How to Qualify Your Business Leads Like a Top Agency
Have you ever said yes to a referral without qualifying the lead?
I did that many years ago, and what should have been a 2-3 week project dragged on for 6 stressful months.
I didn’t know then that I could turn down any client, even a referral. If I had qualified the lead, I would have known it was the client’s first time doing any sort of web project.
He didn’t know that once code is written, it’s harder to change. He wasn’t responsive, which slowed progress to a crawl. He also didn’t understand the agreed-upon benchmarks, so he didn’t want to pay.
Eventually he did pay, and I remember thinking I was so glad to be done with him.
Except that I wasn’t done.
When we began his project, I explained that he needed to find someone to host his site, but he didn’t do it. So I did it for him, volunteering extra time to make sure he was taken care of.
This one lead resulted in six months of headaches, unpaid hours outside of the project scope, and, of course, zero referrals.
So what did I do wrong?
The Problem Is That You’re Not Qualifying Leads To Find Good Clients
You don’t just want any client. Most companies act like they’re desperate, allowing any client to buy from them. For them, “qualifying leads” means making sure that prospects have budgets and are likely to buy.
When you don’t qualify leads, you wind up with bad clients, and servicing bad clients comes at a high cost.
But you want good clients. When you don’t qualify leads, you wind up with bad clients, and servicing bad clients comes at a high cost.
Zack Linford says qualifying leads makes a big difference to his bottom line. Zack is the founder of Conversion Voodoo, which offers landing page and conversion rate optimization services.
The problem, says Zack, is that “if a client’s technical environment is a disaster, it can take months instead of weeks to get cracking, and we need to know that upfront to plan resources.”
The other problem with getting bad clients? They don’t refer other clients. Good clients give you referrals.
“We love referrals,” says Bryan Zmijewski, founder of ZURB. ZURB is a product design company whose clients include Facebook, eBay, Netflix, Zazzle, and Yahoo. “A good chunk of our business comes from recommendations,” says Bryan. “Good clients refer other good clients.”
The Two Reasons You’re Not Qualifying Leads
There are two reasons most people don’t qualify prospects.
First, it can be scary to turn away any lead, especially if you’re hungry for more business. Carl Smith, founder of digital creative firm nGen Works, calls this “feeding the monster”:
In the traditional business model, a web shop is searching for good leads. A lot of times they have cashflow problems, pipeline concerns, and unregulated growth which leads to taking on anything they can. I like to think of this as feeding the monster. The monster isn’t picky, it just needs more. So shops on this slippery slope try and take it all. Not only does this make it difficult to have any control over the quality of work or type of client you get, it leads to burnout and frustration.
The other reason people don’t qualify leads is that they can’t tell the difference between the good, the bad, and the ugly. Do you know how to tell if a prospect will be a good client for your particular company?
To figure that out, you need to analyze your great clients and find their commonalities.
For example, Conversion Voodoo learned that their good clients have two characteristics. First, they have to be willing to give up some control. “If a client is unwilling to engage in this first collaborative step, it’s a good indicator that we may have a tough time moving at maximum efficiency in the future,” says Zack. Second, their technical environment has to be in good order.
ZURB found that the commonality among its good clients is the mental flexibility to do whatever is best. Their best clients aren’t constrained by self-imposed mental straitjackets.
“We like clients who are constantly looking for better ways to solve problems,” says Bryan. “It allows us to understand if clients are willing to collaborate.” ZURB found that the ability to work well with clients dictates whether a project is going to be successful.
You Need to Qualify Leads to Get Good Clients
Once you’ve identified the common denominator among your good clients, you can develop a qualifying question or a series of qualifying questions to determine if a prospect makes the grade.
Here’s how the pros do it:
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Ask prospects to complete a task. Conversion Voodoo qualifies leads by asking prospects to add their tracking tool to their site. “The absolutely, positively most important step we take to qualify leads is to ask permission to install our proprietary tracking tool onto their website so we can analyze their funnel,” says Zack.
This request hits both of their key commonalities among good clients—willing to give up control and a good technical environment.
- Ask a series of questions to evaluate if a prospect is a good fit. ZURB asks a series of questions to determine if a prospect is flexible. “We highlight areas for improvement in the sales process,” says Bryan. “We try to educate clients [to get] a sense of how flexible they are…” What’s important isn’t a single answer, but the mental flexibility implied by their answers.
- Make prospects work to win you over. nGen presents prospects to the company, and if enough team members show interest and a team forms organically, they take the client. If not, then it wasn’t the right opportunity. “Prospects know they may get rejected, and this is a great thing,” says Carl. “Difficult, control freak prospects won’t play this game and go away. The flip side is that team-focused prospects love it and work to win a team.”
Ready to get started?
The Four-Step Process to Qualify Leads
Step 1. Analyze your best current clients to find commonalities.
First, look at the demographics, attitudes, interests and purchase patterns of your last 10 good clients.
Then, contact them and ask what made them decide to purchase and why they like your company. What about them do you like?
Use this information to figure out what your best clients have in common.
Step 2. Think of a qualifying question that strikes at that commonality.
Next, write a question that will quickly tell you if a prospect possesses the commonality.
What is the one question all of your good clients say yes to?
Step 3. Ask all of your new prospects that qualifying question.
Now that you have a qualifying question, you need your prospects to answer it!
If a prospect calls or if you get an email referral, ask the qualifying question to find out if they’re a good fit.
If your website is your main source for leads, you can ask your qualifying question on your email signup page by adding an extra form field.
Remember that every form field you add results in fewer leads. A 4-question form can increase the conversion rate 120% over an 11-question form.
Getting fewer leads is a good thing if you’re asking a qualifying question that will weed out bad clients, but make sure to only ask what is absolutely necessary.
Step 4. Focus on prospects that give the right answer to your qualifying question.
Once the qualified leads are rolling in, it’s time to put on your white coat and diagnose their problems. Ask about their pain points, goals, and expectations to get a clear picture of their needs and the project scope.
Finally, propose a good solution. If it’s a small project, create an estimate. For large projects, write a proposal.
What’s next?
Now that you’ve read this article, follow the four-step plan to start qualifying leads and reeling in more good clients. Remember, don’t “feed the monster”! Be willing to walk away from bad leads.
Now I’d like to hear from you. How do you qualify leads, or if you don’t, what’s been holding you back? Let me know in the comments!
Leave a Comment
This was a fantastic article!! I’m a freelancer-turned-business owner, and I had been wondering where the line was between good clients/bad clients, the work you turn away etc., you answered all of my questions! Thanks for laying it out there in such an easy to understand and approachable way
Thanks! There isn’t a silver bullet and there’s multiple ways to qualify a client but I think it’s really interesting to get insight into how some of the best creative agencies do this.
Oh, how I wish I knew these things 4 years ago! (Or even 4 weeks ago for that matter.)
I actually just fired a first time client, mostly because I ignored the little red flags during the consultation. Let’s just say they were a control freak/micro manager who thought they were a designer (I kept wanting to scream at them, “Then why’d you hire me?!”) Needless to say, I finally got fed up with the back and forth never ending revisions and cut the cord. What a relief!
But I definitely need to take notes on how to better qualify clients; obviously, I was missing something the first time around. Thanks!
The point is a valid one. However, there are many companies and freelancers that are struggling to stay afloat these days and even the ones that implemented a similar prospect background investigation before anything kicks off still sometimes just don’t do it because they can’t afford not to work, even if the client or it’s project is shambles.
Re: Bogdan’s point: “However, there are many companies and freelancers that are struggling to stay afloat these days …they can’t afford not to work, even if the client or it’s project is shambles.”
I understand that. However, I am a veteran of taking on lousy clients (a lot of them, in previous years.) Here’s the downsides:
- They may not pay without a fight – there goes your survival argument, that you “must” take all comers. By inadvertently working for free in a sh*tty economy because you never get paid, you make yourself weaker. Tell me how that is a “survival” move?
- The bad client may effectively discount your rate by being such an immense, time wasting, disrespectful pain to work with that you halve your already aggressively low rate.
- Some bad clients may threaten to sue, causing you to have to mobilize and hire an attorney for $$$ just to evaluate the threat. (The most ignorant newbies will ignore the threat and not find legal counsel.) And the worst clients WILL sue, taking your money and your time, and then you’re in the hole. Worse off than if you blew off the bad client.
Nope. It’s naive to rationalize working for really bad clients. It’s bad business. It not only feels terrible but it puts you financially at risk.
@Ruben: “Most companies act like they’re desperate, allowing any client to buy from them. ”
Not exactly. Many NEW companies, and many businesses run by extremely inexperienced owners – both often act like they’re desperate, allowing any client to buy from them.
Service businesses that prosper and which have been around a while don’t make continuing mistakes. They either figure it out, or the owners move on and they close shop. So it’s not “most” businesses.
And let’s narrow things some. We freelancers sell our services in a relationship mode. We work with a customer, so we MUST get along with them.
If you are engaged in “transactional” sales – one off services or products – as long as the customer is able to pay, then their qualities as a good customer become much less important.
Anyway, I have found exactly ONE key element, not four, to qualify prospects for consulting or freelancing assignments.
It is mentioned nowhere in this article. A big, very significant omission.
Here it is: you ask for a significant advance payment. Such as 25-50% of the price of the job (for fixed price), or a retainer for hourly work.
Repeat: You ask for an advance payment.
Repeat: You ask for a deposit, a down payment, money up front.
Got it? Skip all of the rules. Money talks. Everything else is effectively silent.
No exceptions, except for volunteer work, or for low paid work to get exposure, like guest blogging.
When you ask for a deposit, then there is only one acceptable answer that will trigger your start of work on the project: the client says “yes”, and a deposit check shows up in your mail, or payment shows up online.
The rule is, you DO NOT DO ANY WORK or devote much additional energy to a prospect, if, in response to this condition:
- They act all huffy, like you’re trying to screw them by asking for an advance.
- They want to bargain.
- They change the subject.
- They get abusive.
- Quote a long list of idiots whom they state are cheaper who will work for no advance payment.
Or (quite important): the advance payment never shows up. A lot of prospects lie. “The check’s in the mail”. Just because they say they intend to send you a deposit does not mean that they will.
And to summarize all of the crap about giving the client a task, etc – any freelancer needs to develop intuition about whether they can work with a given party. I really don’t like to burden new customers with makework or tests.
My only real precondition: does the client seem to trust and respect my ability to deliver for them, and do I feel that they are for real?
If the client is disorganized when you first talk to them, they will be disorganized during the project. If the client bristles with defensiveness or is a know-it-all, expect the same, except more and louder.
It’s really pretty simple.
@Don – Totally agree with everything you said in response to Bogdan’s point.
Re new vs. experienced freelancers: You’re certainly going to see more mistakes in qualifying clients with less experienced freelancers. We’re on the same page there.
That said, I’ve both freelanced and worked with many service based businesses and I can tell you that the 80/20 rule applies here — 80% of businesses (of any kind) will make the decision on whether to take a client based almost entirely on money.
Qualifying based on budget and willingness to pay is the bare minimum. Like you said, if you keep getting this wrong, you’ll likely be out of business. The next step for many people (including myself) is to ensure that you’re always working on projects you love and people you enjoy working with. This is something that the highly successful agencies in this post are great at.
Hi, Ruben,
Thanks for the comments.
I still consider the lack of mention of collecting a deposit on new work a serious omission in this article.
In short, collecting a deposit is a “litmus test” of the relationship and the client. The deposit demand has the effect of driving away really bad clients, the worst of the worst. It says – yes or no – should you do business with them? It goes far beyond “qualifying based on budget and willingness to pay is the bare minimum.”
The fact is that many clients are all talk and won’t pay, even though they claim that your price is fine. They will consider the freelancer an underling, a walking joke.
Here is what imposing the condition of a deposit on a new project says to the freelancer – and it’s pretty important, and it all comes about when you receive the deposit:
1) The prospect respects and trusts you enough to hand over advance money. This hits most of the client relations points that you quoted.
2) Receiving the deposit says that the person that you are dealing with is able and willing to pay for work. This alone is quite important and in lieu of a deposit, impossible to determine in any other way. In a larger client organization, it says that the person has signing authority and has the authority necessary to purchase services like yours. IE, you don’t want to accept a project and then start work for an underling who then needs to go and ask his boss for the money to pay you. (It happens.)
Yeah, you can still get a stinker who pays your deposit. I am saying that it reduces the chances to single digit percentile.
- Don
@Don Wallace, I’m really enjoying what you’ve been saying on this thread.
Matter of fact, I just had to send another prospect packing yesterday. Guy wanted a bunch of designers to submit wireframes and home page designs and then he’d decide on the winner whom he’d work with.
Well, I said nix to that spec work opportunity. Told him that I didn’t lift a finger to do any sort of design work unless we had a firm commitment to do business together. Said commitment includes a signed contract and an up-front payment.
Don – I’ll be more direct and make this my last comment since we’re talking in circles here.
When I say that qualifying based on money is the minimum, that also includes payment schedule (like an upfront payment). But that’s the easy stuff and that in no way means you’re going to be working with people you truly enjoy want to work with. The post is about how highly successful seven and eight figure agencies (not average ones) qualify leads and what we can learn from them.
We were talking in circles, yes.
Here’s my point, to bottom line it: if someone is willing to mail me a $1000 check to get started, and actually DOES, then the account may still bear scrutiny, but they have already impressed me with the trust that they are showing. A lot of freelancers think they’re driving away good clients when they demand a retainer. It’s a trust bridge that you’re asking the client to jump across.
I won’t ask for a retainer unless everything else about the client and the job smells right.
> The post is about how highly successful seven and eight figure agencies (not average ones) qualify leads and what we can learn from them.
Ah, but the typical FLS reader is not a seven or eight figure agency.
Commonly solo people run into “prospects” who expect free work or spec work. Extremely few who approach a big design agency will even consider that possibility.
I’ve run into wonderful seeming prospects who would ace your 4 point criteria and when money comes up they say “I was hoping you’d do it as a portfolio piece”.
If a client doesn’t want to pay anything, their meeting my complex criteria of a great client means nothing to me.
Telling the client up front (early in the process I mean) what you will need from them if you move forward will short circuit lengthy discussions that lead no where.
That’s money in your pocket in terms of avoiding wasted time.
- Don
I have not thought about this at all but it makes a lot of sense. I love the idea of qualifying the leads. I am running my freelance business for about 2 years now and last week was the first time I said no to a new client even though he was ready to start. What surprised me was that it actually felt good. I think I did something like qualifying the lead subconsciously
because I don’t think I was aware of this concept before this article. What I did is use my experience from the last 2 years working with different clients and what I saw was a big chance that this project will be very time and resources consuming with little profit. It was still money so I thought that saying no will be at least a little painful but surprisingly it was opposite, it felt right 
These guidelines may really come very handy for qualifying leads generated. Qualifying a good lead and getting a good referral are also necessary. Thanks for nice piece of article.
Nice article. Qualifying leads is extremely important. Once you’ve been in business for awhile, you will easily recognize signs of a client that fits with you and one that won’t. Listen to your gut & save yourself time, money and a lot of headaches by qualifying each and every lead!
Turning down work when a client isn’t a good fit IS difficult, but it is almost always the sensible choice. Thanks, Ruben, for addressing the issue and beginning the conversation; and thank you Don, for adding some invaluable insights.
Great article. My main problem is trying to strike the right balance between lead quantity and lead quality. I have finally let go of the mindset that more is better! Not properly qualifying potential leads can lead to a lot of time wasted weeding them out and as they say in business time is money!