What is lead management? Definition and best practices

Like a skilled gardener tending to a diverse array of plants, successful companies must nurture and manage their leads with care, attention, and strategic precision. This process, known as lead management, is critical for businesses of all sizes looking to cultivate a thriving customer base and business landscape. And just as successful gardeners are skilled agricultural artists, sales teams must be customer-centric lead generators while guiding prospects from their initial interest to a final purchase.

From identifying promising leads to nurturing relationships and closing deals, our guide explores how refining lead management can help businesses reap revenue rewards and reach new heights.

More in this guide:

• Why is lead management important?
• Types of leads
• Stages of the lead management process
• Important components of lead management
• 7 types of lead management software
• Lead management best practices
• Frequently asked questions
• Invest in data-driven lead management

Why is lead management important?

Lead management is important because it provides a strategic structure for getting the right customers to the right place, helping businesses optimise sales pipelines and increase revenue. This systemic approach to handling potential customers ensures that no opportunity slips through the cracks and allows businesses to:

• Prioritise sales prospecting efforts.

• Focus on high-quality leads.

• Increase pipeline visibility.

• Adapt messaging and communication strategies.

• Cater to the needs of different segments.

Not only does effective lead management improve conversion rates, but it also enhances customer loyalty, leading to long-term business growth and success.

Types of leads

When discussing lead management, there are two primary types of leads:

1. Marketing qualified leads (MQLs): MQLs have engaged with your brand or shown interest in a product or service through marketing efforts, such as downloading a whitepaper or attending a webinar. Still, they may need more time to be ready for direct sales contact.
2. Sales qualified leads (SQLs): The marketing team vetted SQLs and deemed them ready for the sales process by meeting specific criteria that indicate conversion likelihood, such as budget, authority, need, and timeline.

Each type of lead indicates a different level of awareness and interest in a business's offerings. By correctly categorising your leads, you can identify the sales strategies with the highest conversion potential while optimising the time and resources needed to interact with each effectively.

Leads vs. customers

While leads and customers are both essential for business growth, they represent different stages in the buyer's journey.

• A lead is a potential customer from a lead source who has shown awareness and interest in a product or service but has not made a purchase.
• A customer has already completed a transaction and established a relationship with a business.

Understanding the distinction between leads, prospects, and sales opportunities by knowing the difference between leads and customers is crucial for effectively tailoring communication and nurturing strategies.

Stages of the lead management process

The lead management process consists of five key stages that guide potential customers through the lead funnel. These stages are:

1. Lead generation: Attract potential customers through various marketing channels and strategies using lead generation software.
2. Lead capture: Gather contact information and relevant lead data through forms, lead magnets, and other methods for future communication.
3. Lead qualification: Use a lead qualification checklist to determine which prospects are most likely to buy.
4. Lead nurturing: Develop relationships with leads and interact with them through valuable content and communication to build trust and educate them about your offering.
5. Lead conversion: Transform qualified leads into paying customers through sales efforts.

It’s important to remember that the lead management process doesn’t end after conversion. To turn converted leads into repeat customers, businesses must continue nurturing efforts beyond stage four.

Important components of lead management

The five-stage lead management process is a great place to start, but there are additional components necessary for converting prospects to customers. Below, we’ve listed some of these components for you to consider.

Lead scoring

Lead scoring is a methodology for ranking prospects based on their conversion potential. This method assigns points to leads based on their behaviour and demographics to identify an organisation’s most promising prospects.

Lead scoring helps sales teams:

• Give priority to leads based on potential value.

• Respond to priority leads appropriately and promptly.

• Increase conversion rates while optimising time and resources.

With lead scoring software, companies can also automate this process to improve team efficiency and lead qualification.

Lead segmentation

Lead segmentation, which can evolve into customer segmentation, involves dividing your lead pool into distinct groups based on shared characteristics or behaviours. This practice allows teams to personalise marketing efforts for multiple leads at once.

With sales tools, teams can segment leads based on:

• Demographics

• Firmographics

• Personal and professional interests

• Engagement level

By tailoring your approach to each segment, you can increase the relevance of your communications and improve conversion rates.

Lead distribution

Assigning leads to the appropriate sales representatives or teams is the process of lead distribution. Also referred to as lead routing, an effective lead distribution system ensures that prospects are quickly and accurately routed to the right people, reducing response times and improving the chances of conversion.

Lead tracking and analysis

Lead tracking and analysis involve monitoring lead activity through the sales funnel to better understand their behaviour, preferences, needs, and expectations. By analysing this data and sales intelligence, businesses can refine their lead management strategies and make data-driven decisions to optimise their sales and marketing efforts.

7 types of lead management software

Businesses can leverage various types of software to manage leads effectively. These types of sales lead management software offer unique features and benefits to support different aspects of the lead management process.

1. Customer relationship management software

Customer relationship management (CRM) software serves as the central hub for managing customer interactions and data throughout the customer lifecycle. CRM systems help businesses organise, track, and nurture leads by providing a comprehensive view of each prospect's history, preferences, and interactions. Features like contact management, pipeline tracking, and reporting tools make customer relationship management indispensable for effective lead management.

2. Marketing automation software

Marketing automation software streamlines and automates marketing tasks and workflows, making it easier to nurture leads at scale. These platforms typically support features like:

• CRM automation

• Lead scoring

• Campaign management

Marketing automation software also helps businesses create personalised lead experiences while improving overall marketing efficiency.

3. Email marketing software

Email marketing software enables businesses to create, send, and track targeted email campaigns for leads and customers. This type of lead management software helps businesses support email marketing strategies through integrated features like email templates, list segmentation, and performance analytics. Companies can also partner this software with email automation software to deliver relevant, consistent communication to promising prospects.

4. Messaging software

With messaging software, companies can facilitate real-time communication with leads across various channels, such as website chat, social media, SMS, and instant messaging platforms. Messaging software also enables businesses to provide instant support through conversational marketing, improving lead engagement no matter where a lead is in the buyer’s journey.

5. VoIP software

Voice over Internet Protocol (VoIP) providers enable businesses to make voice calls over the Internet, often integrating with other lead management tools. VoIP software can support features like:

• Call routing

• Voicemail transcription

• Call analytics

• Interaction monitoring and recording

• Unified conversations

The features of this software help sales teams efficiently manage and track phone interactions with leads, keeping teams updated on their actions, behaviours, and requests.

6. Sales analytics software

With sales analytics software, sales teams can analyse key metrics and visualise data for the most promising conversion opportunities. These tools help businesses:

• Identify trends

• Forecast sales

• Visualise sales pipelines

With sales dashboards providing easy-to-navigate insights into sales performance, pipeline health, and lead behaviour, businesses using this software to track sales analytics can also anticipate lead behaviour and predict potential sales timelines.

7. Customer engagement software

Customer engagement software helps businesses create personalised, omnichannel experiences for their leads and customers. These platforms often integrate various communication channels, customer data, and analytics to provide a holistic view of customer engagement. By making use of customer engagement platforms, businesses can deliver consistent, relevant interactions that encourage lead loyalty and build long-term relationships.

Lead management best practices

To maximise the effectiveness of your efforts, consider implementing these lead management best practices.

1. Know your goals

Clearly define business and sales goals. They should be specific, measurable, achievable, relevant, and time-bound. This practice ensures that your lead management efforts align with your overall business objectives and have a benchmark for measuring success.

2. Choose the right software and tools

Select lead management software and tools that align with your business's unique needs. These tools should seamlessly integrate with your existing backend systems, including your current customer service software, and provide the features necessary to streamline your process while staying within budget.

3. Collect and use clean data

Prioritise the collection of first-party, accurate, and diverse data. Clean, unbiased data is essential for effective lead scoring, segmentation, and personalisation. Regularly audit and update your data to maintain its quality and relevance.

4. Plan your processes

Clearly and thoroughly explain your sales process so all stakeholders understand how you plan to manage leads—and why. Develop standardised lead capture, qualification, nurturing, and conversion processes to ensure consistency and efficiency across your organisation.

5. Align with your sales cycle

Understand the ins and outs of your sales cycle and match your lead management strategies to its particulars. This alignment ensures that your efforts are timely and relevant to each stage of the buyer's journey.

6. Support omnichannel management

Meet your customers where they are by using different channels, like email, messaging, voice, and social media, to nurture and manage leads. This provides a seamless experience across all customer touchpoints. An omnichannel approach allows you to cater to distinct needs and preferences while maintaining consistent lead communication.

7. Prioritise organisation

Implement lead scoring, segmentation, and data management practices to keep your lead information organised and actionable. A well-organised lead management system enables faster decision-making and more effective targeting.

8. Follow up properly

Develop a consistent but non-intrusive sales follow-up strategy. Assign leads to the appropriate team members, establish guidelines for timely and relevant follow-up communications, and create sales follow-up email templates to streamline communication efforts.

Frequently asked questions

Invest in data-driven lead management

Companies can optimise sales processes and drive sustainable growth by implementing a strategic, data-driven approach to lead management. But to do so effectively, businesses need software that will work with them—not against them.

With powerful CRM capabilities, advanced analytics, and seamless integrations, Zendesk Sell empowers businesses to nurture leads more effectively and turn potential into profit. Our solution offers a comprehensive suite of tools designed to support every aspect of the lead management process while being easy to use straightaway.

Unlock the full potential of your sales pipeline and discover how you can transform your lead management strategy with a Zendesk free trial today.