What is Lead Management? CRM 101: Understanding the Basics

Fifteen years ago, I was sitting at my parents’ company office. My family owns a small clothing brand, and it was a logical step for me to join the company as a sales rep. I was tasked with searching for new clients, and I almost immediately noticed that I was hitting the limit of my brain’s capacity to remember prospects I had spoken to. So, I started to look for a CRM system.

Long story short, I ended up with Salesforce CRM on my laptop’s screen,
opened the interface for the first time and started wandering around. The first thing I found was the Leads tab. So I tried to add leads I was already working with.

And this is when I realized that I had no idea what a Lead was – at least for our business. I couldn’t add them to the Accounts, I couldn’t save them as Contacts and they had weird statuses that replicated Opportunity stages. I was confused and didn’t know what all that meant.

In this article, I’ll cover:

• What a lead is and what lead management entails.
• A deeper dive into lead management terminology.
• The key question: when should you implement lead management?
• And finally, I’ll share three essential steps to successfully implement lead management in your company.

Ready to get a clear understanding of lead management? Let’s dive in!

Understanding the Basics

Let’s start with the boring but important basics. A lead is someone who is interested in your product. It’s always a person who has a name and contact details.

Lead management, on the other hand, is a term that is closely related to CRM systems. It’s usually a series of steps your sales reps take to bring new opportunities into your sales pipeline by working with leads. All of this is tracked in a CRM system.

A lead is someone who represents the top of your funnel. To make it at least look like a scientific concept, let’s take the AIDA model. AIDA is a marketing concept that breaks down people’s decision-making process when buying your product. In other words, it’s a way to measure how ready a person is to buy on a scale from “just discovered that your product exists” to “take my money now.”

In this model, you have four stages: Awareness, Interest, Desire, and Action. Normally, leads start to show up at the front door at the Interest stage. But again, this is highly theoretical and differs between companies and sales types.

In any case, leads are the starting point for your sales process. They are important when you are at the beginning of your relationship with a client, but we’ll get to that later.

Key Lead Management Terminology

There are five key terms you need to know about leads: Capture, Routing, Qualification, Nurturing, and Conversion. Let’s go through them one by one.

Capture

First, capture. This is the process of collecting lead information and bringing it into your system. Think of it as the starting point: a form submission, a chatbot interaction, a business card from a trade show, or even an email from a potential client. Without capturing leads effectively, the rest of the process can’t even begin.

Routing

Next, routing. It is about directing a captured lead to the right person or team. Imagine you are at Home Depot looking for screws. You would go and ask someone for directions. The same goes for lead routing. It ensures that leads don’t get stuck in limbo or land in the wrong hands, which leads us to the next term.

Qualification

This is when you evaluate a lead against your company’s criteria. In simpler terms, it’s about figuring out if this lead fits your ideal customer profile. Does this person match the demographics, interests, or needs of your target audience? Is this a lead you want to pursue, and more importantly, are you the right fit for them? This step determines if the lead is worth the effort. That whole process actually has a name, which brings us to …

Nurturing

Nurturing is like building a relationship with your lead. It’s the process of guiding, educating, and supporting them until they’re ready to make a decision. Keep in mind, nurturing doesn’t guarantee they’ll buy, but it does prepare them for the possibility. Once a lead has reached a certain point, you convert it. Usually, nurturing means that one of your SDRs (Sales Development Representatives) or sales reps gives a call to a client, talks to them, and once the client can clearly confirm their interest – usually by stating when they will be ready to make a decision, what the product of interest is, and the approximate deal value – it leads us to our next term.

Conversion

Conversion is the moment when a lead crosses the finish line of the lead management process and transitions to the next stage: becoming a prospect. This happens when the lead is fully qualified, meaning they’re a good match for your product or service and are ready for a more serious sales conversation.

But that’s not all. There is actually another term that I’ve intentionally skipped. It’s called lead generation. This is usually a marketing campaign where you would run ads and drive traffic to your website or social networks. This process is not directly linked to CRM but is a part of the lead management process. It’s that gray area of business where marketing and sales merge.

For example, my company Muncly creates educational content like this to drive leads. People learn something new, see that we are experts on the topic, and ask us for help. You know the game. If you need support with CRM or lead management, feel free to get in touch with us. We’ll be happy to help!

When is Lead Management Needed?

Now, let’s discuss when you might need a lead management process. Too often, I see companies in the early stages of their digital maturity trying to use a CRM system as a template for a new process that never existed in their business.

I always say: Do not try to implement a new process along with a new tool. A CRM is not a means to fix a poorly managed business process. It’s a tool to scale and standardize your existing, already successful process. But how do you know if you are ready?

There are several criteria that I use in my daily work to determine if a customer is ready for a lead management process to be implemented.

First: A company is actively seeking new customers using outbound or inbound mechanisms. This includes running ads, making cold calls, participating in trade shows, or outreaching over email or anything that involves contacting new people or companies that a company has never worked with before.

If you are handling a large number of inquiries. By large, I mean probably five or more inquiries per person per day. It’s a great sign that a lead management process is something you should start thinking about.

But again, do not confuse lead management with opportunity management. If you are closing deals with existing clients and you are not actively seeking new clients, do not have dedicated new client acquisition SOPs (Standard Operating Procedures), and you don’t have this in the KPIs (Key Performance Indicators) of your sales people, you probably don’t need to think about systematizing your lead management.

It’s very hard to give exact criteria, but consultants like me normally ask something like:

• How many leads per day or month do you process?
• How many people work with processing new leads?
• Does your company have a clear criterion for how to qualify leads?

If I see a customer giving me vague replies or if the numbers are low, this is a clear sign for me that this client is not ready for this process.

One last point: lead management applies to longer decision-making cycles. There are two distinct lead management approaches depending on your sales type: long-form and short-form. If you have transactional sales with a short decision-making cycle, you should be looking at a lead management process from a marketing perspective. A CRM system likely will not help you. You probably will not call this process “lead management”; it will be your marketing funnel. Remember that.

Implementing Lead Management

Now, let’s talk about how to implement lead management. In this process, you as a Process Owner will have several important decisions to make. The first and most important decision is deciding how to capture leads.

1. Capture Leads

In other words, how you plan to register your leads. There are two ways of capturing leads: automated and manual.

The automated way of capturing involves creating integrations with your website or landing page forms, integrating third-party information systems that generate leads for you, or importing lists of leads so that you could reach out to them.

Alternatively, you could decide that you will be creating leads manually in your CRM. We recommend this way when a company receives a lot of inquiries directly to sales reps’ inboxes.

Once your lead is in the CRM, you could start reaching out, which brings us to our next decision point: Lead Stages.

2. Lead Stages

Your lead stages are your lead funnel. Their only goal is to qualify leads. For example, if you get a lead that landed in your CRM from your company website, what are your next steps? For my company, these are:

• Contact a lead.
• Schedule a phone call or virtual meeting.
• Decide if we should “convert” a lead and create an opportunity, or we should keep this lead open until it reaches a certain maturity.

This brings us to the next decision you will have to make: what does a qualified lead mean for you?

3. Qualifying a Lead

For most businesses, a qualified lead is:

• Someone who is reachable over the phone or email.
• Someone who has confirmed interest in a conversation.
• Someone who is ready to make a decision that fits your standard sales cycle.

For our company, we consider a lead qualified when we have had a phone call or video call during which we confirmed that there is a real person on the other end, they are looking for a CRM system or already have one and need extra help, they are ready to allocate a budget in the next three months, and they fit our perfect customer criteria, which is a company that has at least 10 CRM users. This helps us quickly filter if it is worth moving forward.

If we confirm that it is a real person, they have an interest in our product, and they are ready to sign a contract within three months, we convert the lead. If a prospect is still a real person and has an interest in our product but is not yet ready to buy, we put them in a “nurturing” stage and follow up once a month until the person is ready. Oh, and if none of the requirements are met, we disqualify a lead.

Conclusion

Lead management might seem like a complex concept at first, especially if you’re just starting with CRM systems. But once you break it down, it’s simply a structured way to handle the very first stage of your sales process.

Let’s recap what we discussed today:

• A lead is someone interested in your business.
• There are five components to lead management: Capturing, Routing, Qualifying, Nurturing, and Converting a lead.
• You should only implement a lead management process if you are working on acquiring new clients.
• Finally, you need to make three key decisions before implementing a lead management process: how you capture leads, what stages they go through, and what a qualified lead means for you.

And if you’re looking to set up or optimize your lead management process and want expert guidance, don’t hesitate to reach out to us. We’ll be happy to help you build a system that works!