How to Classify Sales Leads | Company-Centric Activities

Classifying a sales lead boils down to classifying MQLs and SQLs. But know that classifying leads and discovery are different.

sales team and sales leader

To classify sales leads correctly, you must do three things:

  1. Classify your sales lead
  2. Ask clarifying questions 
  3. Engage in the sales discovery process

Every great lead generation strategy has a finely-tuned lead qualification and discovery process that guides your business relationship and approach with your potential customer. However, most companies learn to categorize leads using lead qualification frameworks and rely too much on the classification rather than the discovery process. 

Always remember: sales qualification is a company-centric activity, and a sales-qualified lead has not yet been discovered. 

Many sales leaders must understand that a sales-qualified lead does not mean the sales team has completed the discovery, meaning neither the salesperson nor the potential customer is pain-aware

What are sales leads?

Simply put, sales leads are potential customers. However, not all “leads” are “prospects.” A prospect is an individual who has shown interest in your company and its product or service. 

Classify your sales lead

Understand that sales qualification is a company-centric activity. A lead qualification framework does not ensure a prospect will buy. Sales-qualified leads denote that an opportunity has the propensity to buy—that’s it. 

The most common classifications are Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs). Others will differ in terminology or use more specific classifications for their organization. 

First, let’s explore the various qualifying leads terminology you’ll encounter from the lead generation stage of the sales funnel:

sales leader or sales team speaking to prospect

Common Sales Leads

  • Unqualified Lead (UQL)

  • Activity/Automation Qualified Lead (AQL)

  • Information qualified leads (IQL)

  • Marketing Qualified Leads (MQL)

  • Sales Qualified Leads (SQL)

  • Hot leads/Qualified lead

  • Warm Lead 

  • Cold Lead


An individual’s buying propensity is unclear or unknown and requires lead nurturing. These individuals may not have expressed interest in your company (cold lead) or have some knowledge of your product, service, or solution.

They generally require more significant work to determine their buyer personas but may still be prospect capable.


Your marketing automation platform identifies a Qualified Lead based on a prospect’s specific activities, including attending a webinar or requesting a catalog. The prospect’s company has shown interest in your product or solution by their marketing response or activity predetermined by a scoring system. 

Often the marketing team will nurture the lead to learn more about your company and how you can help solve their problem. 


Information Qualified Leads, like Automation Qualified Leads, are activity driven: where a person fills out a form to download the information, such as a whitepaper or blog. These prospects are often at the initial research stage and likely need to learn much about your company or service. 

Your marketing team usually provides additional email marketing follow-ups to nurture the lead quality. However, most IQLs will not move on to the next stage after getting the necessary information.


Marketing qualified leads are warm leads where the prospect has shown strong interest in multiple marketing content, such as attending a webinar, interacting via social media, requesting a catalog, or requesting sales team contact.

The marketing department may continue to nurture this lead with quality content, follow-up emails, or encourage sales force contact. 


The Sales Qualified Lead, also known as a hot lead, is where the sales team determines the prospect’s propensity to buy your product or service after a conversation. 

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Hot leads are otherwise known as sales-qualified leads. They are the best lead category because the prospect needs your product or service and may patronize you. They often link you to other prospective individuals requiring your product or service later.


Warm leads are someone who has shown interest in your company and its goods or services. You may have two-way communication with them and their opportunity to move them down your sales funnel to become economic buyers.


Cold leads is an individual or company who is unfamiliar with your brand. They may have commented on your social media or found your blog in a Google search. These leads are the hardest to nurture.

Cold leads could also be someone on a cold-calling or email marketing list or demographics of your ideal customer personas. The goal at this stage is to set up first contact with these leads and qualify them.

What is sales qualification?

Sales qualification determines whether a particular lead or a prospect's company is a good fit for your product, service, or solution. It takes place during a sales discovery call and determines the relationship and long-term.

Ask qualifying questions

Qualifying questions determine the lead’s propensity to buy by the lead’s budget, needs, target audience, authority, sense of urgency, or other factors.

Sales qualification is a company-centric metric. It is a yes or no. If you only sell to government organizations, then you can disqualify anyone who is not. 

Here are some common qualifying questions:

  • Does this human have a set budget to buy? 
  • Is this the decision-maker I should speak to? 
  • Is this an organization we can sell to? 
  • Will this individual waste time? 

The answers to these questions would result in you qualifying or disqualifying the prospect. 

The sales qualification framework itself is checkmark box. It’s a fog test. Discovery is more in-depth.

What is sales discovery?

Sales discovery is an in-depth two-part process. Firstly, the sales executive determines the happenings in the prospect's organization they can utilize to position the deal to success. Secondly, the prospect undergoes self-discovery whereby the prospect becomes pain aware and links them back to the root problem.

Sales Discovery Process

Here’s what sales representatives need to understand. There’s a difference between a problem and a pain point. A problem is the root cause of the pain point, but it is a pain point you feel. 

When you attempt to solve a problem, the customer, the client, or the prospect does not see and understand why you’re trying to solve it because they don’t view the problem; they only feel the pain. 

It is similar to seeing a doctor for a sore knee. The doctor tells the patient you need to walk on a treadmill and lose some weight. But the patient doesn’t take to that treatment because their knee hurts and it hurts to walk. 

The doctor, like the salesperson, must educate the customer that the excess pressure on the knee is causing it to hurt. If they want to alleviate the pain, you need to fix the problem. 

This applies to the salesperson too. 

That never happens on a sales discovery call. On a sales call, one person is talking about one thing, the other is talking about something else, and consequently, there’s no sale.

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Part 1: Organization Discovery

The first part of the discovery is determining the problem. You’re discovering what’s happening inside the organization that you can use to weave in your narrative and position yourself. 

Some good discovery questions include: 

  • What business pain points can this product help you solve?
  • What business problems can this product help you solve?
  • What has prevented you from solving the issue until now?
  • Are you using any current solutions to solve this pain point? If so, why are you switching?
  • Where does this problem fall on your list of business priorities?
  • What is your principal priority/goal in terms of solving this problem? 
  • What does success look like if solved?
  • Who in your team would use this product or service?
  • Which decision-maker (s) would be involved in the purchase of this particular product?
  • Can I follow up with you on mm/dd/yyyy?

You’re asking a lot of questions. You’re gathering all the information. You’re setting the stage for yourself. 

sales team

Part 2: Self-discovery

We get the prospect to make their self-discovery. We make them pain-aware and ensure they can link the pain point to the problem. 

Salespeople need to start asking appropriate questions to help them do their own self-discovery

You should not present or offer solutions during discovery – only ask questions. 

Know that telling your prospect does not mean they will believe you. Instead, if you ask them the right questions, it will elicit the correct responses. 

Then, you can frame it so that the prospect retells you the right things, and they, in turn, start believing their own words, making the sale easier.

sales leader and sales reps

Do you need to optimize your sales process?

You have to play to win when you want to grow your sales organization. Playing to win means thinking up creative solutions to your lead generation and conversion issues. 

Let me ask you this: 

  • Do you know how to find creative solutions to these issues preventing progress?
  • Do you have a quality lead generation strategy and lead qualification process? 
  • Does your sales team understand the difference between cold, warm, and hot leads? 
  • Do your sales representatives know how to ask the right questions?
  • Is your sales process optimized to progress your prospects to deal?
  • Does your team understand prospect planning?

Let me be clear, if the solution were in front of you, you would have solved it already.

Rose Garden Consulting is a world-class sales management consulting firm that redefines your process into a quality sales experience. We ignite revenue growth with transformative solutions based on behavioral economics.

We help close deals faster and at a higher rate. Rose Garden uses a combination of assessments to identify sales team members’ strengths and motivators, providing you with lousy cultural fits and recommendations. We present our Team Member Assessment findings in a one-day workshop.

We also recommend our sales accelerator assessment that provides you with an in-hand diagnostic and sales experience roadmap for quick results.

New businesses must stay up-to-date and ahead of the competition in today’s ever-evolving sales landscape. We provide Founders and CEOs with hands-on coaching to create systems & strategies to scale their sales teams. You can’t afford to leave anything up to chance.

Get started with a Team Assessment, or dive right in with our Sales Accelerator.

Ali Mirza

About the author:

Ali Mirza is the Founder & CEO of Rose Garden, a national sales consulting organization, and featured in Forbes, Inc, Business Insider, The Huffington Post, Business Rockstars, and The Wall Street Journal.

Ali is a highly sought-after public speaker presenting at multiple national conferences on innovative ways to accomplish transformational growth on your sales team.

Rose Garden provides unparalleled support and guidance to growth-minded founders via sales strategy differentiation, world-class sales culture creation, and exclusive playbooks, processes, and scripts to position them for limitless growth.

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