Referral marketing can be gold for your business development. Middle market companies, in particular, lack the big marketing budgets of large companies but still need a larger flow of revenue than a small business. Solid leads can help fill this gap; you're already set up to look good and simply need to close.

How to qualify marketing leads

But closing business alone is not enough. Executives must consider the type and quality of the business they bring in. Picking the wrong customers might actually cost you more than it brings in. And approaching new customers the wrong way leads to lost opportunities.

You must smartly qualify and nurture leads in order to make the right decisions. Here are five elements to consider during the qualification process.

1. Nature of the Referral

Leads are not all alike. A customer could provide a full introduction between one of your salespeople and a contact, or that customer might only offer you a name. Contact lists from a partner could contain people that the partner has already done business with, or it might just be a list of people who signed up for a contest at a trade show.

Depending on the nature of the referral, you may have a leg up on a chance for business development, or you might be essentially cold-calling somebody. Verify the nature of the contacts with the source that supplied them by, for example, finding out whether the people in question were told to expect an email or phone call, or by determining how long ago the relevant contact list was created. Even the best referral has a natural life-span. If too much time passes after an initial contact is made, the target may not even remember your company's name.

Also, consider whether the reference was directed to your company or at a specific employee. If it's the latter, be sure that the right person follows up. Should that person be unavailable for a follow-up, then be sure that whoever reaches out mentions that employee's name.

2. Customer Needs

You wouldn't think of asking someone to buy a particular product or service off of your line card if you had no idea what he or she needed. First you ask about interests, then mention particular offerings that might be a fit.

Treat a lead similarly. Even if a trustworthy person introduced your company to the prospect, you are still showing up out of the blue in a potentially disturbing manner if you aggressively pursue business. Don't immediately press for a sale. Find out the target's circumstances and how your company can help. It may be that you can't at the moment, but at least you are avoiding creating a negative impression while keeping the possibility open for future business.

3. Right Match between Company and Customer

Your company has its own interests just as much as a lead does. As I once heard a sales trainer explain, every company has its own oddly shaped door; that is, a company has a particular business model and a way of working with customers that works best within that context. Companies want customers that are shaped to fit through that door.

Some customers will never be a fit. For example, they might want inexpensive transactions when you're geared for a more elaborate consultative sale. Have a conversation with the prospect to see if there is a match.

4. Total Value

A key aspect of business development with contacts should focus on maximizing various forms of value for your company. What you really want are long-term relationships with customers, not one-off transactions that cause you to continuously prospect at a furious rate. Similarly, you want to understand not just what value you can bring to the customer, but what value the customer can, in turn, bring to you.

Value means more than just money. Customers can provide value by offering good referrals, bringing repeat business, opening a door to new types of business opportunities, and being easy to deal with. Some of these factors, such as referrals, might simply be gravy given a particular level of business, but with less direct types of business, they could be more important. Other factors, such as the difficulty of dealing with a customer, can subtract existing value. Understand the full value, good and bad, that a prospect might be able to offer.

5. Ongoing Use of the Right Metrics

The qualification of leads doesn't happen solely before you do business. You've gained information from the process, but you won't know for certain how accurate it is. Decide on the key metrics for a customer — revenue, profitability, number of good referrals, amount of support needed, or anything else — and measure them. Be sure that customers who seemed to be a good fit at the outset of the process remain that way over time.

Getting leads is great, but qualifying them is even better for your business. Acting on what you've learned is the best practice. Make your leads work for you the right way.

How should companies handle, from a diplomatic standpoint, leads that start to appear unfavorable at some point in the qualification process? Let us know what you think by commenting below.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal The New York Times Magazine Newsweek, the Financial Times Chief Executive Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter and circle him on Google+.