Defining MQL/SQL

I probably give input on what constitutes a "lead" to a different agency each and every month.

The ambiguity often comes from using the terms “marketing qualified lead” (MQL) and “sales qualified lead” (SQL), which are commonly found in SaaS businesses…which agencies are not. So, if you’ve asked your preferred search engine to “define MQL”, you’ll probably get an answer that doesn’t feel intuitive, which you’ll then retro-fit to your agency.

What is an MQL?

In SaaS (and some other businesses), an MQL is a prospective customer that has engaged with some of your marketing…maybe they’ve given you their email address in exchange for some content, for example.

The problem is that the businesses that this term was invented by can typically serve a wider range of “prospective customers” than your agency can. There are few geographical restrictions; they don’t have to pass a credit check; nobody cares if there are red flags in the initial conversations. They enter their credit card details and boom, job done, bonuses all round in the marketing department.

If we want to define “MQL” for an agency, we have to go up a level to another acronym: TAM, or total addressable market.

A total addressable market is the full list (whether they’re literally on a list or not, although I’d recommend trying to compile that list) of prospective customers that the business is able to serve.

For the avoidance of doubt, “able to serve”, in my definition is a client that:

• The agency is likely to be able to win (has the case studies; has the team; looks the part for, and so on); and
• The agency is likely to be able to do a good job for (and therefore make money from; upsell; and retain).

If we’re marketers, rather than growth hackers or whatever those guys like to be called nowadays, we might refer to this as our target segment. Sometimes we might hear ICP, or ideal customer profile. Personally, I’m a fan of the term “suspect”.

A suspect is someone we suspect might be a client we’re able to serve. This is based on:

• Firmographic information (their employer’s revenue is £Xm+; they’re based nearby; they are in our chosen sector - although be careful if you’re choosing to specialise by sector); and
• Demographic information (their job title is X; their remit is Y; they apparently have authority over Z; and so on).

(We’ll gloss over psychographic information for now because it’s hard to do, so few agencies attempt it.)

Part of the work I do when I’m advising agencies is to help them determine who they can serve and therefore who’s in their ICP/TAM/target segment/suspects list, so that, when a prospective client signals that they want to chat about your services, you can determine whether they’re a prospective client you can serve or not.

In my view, this is an MQL: a prospective client that is on your suspects list…or should be, if we’d known about them.

Maybe you’ve got access to some tools (and often you can use a combination of LinkedIn and a search engine) and can determine whether they’re a suspect without speaking to them, or maybe you can only do that when you’ve spoken to them. Either way, a prospective client is only a marketing qualified lead when you’ve established this information: they’ve shown some willingness to do business with us (by giving us their email address/turning up at an event/etc.) and we believe we can do business with them (because they match the criteria we’ve set).

Personally, I prefer the term prospect. As in, they’re a prospective client. Which means that my preferred terminology is Suspect > Prospect.

What is an SQL?

A sales qualified lead, therefore, is a prospect that we have decided to pursue: we’re answering their brief (or helping them to write one) and we’ve got some expectation that they’ll pay us some money at some point, because we both agree there’s a good fit there.

In my terminology, this is just a Lead (so we go Suspect > Prospect > Lead)...but, an SQL is a lead that’s been qualified by a representative of the Sales team, because they match our criteria and we match theirs (and I’ve previously written about how Ideal Agency Profile is just as important as Ideal Client Profile).

As well as the work I do helping agencies to identify prospective clients; this is another common challenge we address together: how do we decide what deals do we qualify into?

Why do I like Suspect > Prospect > Lead? Because it’s less likely that people will bring baggage to the term and it’s less likely that someone will ask their phone what it means and get a definition that doesn’t apply to them.

Where does this usually go wrong?

There are a few things that typically cause agencies problems:

• They’re so rigid with their ICP/TAM/target segment/suspects list that they automatically qualify out of everything else: if there’s a person in front of us who isn’t the norm, but who we believe we can do good work for and, crucially, we can win with very little effort in a non-competitive environment, then why shouldn’t we go for it?
• Every single brand who matches their ICP is automatically qualified: some agencies (if I’m being generous) have qualification criteria based entirely around demographic and firmographic information, which means that if a big brand calls, they are getting everything thrown at a response regardless of whether there are real buying signals. A good test is this: look at your criteria and ask whether you would pitch for Apple (or your industry equivalent) regardless of the ask.
• They qualify out of deals rather than qualifying in: the default stance should be “we don’t know if we can help, so let’s have a proper conversation and I’ll tell you if I can by the end of it”...not “we’ll have a chat and I’ll just check there are no alarm bells”.
• On that subject, red flags are waved at you and it’s your job to point at it and say “hey, what are you signalling here?” - it doesn’t mean “walk away”, it means “here’s something we need to address before we can continue”. Nobody is a perfect fit; you’re just trying to make sure that the fit is good enough.
• They get hung up on whether an “SQL” has to be an “MQL” first: did this touch marketing? The answer is yes, because marketing is your colour palette; your tone of voice; the clothes you wear; the name of the business; the type of people you hire…marketing is not just blog posts and social media content. Your positioning has a part to play in whether a prospective client gets in touch, even if that whitepaper you wrote didn’t (and once you accept this, you’ll probably spend more time on marketing strategy and less time churning out content).
• Their list of suspects/TAM/ICP etc. is too small or too large: if you can serve everyone then clients will just see you as a simp; if there aren’t enough brands then you can’t grow. There should be at least hundreds of brands on your list (David C. Baker says between 2,000 and 10,000…the man generally knows what he’s talking about).
• They don’t refine their suspects list: things change. Rise at Seven went from having a portfolio of clients paying £2,500 - £12,500 per month, to a range between £7,000 and £74,000 per month, in about 2 years. I don’t need to tell you that those businesses were different.
• They don’t qualify into a deal, so they scrap the suspect: just because what they want you to do now isn’t right, doesn’t mean that the business will never be a fit. The ask changes. When you tell them “no”, it means more later on when you say “yes”...as in, “we can’t help you on this occasion, but if you’re ever looking for X, Y or Z, give us a call”...and then please follow up!

Please do send me a message if there’s anything you’d add to this list!