What is lead scoring – and is it right for you?
What is lead scoring – and is it right for you?
In our post on lead nurturing we highlighted how the B2B buying landscape has radically changed.
- Your prospects are increasingly self-educating by conducting research online.
- This means that they are searching websites, attending webinars and downloading thought leadership pieces long before they are actually ready to buy.
- Yet, they may already be appearing as a ‘lead’ in your sales pipeline.
Understanding exactly where they are in the sales process is critical if marketing and sales teams can react with appropriate strategies for the stage of the buying journey that each lead has reached.
And this is where lead scoring comes in.
Let’s look at how it can be best implemented and used – and who it can be best used by.
What is lead scoring?
‘B2B marketers who emphasize lead volume over lead quality reduce sales efficiency, increase campaign costs, and fuel the gap between sales and marketing.
To generate qualified demand, marketers need technology and processes that:
- Capture lead quality information
- Validate, score, and classify leads
- Nurture leads that don’t yet warrant sales attention
- Define metrics that directly identify marketing’s contribution to the sales pipeline and closed deals’
(Laura Ramos, Forrester Research, Improving B2B Lead Management)
Lead scoring is a way to assign value to prospects according to how far they have moved from expressing initial interest to revealing purchase intent.
It tracks their journey through the sales funnel and assesses their likelihood of converting to a sale.
The rise of inbound marketing is very much a result of responses to the changes in buying behaviour identified above. Yet, one of the core issues faced by those generating leads from inbound marketing is that they can attract a high volume of leads but that these will vary greatly in quality.
In fact, according to Marketo, less than 25% of new leads are in any way sales-ready.
Lead scoring can be highly effective in identifying and separating sales-ready leads from those with interest but little intent – or ability – to purchase.
How does lead scoring work?
Lead scoring is based on two types of information available to you: these are usually referred to as explicit and implicit scoring.
Explicit scoring is based on information that the prospect tells you directly, for example when they complete a data capture form. It can also be aided by data appending to the information they provide.
Typical explicit data includes a BANT (Budget, Authority, Needs and Timeline) assessment based on:
- Job Title / Role
- Company size
Implicit scoring is based on information that you infer about the prospect, usually from their online behaviour (although offline behaviour can also be used).
These may be:
- Revisiting the website blog
- Or revisiting a product page
- Downloading a White Paper
- Or downloading a product spec/manual
- Opening an email
- Or clicking on a link in an email
- Registering for a webinar
- Or attending a webinar
It should be immediately apparent that not all actions are equal.
In the examples above, a heavier weighting will be given to the second of each pair as they are stronger buying signals.
Sometimes these differences are classed as examples of latent buying behaviour and active buying behaviour.
Some lead scoring factors will be negatively scored, rather than positively scored.
Examples of these could be those who are students rather than employees, those who live in countries not served by the company, those using common email domains – such as gmail.com – rather than corporate domains and those whose ‘inferred company’ name based on the IP address maps to an ISP rather than a corporate domain.
Do you need lead scoring?
To really benefit from lead scoring, you need to make the leap beyond using just a CRM and invest in marketing automation software to complement it. Only the most basic level of scoring can be carried out by CRM alone.
Although lead scoring is not difficult to implement, it does require a commitment to regular reviews and an in-depth understanding of exactly who your target customers are.
There are three questions to ask yourself before you go down the lead scoring route to assess your readiness.
1. Are there enough leads in my pipeline?
If your sales team doesn’t even have enough leads to make qualifying an issue then lead scoring is not for you.
Focus instead on lead generation.
2. Is your sales team contacting the leads you generate?
Your organisation needs a good sales and marketing alignment to create the necessary feedback loop that lead scoring relies on.
If there is an existing alignment issue introducing lead scoring will only exacerbate, rather than fix, the problem.
Concentrate on creating – as a minimum – a service level agreement (SLA) that clarifies how many leads marketing must deliver to sales and how many sales must follow up with.
3. Do I have the means to capture the data I need?
You will need two types of data:
– Explicit (usually captured by forms)
– And implicit (usually captured by analytics and lead management platforms).
Without these in place your lead scoring system will be, at best, incomplete and, at worst, highly misleading.
Your focus should be, first of all, on improving the quality of the data you can capture and use from your marketing activities.
How to implement lead scoring
If you’re good to go there are some big wins out there.
Analysts agree that, in companies where sales and marketing teams are collaborating closely and continuously, lead scoring can truly skyrocket conversion rates. According to Douglas Burdett, lead scoring can increase a sales team’s closing rates by as much as 30%.
So, how can you implement your own lead scoring?
Remember your goals
The first thing is to keep the fundamental reasons for introducing a lead scoring system front of mind at all times.
- To avoid potentially off-putting sales contact at the early stages of lead nurturing.
Instead, your goal is to progress and track leads through the sales funnel by serving content best-suited to the stage of the journey they are at.
- To maximise the efficiency of your sales team by identifying leads who are sales-ready.
Define a marketing qualified lead
You need to determine what criteria makes for a marketing qualified lead (MQL).
This is something that must be agreed upon by both sales and marketing – and it is also something that will need regular reviewing based on analysis and feedback.
You will need to identify both explicit scoring factors, such as demographics, and implicit scoring factors, such as online behaviour.
Here are some of the things you’ll want to explore:
Explicit scoring factors
- Are VP-level executives more important than others?
- Are certain industries key to your sales?
- Which countries do you not service?
- Are small companies as important as enterprises?
- Are certain departments or job roles critical in making buying decisions?
Implicit scoring factors
- What actions indicate buying readiness (e.g. requesting a demo/specific information)?
- Which pages on our site indicate consideration?
- Can we define top of funnel activity (eBooks, webinars) and middle of funnel activity (pricing pages, product video demo)?
- What is the expected timeline – or number of touchpoints – before an MQL converts to a customer?
Create the scores on the doors
Once you’ve identified and agreed on the criteria for an MQL you need a points system to rank the various scoring factors and you need a threshold at which a lead becomes an MQL.
A quick example:
One of your buying personas is a decision-maker at a large company. And you know that typically leads have visited at least five pages of your website and viewed at least one pricing page.
These factors would be weighted to ensure that anyone meeting all three would become an MQL and considered ready for sales team contact.
Lead scoring is for life – not just for set-up
Here’s the bad news:
There is never a point when you can say ‘we’ve cracked it – we’ve got the perfect lead scoring system.’
It just doesn’t work like that – your offering changes, your market shifts, competitors tread on toes, your marketing collateral alters, your marketing channels grow and so on.
The world outside doesn’t stop and nor does the lead scoring process.
Here’s the good news:
In time, most lead scoring becomes more and more accurate in predicting sales-readiness.
Typically, ongoing feedback from sales and adjustments from marketing turns what was a finger in the air guess into a smooth-running lead scoring machine.
And the best news is:
These two highly desirable prizes that lead scoring delivers.
- Vastly improved ROI
Marketo research indicates that a 10% increase in lead quality will translate into a 40% increase in sales productivity.
- Greater alignment between sales and marketing
The process of creating lead scoring – and monitoring its effectiveness – is a textbook case of sales and marketing needing to work together toward shared goals.
In practice, lead scoring helps marketing gain a better understanding of the needs at the bottom of the funnel and ensures reps only need to focus on the best leads marketing provides.
We’ll leave the last word to SiriusDecisions, taken from their What’s the Score report:
‘A solid lead scoring approach not only helps to rank prospects against one another but can smooth the lead flow and serve as the baseline for building a range of business rules that include ownership, role and activities.’