All those leads – and so little chance of converting them.
It’s a frustrating reality for marketing and sales professionals: Only about 20% of leads convert to a sale, according to MarketingSherpa research.
But there’s promising news. Companies that handle leads well – through tactics such as scoring and nurturing – generate 50% more sales at a third of the cost, Forrester researchers found.
Bottom line: Companies that use lead scoring get more quality sales.
Lead scoring is just like it sounds. Leads get scored with numerical values you assign to different behaviors and activities. Then you decide if their total score is worthy of moving through your funnel.
And like so many other sales functions, lead scoring can’t be left to chance. It can’t even be left to simple practice.
Lead scoring is effective only when it’s handled and evaluated at the same level as any organizational process that keeps the business afloat. Companies that are serious about using lead scoring realize as much as a 77% increase in lead generation ROI, the MarketingSherpa researchers found.
Here are the six critical steps to building an effective lead scoring system.
1) Identify your buyer
You want more of your best customers – no matter how you define “best.” They might be the customers who have the greatest need for your solution, spend the most, buy often and truly benefit from your relationship. Perhaps they’re all that wrapped in one. Or maybe they are the best customers for different product lines or services.
To build a strong lead scoring system, you want to start by identifying your ideal buyer – and your ideal buyer is mostly based on your best customers.
To create a semi-fictional representation of your target audience, pull together what your best customers have in common:
- demographics such as gender, age, income, location and education
- job title and function
- goals and challenges
- buying behaviors, and
- business habits
Couple that with insight you get from colleagues who have contact with customers, such as salespeople, customer service reps and technicians. Also, add analytics about customers’ online activity such as visits to your site and social media interaction.
Then create a customer profile for each target audience you want to reach and move through your sales funnel. You may even create several targets – perhaps based on product type, location, company size, preferences, etc. Here’s a sample idea:
2) Line up the data points you want to score
With your target audience identified, you want to determine the actions and attributes you’ll score to determine if they’re a lead worthy of moving along – or maybe one to pursue later. Criteria can be broken into two main categories: demographics and behavioral.
Demographics are about the characteristics and unique attributes the lead has. For demographics, you might assign scores to criteria such as:
- Role or job title
- Company size and/or revenue
- Social network participation and activity
Behavioral criteria are about the actions leads take with your organization and engagement. For behavioral, you might assign scores to criteria such as:
- Subscribe to and opens email
- Visit Web page
- Download or view free, gated content
- Take online demo
- Read and/or responded to blog post
- Engage in social media
- View video
- Request free trial
- Register for and/or attend webinar
- Attend trade show
- Complete surveys
- Listen to podcast
- Attend online course
You’ll also want to identify “bad” behaviors and demographics – criteria that’ll prompt you to deduct points in your scoring system. For bad behaviors, you might assign negative points to criteria such as:
- Unsubscribe from email
- No website activity for specific time frame (perhaps a month)
- Change role or job
- Comment negatively in social media
- Decline initial meeting
- Ignore personal email
- Complain about contact
- Location is outside of service location
- Has wrong title, industry and/or role
- Aligned poorly (for instance, lead has Gmail address, and you sell B2B)
3) Assign your point value
Here’s where you need to tightly align your ideal customer and the behaviors and demographics. You want to identify the attributes that most often lead to a sale and weigh those more heavily than other, less-important attributes.
You can choose the scale. Some organizations assign one or two point values and rate on a 10-point scale. Others use a 100-point scale with values increasing by five points.
Things to consider
Consider things such as these examples when assigning scores (and recognize what’s most important in your organization):
- Leads who sign up for e-newsletter updates don’t often turn into sales. But leads who access gated content convert 50% of the time. So e-newsletter sign-ups get assigned 10 points and white paper sign-ups get 50 points.
- Leads who attend trade shows interact on site but very few respond to follow-up efforts. Conversely, 30% of the latest attendees at your webinar signed contracts. So webinar attendance gets 100 points and trade show attendance gets a 25-point assignment.
- Leads must be in a certain location, they must employ X number of people, or maybe they must operate under required government guidelines for you to even consider them. For your “must have” criteria, assign the highest numerical score so those leads rise to the top immediately.
3 best practices
To help you assign the right values to the criteria:
- Work with salespeople. They have the deepest insight on what prompts customers to consider your products, services and promotions. They also see first hand the signals leads give when they’re ready to buy or just move to the next level in your sales cycle.
- Talk to customers – your newest and most loyal customers. Find out about their buying journey to uncover the most important factors in taking an action (such as signing up for a webinar or taking a demo) – and which actions were the biggest influence on their final decision to buy.
- Dig into your analytics. Look deep into your sales software or CRM system to find the campaigns, specific piece of content and event that generated the highest conversion rates. Those are worthy of high-point value.
2 important factors
“Lead scoring is only effective if it’s highlighting prospect activity and triggers that actually correlate with interest and/or demand,” says Matt Heinz, Founder and President at Heinz Marketing, and author of Successful Selling. “Too often we track activities that don’t necessarily mean a prospect is ready to engage with sales. For example, let’s say your prospect is spending extra time on your blog. They might be in early educational stages and not ready for sales. They might have attended your last six webinars. Maybe they’re qualified, or maybe they’re just bored!
“Look back at past activity and focus on scoring behavior that’s historically, tightly connected with buying cycle velocity.”
Another important factor: Make sure your point value is balanced between the behavioral and demographic criteria. If you don’t, you’ll qualify leads who are interested but aren’t a good fit (because they scored lots of points for activity, but had very few points based on the demographic criteria). Or you might qualify leads who look just like your current customers, but aren’t at all interested in change (because they were spot-on for demographics, and had a few points for signing on your email list).
4) Pick your threshold
Once you’ve scored leads, it’s time to determine which are good to go, should be set aside for further nurturing or tossed altogether.
You probably don’t want to set one threshold – any lead above it, you pursue; any lead below it, you dump. Instead, experts agree you want to focus on scores that are in some state of sales-readiness.
Set a level for immediate follow-up (and make sure salespeople know that’s what you’re sending them). Assign a range for leads who are less sales-ready, and can move into or out of the range by increasing or ceasing interaction. And set a very low bar for leads to be tossed.
Be prepared to analyze and test your thresholds around 30 days after you set them. Look at how many, which and the value of those that converted to determine if thresholds need to change. Ideally, you’ll see a clear cut-off point. Realistically, you’ll see where to narrow the margin on your less sales-ready leads.
5) Optimize lead scoring before you launch it
You can test your scoring system before you actually launch it – which will help with its effectiveness but won’t completely eliminate the need to follow up on its effectiveness.
Try this test on the existing leads and opportunities in your pipeline:
- Take a random sample from your existing sales software or CRM system.
- Look at the details you have on each contact’s demographic and behavioral information.
- Note each’s activity so far.
- Assign each lead points based on the scoring criteria you just created.
- Determine the percentage of the sample that would qualify as a lead (based on the threshold you determine).
Ideally, the percentage of sales-qualified leads is better than or has higher quality than your current system.
6) Schedule follow-up, tune-up
Lead scoring can only improve with regular, thorough follow-up on the process. Once you have at least 30 days of data compiled, you’ll want to analyze the system.
Some important things to consider, according to research from Marketo:
- Where do the leads score? In the bottom 25% of your scale? The mid-50%? Or at the top of your scale? Where are the outliers? This can help identify your ideal lead score. Remember: A perfect score isn’t necessarily a perfect sale.
- How is the content in your lead generation plan performing? Significant – and even small – changes in design or distribution can affect scoring and you’ll want to recognize those.
- Which behaviors most correlated with moving to the opportunity stage? Which behaviors correlate to moving to the next stages?
- Did low-scoring leads convert? Did high-scoring leads falter? While they might seem like anomalies, you can learn from their path to sale or no-sale.
- What needs to change? Look for qualifications and points-awarded that might have skewed things. Perhaps you put too much emphasis on the demographic score – or not enough on behavior scores.
- What was the pivotal moment? Try to determine who and when the final decision was made to help determine if lead generation content is in the right place at the right time.
Dig deeper into the analytics that are most important to your organization and sales cycle. Then make changes and adjust for another round of scoring.
Does all this sound like a lot of work? Nearly all CRM/marketing/sales automation software today can handle any and all of it and deliver the analysis on demand as regularly as you’d like.
3 more ways to apply lead scoring
A lead scoring system can help with more than qualifying leads.
Other uses for a lead scoring system include:
- Identifying opportunities for lead nurturing. Some low-scoring leads just need a little extra attention and they’ll be viable. If you can identify a common group that falls just below the lead threshold, move them into an alternate nurturing campaign.
- Finding your biggest fans and referral opportunities. Lead scoring is a tool that essentially tracks lead engagement so you can see who is extremely satisfied and engaged with your brand. Recognize them and they might advocate for you.
- Testing assumptions – about your target audience, ideal customers, sales process, etc. You can tweak what you offer, the leads you pursue and how you do it every 30 days if you want as you analyze the data.
Best practices for lead scoring
Here are three best practices for effective lead scoring.
- Align marketing and sales. Almost 90% of companies that get the two functions aligned on lead nurturing and scoring report a significant increase in leads that are turned into opportunities, a CSO Insights study found. Sales and marketing want to work together to set goals and responsibilities for lead scoring and nurturing. A formal agreement on goals and responsibilities will hold each group accountable for finding, scoring and nurturing worthy leads into paying customers.
- Create more than one model. You can avoid misleading scores by creating separate scoring models for each product line or service offered. A generic scoring model often doesn’t take into account the intricacies of each solution and what makes it attractive (or not attractive) to potential customers. With an individual model, lead scores will more likely reflect customers’ true interest (or lack of).
- Set a “point decay.” Leads who lose interest and stop engaging need to be let go. You don’t want to chase or hold out hope for leads who haven’t interacted in a significant amount of time. Your point decay – the time you kick an inactive lead out of your system – should reflect your normal sales cycle. No activity within the norm, cut your efforts.
Practical tips for lead scoring
- Customize scores. Not all lead generation content and prospect activity are created equal. For instance, some website visits – such as a pricing page or contact us page – are higher value and deserve a higher score than a single product page visit. In some cases, you want to break down scoring deeper.
- Create account lead scores. Similar to customizing scores for different products or services, customize lead scoring for an account (or company). Create a combined score from all the contacts at the same company who are interacting with your content or salespeople to reflect a total picture of the activity and engagement. Then score the account’s activity.
- Put caps on scoring activities. To avoid getting inflated scores, you’ll want to limit how often an activity is counted. For instance, count for a maximum of three website visits per day or credit no more than four qualifying activities within an hour.