Lead Scoring 101: Determining the Value of Your Prospects
When you first start utilizing inbound marketing campaigns, you are most likely to be concerned with gathering as many leads as possible. After all, people have to be in your funnel in order for your marketing to be working right? Well, not exactly.
You also need to make sure that you are getting quality leads which are most likely to yield actual customers that benefit from your product.
This is where lead scoring comes in and can help bolster your strategy to the next level.
What is Lead Scoring?
Just as it sounds, B2B lead scoring is the practice of giving each of your marketing leads, or prospective customers, a score based on a set of predetermined factors. You can utilize a number of factors to help determine the score such as the professional information they have given you or how they have engaged your website and brand across multiple platforms. Every company will have a different model for scoring their leads, but one of the most frequently used techniques to develop your value system is to use data from past leads in order to find a baseline.
To start, look at those contacts who have already become customers and find any commonalities they have amongst them. Then, you’ll need to look at the characteristics of those contacts who didn’t become customers. After analyzing this set of historical data, you can determine which attributes should be weighted more heavily based on the likelihood that how they indicate whether or not a prospect is a good fit for your product. This sounds easy enough but depending on your business model and the leads in your database, it can quickly become a complicated process.
There is a lot of different datasets you can look at when analyzing your current and lost customer base. However, you will want to remain focused on what you look at so as to not become inundated and overwhelmed with data in which can make determining the important information difficult. Here are some data points that are a good place to start:
- Demographic Information By asking demographic questions (think job title or geographic location) on your lead forms, you use your leads’ answers to see how well they fit into your target audience. You can then remove outliers from your sales team’s queue by subtracting points from those leads who fall into a category you don’t sell to (i.e. a specific geographic location).
- Company Information Maybe your product or service functions best for business to business (B2B) companies as opposed to those who are business to consumer (B2C). Or you might learn that mid-sized companies are your sweet spot. Again, by asking your leads specific questions, such as company size or industry, on your forms you can weed out poor customer fit early on.
- Online Behaviors Understanding how your current customers interacted with your website as prospects can give you a lot of insight into predictive behaviors. Try to look at what offers they downloaded, how many downloads they completed, and which pages they interacted with or spent the most time on. This will give you priceless insight into what your customer base finds most valuable.
- Email Engagement It is not enough for someone to opt-in to receive your marketing emails, that’s only the first step. But monitoring open and click-through rates will give you a much better idea of how interested a prospect is in what you have to offer.
- Social Engagement Similarly, how a prospect engages with your company on social media platforms can be an indicator of their interest in becoming a customer. Not only can you look at click-through rates here, but you can analyze how often a lead retweets or shares your posts and you may even consider utilizing their Klout score to gain further information.
- Spam Detection Finally, you may decide to award negative points to those leads who fill out a form in a way that indicates it may be spam. For example, names left uncapitalized or non-business emails may be indicators of bad contacts.
Clearly, there is a lot of data to sift through in order to figure out what is important and how it can predict successful customer relationships. But you have a lot of tools at your fingertips that can help you throughout this process. First, talk to your sales team about what they are seeing during their process. They may have already noticed trends in their day-to-day activities that could benefit your research. Second, talk to your customers! Find out what they think were the reasons that ultimately led them to purchase from you. Finally, turn to your analytics. This is the hard part but can yield a lot of valuable insights. Try running an attribution report to figure out which marketing efforts led to conversions throughout your funnel and acknowledge the content people are looking at before the submit their information on a lead form.
The payoff from all this work can have a substantial impact on your ability to accurately assign lead scores.
How to Leverage Lead Scoring for Your Business
Once you have determined which data points will correctly predict successful customer relationships, you can begin to calculate a lead score and implement the practice into your daily activities. Here is one of the simplest ways to calculate a lead score:
- Calculate the lead-to-customer conversion rate of all your leads. This simply means to divide the number of new customers you acquire by the total number of leads you generate. This rate is your benchmark moving forward.
- Identify the customer attributes that indicate higher quality leads. Selecting your attributes is completely up to you and is where all that research and analysis that you’ve done comes into play. This is what makes your model so unique from every other company’s.
- Calculate the individual close rate of each attribute. Just like it sounds, you’ll need to determine the close rate for each attribute you selected.
- Assign point values. Compare the close rate of each attribute to your overall close rate and use that to assign appropriate values to each. You will want to base the point values of each attribute on the magnitude of their individual close rates.
There are more complex models for calculation available, but the above will get you started with lead scoring quickly and provide a base to work off of. After you are more familiar with the practice, you may choose to recalculate using a more advanced method.
Benefits of Lead Scoring
Now that you know what lead scoring is, hopefully, you have started to get a sense of why this method can benefit your organization.
Ultimately, the benefits all boil down to an ability to prioritize leads in an effective way but there are a number of other benefits as well.
- Increased Sales Efficiency Scoring your leads can give your sales team insight into a prospect’s readiness to purchase. This helps prevent them from spending time and energy on prospects that may just be in the researching phase of their purchasing process.
- Increased Marketing Effectiveness Lead scoring allows marketing teams to effectively measure the ROI of their efforts by giving you a closer look at which channels and programs are producing high-quality leads. Additionally, lead scoring can help improve lead nurturing by identifying where prospects are in the buying cycle and sending targeted content which is more relevant to them during each phase.
- Improved Sales & Marketing Alignment These two teams must work together to define the profile of a sales-ready prospect and understand the type of leads which convert at a higher rate. From there, marketing can create targeted programs for these prospects and hand off high quality, purchase-ready leads to the sales team.
- Increased Revenue By effectively identifying the best leads, you can reduce your customer acquisition costs and, in turn, increase the revenue you recognize from each new customer.
In essence, lead scoring is a practice in efficiency. By identifying the factors that indicate a successful customer relationship, you are able to market better to the right leads which will increase their likelihood of purchasing. Though it sounds like a complex process, the heavy lifting is completed in the data analysis stage. After that, you’ll be able to quickly calculate your lead scores and begin passing off high quality leads to your sales team.