More leads than ever but sales are down. Why?!

As a founder or sales leader, its easy to believe that more leads is better than fewer–and results in more sales. But this isn’t usually the case. In my experience working with numerous startups and scale-ups, I've found that lead quality often trumps quantity. When people scale up lead volume, quality declines–and yet, the sales team still talks to all of those people. Stress goes up and sales go down. How can you avoid this?

What makes a quality lead?

First, let's talk about what we mean by "lead quality." It's not just about who has the budget or who's actively looking for your solution. Quality leads are ones that are likely to become customers–now, or later, depending on the typical journey your prospects take to become customers.

Sometimes, the characteristics that indicate a high-quality lead aren't obvious or directly related to your product and may have no rational basis in reality. For example, a custom window company in San Francisco discovered something surprising: prospects who owned grand pianos were much more likely to become customers. Strange, right?

Nobody ever could tell you “why” with any meaningful data, but the close rates didn’t lie. Personally, I think grand piano ownership is a choice that reflects wealth and style. They could have paid $2,000 for an upright piano, but chose to pay 5x or 10x more for something with more style. Why doesn’t matter–salespeople recognized the importance of this lead characteristic, looked for it, and focused their time on leads who had it.

Take another example, closer to tech: Dog Vacay, best described as Airbnb for dogs. They struggled to raise seed funding at first. Tech industry veterans, with great connections, but what felt like a tough sell: they couldn’t convince people that the pain they were solving–that boarding a dog is bad for the dog, makes the owner feel bad, and costs a fortune–was real. Then they pitched someone who owned two dogs. That person got it immediately and invested. Another two-dog owner invested. They soon realized that if you owned two dogs, you got it immediately. You always invested. Not so with one dog or no dogs. They changed their process to first ask how many dogs a person owned. If the answer was less than two, they passed on the meeting.

Why two dogs? I have theories–relatives might take one dog, but two is asking a lot; or it’s twice as much to board two dogs and they might be separated if you board them traditionally. But again–it doesn’t matter. You just have to be able to identify characteristics of a great lead, and act on them.

Identifying your quality lead characteristics

So, how do you find these ideal lead characteristics for your business? Here are some areas to consider:

• Industry: Which sectors convert fastest for you?

• Role: Who typically has decision-making power in your sales process?

• Budget: Can they afford your solution?

• Pain Points: Do they clearly articulate a problem you can solve?

• Technical Fit: Is your solution compatible with their existing systems?

• Other Tools: What other products or services do they use? Maybe it’s a grand piano–or maybe it’s AWS.

• Lead Source: Do certain referral channels consistently produce better leads?

• Digital Engagement: How are they interacting with your website or content?

These are just examples; they might apply to your business or you might think of others. Don’t be afraid to use proxies, also, as some characteristics of leads are unknowable early in the process. For example, a private company lead might not tell you how much revenue they have, but you can tell in LinkedIn they have 1,000 employees–so you can guess pretty accurately if they meet your revenue requirement.

Negative characteristics

You can also have characteristics that are used to disqualify. For example, if you know that the absence of the use of a particular tool or service meant that the prospect would never buy, why spend time trying to win that deal?

The key here is to be curious and open-minded. Your initial assumptions might lead you astray. For example, imagine you are selling sales coaching. Your target client is a $10mm business with a sales team of at least 5 people. They probably use Salesforce or another reputable CRM. You get a referral who fits your characteristics, and ask them, “have you used other coaches in the past?” They say, no, not really.

An uncurious salesperson might think: Great! They haven’t used any of their budget for sales coaching! And their team is probably very poorly trained, so I can show a lot of ROI by teaching even basic things. This is the best prospect ever! Immediately the uncurious salesperson goes into know-it-all mode, expounding on the value of coaching, the high ROI etc. And, 99 times out of 100, she will not close the client. Because this client isn’t a buyer–they must not believe in coaching, or they would have tried it previously.

Simple advice for improving lead quality

Asking qualifying questions early can transform your sales process by filtering out unqualified leads. Let me share a strategy that worked wonders for an EV charging company I advised. They were drowning in leads but struggling to close deals at all–let alone quickly. We implemented two simple but powerful tactics:

1. We introduced a qualifying question: "Do you have an existing EV charging business?" This quickly identified serious prospects with relevant experience.

2. We required an NDA and presented a proposal requiring significant budget early in the process. This helped weed out tire-kickers and accelerated the sales process for qualified leads.

They had a lot of angry leads. Many entrepreneurs were trying to get into the market–but had no experience, no funding, and no team. The first question weeded them out.

The second question weeded out people without budget.These were never going to be buyers. It took the founders some time to accept that they wouldn’t win every deal–and that some deals you don’t want to win.

No qualified company ever balked–in fact, by putting this early in the process, deals closed much faster than doing technical work first. It showed that the company knew it brought value. Because we did the homework, the pricing was well within customers’ budgets and budgetary authority.

The result? A dramatically improved close rate, shortened sales cycle, and 50% less sales time spent on unqualified leads and 90% less technical time spent overall.

Quality vs. quantity

Quality problems usually start when you try to scale up your lead generation efforts. But filling your pipeline with low quality leads waste your team's valuable time and resources on prospects unlikely to convert–making it harder to convert the good leads.

To avoid this, focus on where the good leads are coming from rather than opening up new channels. If you get good leads from referrals–try to get more referral sources. If you get good leads from paid advertising, increase budget in that specific channel. Of course all channels have a limit, and you have to expand into new channels. When you do this, pay close attention to lead quality from the start, and avoid filling your funnel with unqualified prospects.

Always, always empower your salespeople to disqualify the unqualified prospects. Marketing is there to keep them engaged; sales needs to go close some business. In many cases, I've seen companies improve their results by focusing on fewer, higher-quality leads rather than just increasing their lead volume.

Wrapping up

The goal isn't just to fill your pipeline; it's to fill it with prospects most likely to become valuable, long-term customers. By focusing on lead quality and implementing effective qualification strategies, you can improve your sales efficiency and increase your conversion rates.

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