster-moving deals, there is certainly more value in the second type. 

3. Improved sales performance

Your sales team wants to do what they do best—sell. Parsing through dozens of random lead records each day is not an effective use of their time. Lead disposition aligns with their desire to sell by overcoming unnecessary clicks and decluttering the workspace.

4. Increase the speed and accuracy of forecasts

When pipelines are clean, salespeople and sales managers can easily see the deals that are moving through the pipeline and headed for a close. This helps create an accurate forecast so the full business can operate and make better financial decisions.

How does a CRM support lead disposition?

The Customer Relationship Management system (CRM) is the heart of your sales operation and is where your lead disposition will take place. By utilizing a CRM system, and customizing it to your processes, your business can track and manage leads effectively, ensuring that each lead is properly followed up on and no opportunities are missed. The lead disposition feature in CRM allows sales teams to streamline their process, prioritize leads, and make data-driven decisions on how to best engage with prospects. Overall, lead disposition in CRM is a vital tool that helps businesses optimize their sales pipeline and improve conversion rates and overall performance.

Insightly CRM supports lead disposition

Ready to put in a lead disposition process at your company? To ensure you have the best CRM for the job, check out Insightly. With easy customizations, Insightly can conform to your business and get your lead disposition process running fast. Get started with a free trial today, watch a demo-on-demand at your convenience, or request a personalized demo to see how your sales and marketing teams can align with Insightly.