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Lead Scoring

The ROI of Lead Scoring

According to the Content Marketing Institute, more than 85% of marketers consider lead generation to be their top priority in 2016a telling statistic on the priorities of the modern marketer. However, lead generation neglects a critical element for creating a real return on investment: lead scoring.

As evidenced by the CMI study, many small business owners and marketing practitioners are laser-focused on new lead generation through content creation, digital marketing, conversion rate optimization and the like.  But the unintended consequence of our collective lead generation obsession is that the task of actually determining which of the leads generated are sales-ready is relegated to the back-burner. That ultimately results in sales teams being sent troves of contacts who are either unable or not ready to buy.

Lead quantity vs. lead quality

Regardless of your company’s size or industry, focusing on lead quantity over quality is almost always a mistake for the simple reason that the intermediate result (increased lead generation) isn’t properly aligned with the ultimate business goal (gaining new customers).

Often, this is a product of the “quantity drives quality” line of reasoning – the higher the volume of leads generated, the more likely it is that some of them will be “good.” Of course, this is (1) not necessarily true, (2) sets the stage for a massive waste of sales resources and (3) usually results in the “good” leads being squandered along with the “bad” ones.

Implementing a lead scoring system addresses this issue and bridges the divide while providing tangible, bottom-line benefits to your company. In fact, Marketing Sherpa found that companies using lead scoring mechanisms increased their ROI for lead generation activities by 77%; a later study found that 68% of “highly effective and efficient” marketers attribute their success to lead scoring processes.

What Exactly is Lead Scoring?

At its most basic level, lead scoring is the process of ranking leads based on their perceived value to your company. Traditionally, this is accomplished in one of three ways:

  • Profiling = evaluating a lead based on how closely it resembles your ideal buyer persona (company size, role, budget, location, industry, etc.)
  • Behavior Scoring = evaluating a lead based on the observed activities and behaviors of the individual across multiple channels (attending a webinar, viewing an RFP, downloading a thought leadership piece, scheduling a call with Sales, etc.)
  • Hybrid = uses both Profiling & Behavioral Scoring to assess the viability of each lead

The important thing to note from the definition above is that lead scoring measures that value of a lead to your company. The individual behaviors recorded and data points assessed will differ from company to company and industry to industry – but the result is a consistent, data-driven framework for prioritizing and segmenting all of those leads generated by your content and marketing initiatives.

For your sales team, a well-designed lead scoring program means pre-qualified, high-potential leads on which to focus all of their efforts; your marketing team gains audience segments that can be nurtured through automated programs until they are sales-ready, and an increased understanding of which types of content are effective at driving/nurturing leads (along with which ones are simply ineffective); finally, your company profits from higher close rates, fewer leads lost and increased sales productivity.

How Lead Scoring Increases Marketing ROI & Sales Productivity

The goal of a lead scoring program is to provide a data-driven framework to evaluate leads through the lens of your business – after all, what good is done by having sales call a lead who can’t afford your product or who works in an industry you don’t serve?

Each lead passed onto sales comes with a price tag: not only is the salesperson’s time valuable, but each bad lead has a pair of hidden opportunity costs: (1) it takes away from the time that sales can spend building a relationship with the “good” leads and (2) trying to sell leads before they are ready to buy often alienates them – resulting in the loss of a potential future customer and a sunk lead acquisition cost.

It’s important to note that a lead generation program is not a panacea to bad marketing and lackluster salespeople; it’s a tool to be used as part of a broader new business strategy. When used appropriately, it will help your organization increase revenue, cut unnecessary expenditures and deliver better customer experiences by:

  • enabling you to see what content, tactics, and channels are driving qualified leads;
  • ensuring that you are appropriately “segmenting” leads generated based on their sales readiness
  • focusing your sales team’s time and effort on those leads that are qualified
  • creating a personalized user experience for each lead based on their interests, behaviors, and readiness to make a purchase
  • providing a mechanism to continuously re-engage those leads who aren’t sales ready in a productive manner

Getting Started: The Next Steps To Implement A Lead Scoring Program

Many companies I’ve worked with have had the same reaction when the topic of lead scoring is discussed: “That sounds complex and expensive.”

Nothing could be farther from the truth.

The first step to creating a successful lead scoring program is bringing together your executive leadership, marketing team and sales staff to sketch your ideal buyer persona(s), behavior(s) and customer journey(s). This need not be an exhaustive, in-depth process (although if you are interested, Marketo provides an excellent guide) – start by reviewing your business offerings and past sales. Some key questions to consider for creating your target buyer profile:

  • Who is an ideal customer for us (industry, company size, revenue, etc.)?
  • Where are our ideal customers located?
  • How long is the sales cycle for an ideal customer (week, month, year, etc.)?
  • Who are the decision makers at an ideal customer (CEO, VP, Director, Manager, etc.)?
  • Where in the buying cycle is this lead (timeline)?

While that may sound like a lot of information to gather in a simple lead form, the good news is that many companies provide accurate data appending services – so you need only ask a few questions (Name, Title, Company, E-mail) on the form; the rest of the blanks can often be completed by the data appending company. Given that forms with fewer fields tend to result in higher submission rates and more accurate information, it’s usually safe to say that an appending service will pay for itself.

The above questions provide key insights into your ideal buyer – the next critical piece is determining which behaviors indicate that your buyer is “ready to buy.” Assuming you’ve configured your analytics goals, you can often see what behaviors drive goal completions; from your CRM, you should be able to track which goal completions ultimately resulted in sales.

Working backward from converted leads (i.e. leads that became customers), examine the individual goal completion paths. Look for what pages on your website those individuals tended to visit. Did they view a product demonstration, request a free trial, sign up for an account, download a whitepaper, watch a webinar or visit a services page? Identify those pages that frequently appear in the journey of your customers – and assign each a value just as you would for an analytics goal value.

Finally – and this is critical – make sure you assign “negative” values for behaviors and profiles that indicate the prospect is not legitimate or interested. This might include: having a title like “student” or “intern”, unsubscribing from your e-mail newsletter, cancelling a free account, visiting to a “Careers” page or not not opening more than X e-mails – this helps to filter out “false positives” and ensure that you are delivering the best leads to your sales team.

Once you’ve completed the above steps, determine an appropriate threshold value for “profile” scores and “behavior” scores – those above that level are “sales-ready”; those below can be placed into a lead nurturing program. Keep in mind that your lead scoring program can be as complex as you would like it to be – you can have seven different “threshold” values for both profile and behavioral scores, along with a customized path for all 49 different customer types. You can have multiple buyer personas. It’s your lead generation program.

As you are going through this process (and often, it takes companies less than 2 hours to complete once everyone is in the room), remember that the goal is to begin to foster alignment and secure buy-in from everyone involved. This approach works because it aligns everyone’s efforts – and that’s only possible if everyone is bought in and willing to do their part.

Once you’ve outlined your program and how you’d like to score each lead, find a platform that can implement what you want to do – too many companies find a vendor first, then are frustrated that the scores they want simply aren’t possible with the out-of-the-box versions of the software provided.

First understand what you want to measure as part of your lead scoring program, then find a partner with the technology to help you do it. This same approach whether you’re a small family business or a large corporation – and there are solutions out there for any budget. As an example, Saleswings start at just $11 per month and InfusionSoft provides an all-in-one CRM for just $199 per month.

In the end, remember that lead scoring is essential if you want to get the most out of your marketing initiatives and sales team. While it may seem daunting, there are hundreds of web resources to help you through the process.

If you liked this post, check out our Small Business Guide to Marketing Automation.

Sam RuchlewiczSam Ruchlewicz is the resident data expert and Senior Digital Strategist for Warschawski, a Baltimore-based Advertising, Marketing & PR Agency. He’s successfully helped companies across the B2B, B2C & B2G spaces use their data to overcome their marketing and customer acquisition challenges – and is always willing to help. Drop him a note here.

How to Determine When A Lead Is Sales-Ready

Today’s Guest Post is by Ellen Gomes – Enjoy! 

Relay runners know that the exchanges make or break a race. The same is true for businesses of all sizes. Whether you’re an enterprise industry with huge marketing and sales teams or a small business owner piecing everything together yourself, figuring out when a lead is ready to buy can be tricky business with potentially serious consequences.

Leading scoring is how successful business of all sizes “practice” the exchange. It is a key element to lead nurturing that helps companies determine whether prospects need to be fast-tracked to sales or nurtured further. There are four basic dimensions to lead scoring:

1. Lead Fit
2. Lead Interest
3. Lead Behavior
4. Buying Stage

Each dimension will help you assign a number value to actions and characteristics that create a “score” for each lead. All you have to do then is determine what score makes him qualified for a sales contact.

Lead Fit

Scoring lead fit means collecting some data on your prospect. You can collect data with online forms for gated content or registrations.

  •  Demographics—This consists of information on the lead himself, such as his job title, years of experience, etc.
  •  Firmographics—This is information you want to capture about organizations, like the company size, revenue, and locations served.
  •  Budget, Authority, Need, Time (BANT)—This is more advanced qualification, but can tell you where the lead is in the buying journey by collecting information on her budget, purchasing timeline, etc.

Calculating an initial lead fit score will help you focus on those who might actually become sales.

Lead Interest

Determining lead interest involves monitoring a prospect’s interest in, and interaction with, your content and networks. This score will tell you how interested someone is in your brand, in addition to your information. Monitor behaviors like email opens and click-throughs, social media engagement, and downloads.

Lead Behavior

Monitoring lead behavior starts to move beyond determining if a lead is a good fit, to determining where she is on the buying journey. These scores are developed and honed over time, but if you know your audience and your industry, you can put together a strong initial estimate.

Consider which behaviors and online activities tend to correlate with leads which eventually become customers. Those are “active behaviors,” and should come with high scores. Conversely, “latent behaviors”—like early-stage content and blog posts—earn much lower scores.

Buying Stage

Determining a lead’s buying stage is the final touch to pinpointing where he is on the buying journey. One simple way to structure and score the buying stage is to align it with a traditional sales funnel.

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  •  Early Stage—A person who is aware of your business but may or may not ever become a qualified lead. She will read blog posts, download infographics, and share funny videos.
  •  Mid Stage—This is when a person becomes a lead. He has engaged with your content over time, and displayed some of the usual buying behavior. He has moved on to content like buying guides and ROI calculators. He may have contacted you for more specific information.
  •  Late Stage—These are qualified leads that would either pass to sales or start receiving content like pricing, demos, and discount offers.

Once you establish criteria for your buying stages, it will be much easier to score leads and get an objective perspective on where they are on the buying journey.

Lead Nurturing Means Lead Scoring

Businesses that excel at lead nurturing generate 50% more sales-ready leads at a 33% lower cost, and the metric for effective lead nurturing is a strategic lead scoring system. This process can help SMBs from the start, and scale as the business grows into an enterprise.

If you don’t have a system in place for scoring leads, it’s never too soon or too late to start, and no business is too big or too small. Start at the top by identifying some of the simple lead fit data points that characterize your target audience, and then score your current leads against them. Before you know it, you’ll be nurturing more effectively, timing sales calls perfectly, and closing more business.

If you liked this post, check out our Small Business Guide to Marketing Automation.

Author: Ellen Gomes is a Content Marketing Specialist at Marketo and co-author of The Definitive Guide to Lead Nurturing—a newly released eBook that offers unique insights, and practical lessons for nurturing leads like the pros.