Reframing the Growth Equation with CQLs

Who in Sales and Marketing doesn't want high-quality leads? 

Acquiring these efficiently could be a game-changer for most companies. Aligning marketing and sales efforts to business outcomes like new revenue and growth is more crucial than ever. We are not strangers to metrics such as Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs.) But now, the focus is on a more nuanced metric: Customer Qualified Leads (CQLs.) 

CQLs are leads that represent sales opportunities emerging from your existing customers. This results in customer growth, higher net retention, and lower acquisition costs — which boards and investors love to see. In companies where existing customers are managed by the customer success team, this new lead source is called Customer Success Qualified Leads (CSQLs).

Ever wondered how some companies seem to drive revenue from existing customers effortlessly? 

Forget the old playbooks; if you’re not tracking CSQLs, you’re leaving money on the table. This post explores CQLs and CSQLs, their significance in sales, and how they can unlock growth and enhance revenue strategies. Ready to find out how these game-changing metrics can supercharge your growth? Let’s dive in.

What are Customer Qualified Leads (CQLs)?

Customer Qualified Leads represent a progressive step in lead qualification, emphasizing leads generated from existing customers. These leads are typically associated with higher conversion rates as they come from users who have already shown trust and satisfaction with your products or services. Unlike MQLs, primarily based on engagement, or SQLs, which are sales-ready opportunities, CQLs are deeply embedded in customer success and retention strategies.

Lead Qualification Evolution: From MQLs and SQLs to Customer Qualified Leads (CQLs) 

The journey of lead qualification in sales and marketing has traditionally been dominated by two well-known metrics: Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs). MQLs are identified as prospects who have expressed interest in a product or service through various marketing activities yet are not ready to purchase. These leads are nurtured through marketing efforts until they reach a level of engagement sufficient to transition into SQLs—leads ready for direct sales engagement, having met specific criteria that suggest a higher likelihood of closing a deal.

However, diversifying revenue channels beyond acquiring new customers is crucial in today's market. Traditional metrics like MQLs and SQLs primarily focus on new lead generation and customer acquisition, often at the expense of engaging with existing customers. This oversight can be rectified by integrating Customer Qualified Leads (CQLs), which build upon the foundation set by MQLs and SQLs to offer a more dynamic benchmark for growth, particularly from existing relationships. By capitalizing on this often-neglected segment, businesses can unlock untapped revenue opportunities, strengthen customer loyalty, and enhance overall business sustainability.

Alex Farmer, Chief Customer Officer at Nezasa, one of the Top 25 CS Leaders to Watch, and founder of Customer Success Excellence, gives his stamp of approval on the effectiveness of this growth strategy. He successfully utilized CQLs to boost qualified upsell leads from existing customers by 40% and reduce the time to first upsell from 18 months to just 6 months. His strategy demonstrates not only the potential of CQLs in maximizing revenue and their role in accelerating the sales cycle. You can watch this video to learn more. 

Reframing the Growth Equation with CQLs

The strategic shift toward Customer Qualified Leads is part of a broader change in the business growth landscape. This transition from a traditional, siloed approach focused solely on customer retention to a dynamic, team-based strategy aimed at comprehensive customer growth is captured vividly in the "Reframe the Growth Equation" graphic. On the left, the conventional model depicts the Customer Success (CS) department as an isolated entity, primarily concerned with renewals and seen merely as a cost center with a defensive posture—focused on not losing the business. In contrast, the right side of the graphic advocates for a "Team Sport" approach where growth is driven through a Go-to-Market (GTM) mindset, involving collaborative teams that engage across the entire customer lifecycle.

This model emphasizes driving outcomes through scalable upsell and cross-sell strategies encapsulated in Customer Qualified Leads. This shift promises enhanced growth and fosters a more sustainable business model through active customer engagement and strategic expansion.

The Importance of CQLs for Growth 

In a market where customer retention and lifetime value are increasingly critical, CQLs represent a significant evolution. The shift towards Customer Qualified Leads reflects a more profound understanding of the customer’s journey and the importance of leveraging existing relationships. In environments where acquiring new customers is costlier and more challenging, maximizing the potential of current customers through upselling and cross-selling can lead to more sustainable growth and profitability. CQLs focus on the quality and readiness of leads based on proven customer engagement, making them a vital component in strategic sales planning. This approach improves efficiency and enhances customer experience by ensuring timely and relevant communications and offers.

CQLs are crucial for several reasons:

• Higher Conversion Rates: Since these leads come from existing customers, the trust barrier is significantly lower, leading to higher conversion rates.
• Increased Customer Lifetime Value: CQLs often indicate opportunities for upselling and cross-selling, directly impacting customer lifetime value.
• Enhanced Alignment Between Teams: Focusing on CQLs encourages better alignment between sales, marketing, and customer success teams, fostering a unified approach to growth.
• Lower Acquisition Costs: Leveraging CQLs can reduce the costs associated with acquiring new leads, as it involves tapping into an already engaged customer base.

How to Implement a CQL Strategy 

To effectively measure Customer Qualified Leads (CQLs) similar to MQLs and SQLs, developing a set of processes and rules that accurately identify and categorize these leads in your CRM is crucial. This step involves mirroring the strategies of your best-performing reps, who consistently ask the most impactful questions at optimal times throughout the customer lifecycle. You can scale their success across the entire Go-to-Market (GTM) team by codifying these effective interactions into your processes.

This approach ensures that the insights and techniques that lead to high conversion rates are not confined to individual top performers but are instead leveraged by your entire team. It’s about creating a systematic way to capture and replicate the most effective sales behaviors and strategies throughout the customer journey, thereby maximizing the potential for growth and revenue generation across all customer interactions.

Here’s a structured approach:

1. Finding early signals of churn and upsell. Churn and customer growth are two sides of the same coin, you can’t treat them separately. Combining the two helps create a cohesive customer experience and shift the mindset from customer retention to customer growth. In my whitepaper interview of 50 C-Level executives, we found that 80% of companies are looking at product usage-related signals to predict churn. In contrast, 100% of companies said they find upsells by talking to their customers. 

Talking and listening to your customers is the best way to uncover upsell opportunities, but how can you do it at scale? Across all GTM team members, almost no company can achieve it. Most companies only have 1-2 star CSMs or AMs who know how to ask the right questions to uncover untapped customer needs. Mirror what your best rep does to uncover growth signals through intentional questions! 

For example: I have found some top reps use the following growth signals:

1. Upcoming fundraising events
2. Key executive hiring in the next 3-6 months
3. Company headcount increase or decrease
4. Rolling out new products and offerings. 

You can find your company’s unique customer growth signals if you talk to your best account managers. Scale it to all of your customers by implementing a Customer-Journey Pulsing program. 

2. Customer-Journey Pulsing: Utilize continuous measurement techniques to track customer value throughout their journey. This involves deploying automated tools that send customers periodic queries (pulses) via emails, live conversations, or on-demand question links. This process helps capture timely, nuanced insights into customer satisfaction and expectations, allowing you to identify when a customer will most likely be receptive to upselling or further engagement. Learn more about TheySaid’s solution. 
   
   
3. Define CQL Criteria: Establish clear criteria that define what constitutes a CQL in your organization based on customer engagement, product usage, or feedback.
   
   
4. Add a new lifecycle stage: Ensure your CRM and marketing automation tools are configured to capture and tag leads as CQLs based on the defined criteria.

5. Lead Source Attribution: Implement systems to track the origin of each lead accurately. For CQLs, it's essential to identify which are generated through customer referrals, upsells, or other customer-initiated interactions.

6. Reporting: Implement tracking mechanisms to monitor the behaviors and interactions of existing customers, using data analytics to pinpoint potential upsell or cross-sell opportunities.
   
   
7. Automate and Refine: Use automation to nurture these leads through personalized content and offers, continuously refining your approach based on lead response and conversion rates.
   
   
8. Feedback System: Incorporate a feedback loop from the sales and customer service teams to adjust the CQL identification process and ensure it remains aligned with customer needs and market trends.

This process-oriented approach ensures a seamless integration of CQL measurement into your tech stack, enhancing your ability to capitalize on existing customer relationships and drive growth.

This approach enhances the effectiveness of your sales strategies by focusing on the most promising leads and improves customer retention by ensuring that interactions are timely and relevant. By integrating tools like TheySaid, which provides automation and integration capabilities for customer journey pulses, you can seamlessly sync these insights into your CRM or other systems, ensuring that your team has the most up-to-date information at their fingertips.​

Increasing CQLs with Customer Perceived Value (CPV)

Customer perceived value (CPV) is crucial in any discussion about optimizing sales and marketing strategies. CPV reflects the customer’s perceived worth of a product or service based on its ability to meet their needs and expectations. In our strategic approaches, CPV is pivotal in identifying and nurturing Customer Qualified Leads (CQLs).

What is CPV, and how can it be used as a leading indicator of revenue?  

CPV is a leading indicator that helps identify if a customer is receiving value, influencing their purchasing decisions. This insight is invaluable as it allows us to predict which customers are more likely to engage further and convert into Customer Qualified Leads (CQLs), especially in scenarios involving upsell or cross-sell opportunities.

Suppose CPV data shows that customers highly value a specific feature of our product. This feature can be highlighted in targeted marketing campaigns aimed at existing customers, effectively increasing the likelihood of upsells. These campaigns directly generate CQLs by focusing on the aspects of our offerings that customers perceive as most beneficial.

Practical Outcomes of Integrating CPV with CQLs:

By aligning marketing content and sales strategies with the high-value elements identified through CPV, businesses can enhance customer engagement and improve the efficiency of their lead conversion process. This targeted approach ensures that communications and offers are timely and highly relevant, increasing the overall effectiveness of sales efforts and customer satisfaction.

Integrating CPV into the assessment of CQLs enables a more nuanced understanding of the customer journey. It helps forecast customer behavior more accurately and tailor marketing strategies that resonate deeply with customer needs and preferences. This strategy supports better alignment between customer expectations and company offerings and optimizes conversion by targeting the most informed and strategically valuable leads.

Conclusion

Embracing Customer Qualified Leads is more than adding another metric to your sales and marketing reports. It's about cultivating a deeper understanding of your customer base and leveraging that knowledge to drive growth. As businesses strive to be more customer-centric, CQLs offer a pathway to more targeted, effective, and ultimately successful marketing and sales strategies.

Interested in learning more about how CQLs can transform your business? 

Reach out for a consultation or join our upcoming webinar on leveraging customer insights for revenue growth. Let's explore how we can turn your existing customer base into your most valuable sales asset.