In my opinion, the importance of lead qualification can't be overstated. My friend Ali Powell of HubSpot recent wrote an excellent blog post on that very subject. You should definitely read the whole post, but the gist of her article is that before you start putting effort into working on a potential customer, you should do the research to make sure the prospect is a good fit for your company.

I couldn't agree more. For SMB companies, focusing on a targeted niche is the best way to grow. The reasoning behind that advice is simple. Smaller businesses generally have expertise in a particular industry or geographic niche that they can exploit to capture new business. This domain expertise is your differentiation; when you venture outside of it, you're just like everybody else.

Before you can qualify leads, you need to have a process by which you define what a good lead looks like. An ideal customer profile defines the types of businesses that are most likely to be profitable customers for your business. Buyer personas are fictional depictions of your typical buyers at those ideal customers. 

We've explored the positive outcomes of a well-executed lead qualification process, but we haven't talked about the negative outcomes of not doing so. Here are 3 bad things that can happen when you don't qualify leads.

1. You waste time that could be spent more productively

You can always work harder or spend more money, but there is one thing that you will never be able to do. You will never be able to make a day longer than 24 hours.

Many growth-hungry businesses fool themselves into thinking that a piece of glass is a diamond. It's all well-intentioned - executives and sales professionals are so hungry to grow that they're reluctant to not pursue a lead, regardless of potential fit. The problem is that the time spent pursuing that lead can be spent on pursuing leads that are a better fit.

It's counter-intuitive to give up on a lead that has shown interest in your company, but you have to discipline yourself to only work on qualified leads. You don't have to be rude, share your marketing content with the unqualified lead and refer them to a competitor that's a better fit, if appropriate.

2. You win a customer that doesn't fit your business

So what's the big deal, you ask? Their money's green. In most cases, it's only a matter of time before this relationship implodes. 

The consequences of a bad fit for your company are serious. The customer that's outside your target niche will challenge your team to do things that they're not accustomed to doing. It will take time for your team to understand how to properly service the new customer. The customer likely won't wait for your team to learn. Guess what? Nobody's happy.

There are often unrealistic expectations behind these deals. Maybe you'll get lucky and have a great relationship with the customer outside of your target niche. But it's more likely that you'll have a customer that you wished you never had. Your wish will come true when the customer leaves you. Worse yet, you will probably lose money on the deal.

3. Your reputation takes a hit in the marketplace

What do you think the mismatched customer described above will do after they cancel with you? One thing they won't do will be to sing your praises. 

A customer that has a bad experience with a company is going to share that bad experience with their friends and colleagues. Some will even blast your company on social media. It's hard to put that genie back in the bottle.

If you're not 100% sure you can turn a prospective customer into an evangelist for your company, don't waste your time!

You can avoid all of these problems by getting your lead qualification right. Know what you're good at and stick to it. If you're going to target a new niche, there must be a reason for it. Perhaps you've hired someone with expertise in the new niche. Perhaps you've completed a successful project in the new niche and want to exploit it. 

The moral of the story is that if you properly qualify leads, you will grow more quickly and avoid a lot of headaches.