Have you ever thought about how businesses find the correct buyers for their services or products? It’s all around nurturing and identifying qualified leads. This process reassures you that not every lead is created equal. A few are more likely to buy than others, and it’s these leads that can make a significant difference in your business. 

In lead generation, there are three main types of leads: marketing-qualified leads (MQLs), sales-qualified leads (SQLs), and high-qualified leads (HQLs). MQLs show interest, HQLs are highly promising, and businesses should assess the buying intent of each lead to prioritize resources.

This blog will take you through the different types of leads, ranging from those who just learned about your business to those who are likely to be your customers. 

Before we dive into the types, let’s get some basics straight and understand who can be classified as a qualified lead.

What is a qualified lead?

In simple words, a qualified lead is a potential customer – someone who’s interested in purchasing from your business but hasn’t made the decision yet. Qualified leads need to meet certain criteria, including behavior and demographics, as set forth by you.

Some examples of a qualified lead are a Chief Marketing Officer (CMO) who signed up for your webinar or a shopper who subscribed to your offers email list.

To make the process more qualitative, qualified leads are classified into three types, which we’ll discuss below.

Marketing Qualified Lead (MQL)

MQL is a lead qualified by the marketing team as more likely to purchase than others. Qualification here is undertaken mainly on behavior.

An example of MQL is someone who performs any of these actions:

• Visits your website frequently
• Subscribes to your newsletters
• Downloads a guide from your website
• Interacts with your social posts

MQLs aren’t part of the selling stage but are classified under pre-selling. They’re further passed on to the sales teams by different methods such as “closed-loop reporting.” Herein, the marketing team is kept in the loop (or informed) about the lead’s movement through the sales funnel. 

Sales Qualified Lead (SQL)

Once the marketing team vets qualified leads, they’re passed on to the sales team, where they’re known as SQLs. These leads are ready to become customers, showing increasing interest in your product or service. SQLs fall within the selling stage.

While your marketing team may be tempted to qualify leads quickly and pass them on to sales, determining the difference between each is crucial. Lead scoring between MQL and SQL phases ensures that the marketing team passes on only those leads ready to have a more serious discussion about their needs, encouraging them to convert.

But how does marketing know if they can convert an MQL to SQL? Some ways to identify SQLs are when the lead performs one of these actions:

• Registers for your targeted webinar
• Fill out contact forms on your website 
• Responds to your email

Highly Qualified Lead (HQL)

While everyone follows the MQL-SQL route, few know about HQLs.

Conventionally, an MQL becomes an SQL after it has passed the marketing team’s qualification criteria. However, marketing and sales teams have rarely been in sync, which affects the quality of leads. For instance, the marketing team could ask only a few questions regarding the prospect’s requirements, such as their name, designation, and email address.

Marketers and salespersons need to create and follow the Ideal Customer Profile (ICP) to convert MQLs to HQLs. ICP is a tailored, extremely specific outline of your ideal customer’s environmental, behavioral, and demographic characteristics.

To qualify leads based on your ICP, you need a sharper set of questions like:

• What is your Revenue/Profit?
• What is your Budget?
• What are your 6 or 12-month goals?
• What are you hoping to achieve with our product/service?
• What are the challenges you’re facing?
• When are you looking to get started with our product/service?

HQLs are always driven by your ICP and, therefore, are the ultimate decision-making buyers with a higher level of purchase intent. They’ll also have multiple interactions through just one specific domain (for instance, email) and can be tracked to that domain.

The Pros and Cons of Each Type of Lead

MQL- Marketing Qualified Lead

Pros

• It represents a large pool of potential customers who have displayed initial interest in your brand or offerings.  

• It provides valuable insights into your target audience’s preferences and behaviors through their website interactions, content downloads, and email engagement.  

• It helps you build a substantial email list for effective nurturing and lead cultivation.  

• It offers opportunities for optimization of marketing campaigns to improve lead quality.

Cons

• MQLs have a lower conversion rate compared to SQLs and HQLs, requiring significantly higher nurturing efforts.  

• There might be many unqualified leads that do not align with the ideal customer profile. 

• You need substantial resources to manage lead scoring, segmentation, and nurturing activities.  

• Converting MQLs into sales-ready leads can be time-consuming.

SQL- Sales Qualified Lead

Pros

• SQLs demonstrate a higher purchase intent and these leads are more likely to convert into customers than MQLs.  

• They align closely with the sales team goals and quotas, optimizing sales efforts.  

• Due to its increased conversion potential, it offers a better return on investment (ROI) for sales and marketing teams.  

• SQLs provide valuable insights for refining the lead qualification process. 

Cons

• You get a smaller quantity of leads compared to MQLs, requiring more focused lead management.  

• Demand more sales efforts and resources to close deals.  

• SQLs carry the risk of losing potential customers if not handled promptly and effectively.  

• Higher cost per acquisition due to the focused nature of SQLs.

HQL- High-Qualified Leads

Pros

• HQLs represent the ideal customer profile, significantly increasing the likelihood of a successful sale.  

• Offers the shortest sales cycle and highest deal value due to pre-qualified interest and alignment.  

• Requires minimal sales effort as HQLs are already deeply engaged and informed.  

• Enhances customer satisfaction and loyalty by delivering tailored solutions. 

Cons

• HQLs have the smallest quantity of leads, making them challenging to identify and acquire.  

• Requires a refined lead scoring and qualification process based on a well-defined ICP (Ideal Customer Profile) 

• HQLs might demand premium pricing or customized offerings to meet specific needs.  

• Demands higher personalized customer outreach approach when dealing with HQLs.

The Bottom Line

While MQLs and SQLs are data-driven enough to start with, your business should aspire to attract HQLs for better sales opportunities and higher revenue.

If you don’t know where to start, reach out to us. At Market Boats, we’ve automated the process of nurturing HQLs through our custom-built software CALS,  so that you get maximum returns on your marketing efforts.