Lead qualification using scoring is a concept that’s not really new. All intelligent businesses realize that lead generation is not really the big issue; rather, the real one is separating the wheat from the chaff. The inability of marketing to identify and hand over the best opportunities in time to the sales team is what causes most lost opportunities, and the ever-prevailing tiffs between marketing and sales.
The Solution – Lead Scoring
Lead scoring is valuing your leads based on their demographic, firmographic and behavioral data. Simply put, you qualify your opportunities based on whether or not they fit the persona of your target audience, and how engaged are they with your business (their response to your email campaigns, their activities on your website etc.), and their position in your sales cycle.
It does the great work of keeping your sales and marketing on the same page, while helping them identify what action to take for a particular set of leads. All this information would help you drive better engagement and faster sales closures for your business. Here is how a simple instance of activity-based scoring would look like.
Look Beyond Lead Scoring – Engagement Scoring
However, there would be certain cases, where only lead scoring would not be enough. For instance, if in your database, there are 2 leads, with identical lead scores of 250, however, with drastically different ages, with Lead A being 7 days old, and lead B being 100 days old. Your sales team would not be able to identify the sales ready lead just by looking at the lead score here.
A concept more advanced than lead scoring comes into picture now – Engagement Scoring. Engagement scoring typically considers recency of your engagement related activities, in addition to their lead scores.
Let me specify how that would go down. Your engagement score is calculated based only on engaging activities, and a timeline that you specify, say past 30 days. So, the lead activities of only the past 30 days are being used to calculate your engagement score. So, you immediately know by looking at the engagement scores of these 2 leads (Lead A = 100, Lead B = 0), that Lead A is the one that is probably interested in buying from you.
However, even with the evident benefits, only roughly 44% of businesses are using lead scoring (according to a survey by Decision Tree Labs, September 2013). Now, I would quote some benefits here that you would derive if you have a scoring mechanism set. Before that, here’s a stat from MarketingSherpa:
“Organizations that use lead scoring experience a 77% lift in lead generation ROI, over organizations that do not use lead scoring.”
Yes, I know, this is an external statistic, and may or may not apply to your business, but it is a universal fact that sales and marketing need to be aligned and that sales need to focus their efforts on the best opportunities first. Therefore, if you have a good lead volume, or plan to grow in future, you must have a lead scoring strategy in place.
Benefits of Lead and Engagement Scoring
1. To identify the sales readiness of your leads and prioritize sales activities
Not all the leads you generate are sales-ready; in fact, quite a few of them are utter junk for your business. However, without a scoring system in place, this is how your database would look like.
With this, how on earth would your sales team identify which leads to call first.
Result – they end up calling the junk leads first, thus not only wasting their own time, but also losing the opportunities that would have actually converted to sales, because they call them late.
“The odds of contacting a lead if called in 5 minutes are 100 times higher versus 30 minutes. The odds of qualifying a lead if called in 5 minutes are 21 times higher versus 30 minutes.” (Source: Forbes)
Aftereffects of this – Lost opportunities and reduced sales morale. So, lead scoring can help you close this gaping black hole between marketing and sales functions, by giving the sales team a view like this:
This database has an accumulated score from all the different lead activities, therefore, the sales immediately know that the leads with the highest scores are the ones they have to call first, and the lowest ones can be deprioritized for now. Therefore, they make the right calls at the right time and consequently get more closures.
2. Identify up-sell/repeat sale opportunities from existing customers
Now, in case of businesses that can make repeat sales, whether now (most service businesses, like health and beauty clinics, spas etc.), or a year down the line (travel businesses), existing customers are a very viable business opportunity. This especially gets strengthened by the fact that it’s often easier to make a repeat sale, than a new one (The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Source: Marketing Metrics).
Engagement Scoring is your trump card here. If you suddenly see that a 1 year old customer has suddenly started accumulating engagement score again, in all probabilities they want to buy again and are looking for options. A call from sales at this point would result in a quick closure in such cases.
3. Helps marketers segment and target leads
So, your sales team has hand-picked the hot leads, made their calls and closed their deals. What about marketing? Lead and Engagement Scoring would help them identify different brackets of engagement and create customized offers to push your raw opportunities to conversion. What’s even more interesting is that they would be able to identify the lead sources that get the most immediate closures, and advise you to allocate your marketing budgets accordingly.
For instance, say your marketing ninja John has identified Facebook as the source from where the engagement scores have recently been higher, therefore, you can put in more money into Facebook to generate even more leads that would have a higher and quicker conversion rate.
4. Drive marketing and sales alignment
This is perhaps the least quantifiable, but most viable advantage of lead scoring. Everyone knows of the tension that typically exists between sales and marketing functions, with sales dissatisfied of the quality of leads marketing hands over to them, and marketing complaining about the lack of an accurate feedback from sales about the lead quality.
Now, with a common lead and activity management and scoring in place, not only would all the activities be tracked properly, but there is a transparency that comes only from having all the cards on the table from both ends. Whatever intelligence is available is derived from scoring of both marketing and sales-related activities, therefore there is more harmony within the team, and consequently more closures.
5. Find engagement percentage and take actions accordingly
Engagement Scoring would allow you to identify what percentage of all your prospects are engaged at any given point, and therefore devise strategies to increase engagement.
You can look into your existing data, and identify what kind of offers have driven higher engagement in the past, (like a survey/contest), and run a similar one again to reactivate your disengaged leads.
6. Identify the winners and laggards from your products/services
Identify which of your services/products are attracting more engagement and which ones are lagging behind. This would help you devise engagement campaigns for the services that are getting left behind.
As you can see, the prospects interested in the South African Tour Package seem more disengaged, so you can send them offers etc. to increase engagement and get them to close fast.
Some Stats for the Benefits of Lead and Engagement Scoring
To strengthen my case, I would quote some further statistics from Lead Scoring Survey by Kentico. They surveyed businesses that have already employed lead scoring in their business and asked them about the benefits that they received, and look at the awesome response that they got. The image represents the percentage of businesses that observed a particular benefit as a result of their lead scoring setup.
So, you know that there are definite benefits. So, let’s get you started.
How to start Lead and Engagement Scoring
1. Organize your Lead Capture and Management
Have a system in place that would not just store leads from all your sources (yes, all), but would also track all the web activities, email activities, and everything else that would contribute to your lead/engagement scores.
If this is not set up, you would not only need quite a bit of manual effort on the side, but would also miss on certain kinds of tracking – which means inaccurate scoring. Without a central scoring system all your leads would not be scored equally, and that’s not what you want.
2. Try to Use an Integrated System instead of Segregated Tools
If you are doing different activities (email, lead capture, CRM etc.) in different systems, you would have trouble managing the scoring accurately anywhere at all, and once again the gap between your marketing and sales would widen, leading to lost business opportunities.
3. Set up your Lead Scoring Criteria
Now, to develop an ideal scoring system, you need to consider 3 things:
a) Demographic/firmographic scores
For B2B Businesses, a certain industry, a certain designation (decision-maker) would hold more weightage than others would. And, of course, another thing to consider is whether or not a business has the budget to buy your solution, and what is the company’s size.
For B2C businesses, you need to define the age, gender, financial, locational (if), authority (decision-maker again) and other demographic attributes that would make your ideal buyer persona.
All/or some of this information would be captured during the prospect’s first interactions with your business on your landing pages/query forms.
b) Activity Relevance Scores
How actively and relevantly are they interacting with your business? For instance, if they are very active on your website, and visiting pages like your Product features, Pricing etc. they would score higher on your relevance sheet.
However, if they are active on your website, but visiting pages like Career Options, Work Culture etc. then they might be interested in your business, but not as a prospective buyer, so visits to these pages should have a lower score to bring them off your sales radar.
All businesses are different, so there is no set formula for the kind of activities you would rate, but some things are a given. Any activity that gets a lead closer to closure in your sales cycle is a positive lead activity and anything that gets a lead away from your business is a negative lead activity.
You would typically assign scores based on:
1. Importance marketing and sales assign to an activity – Both your teams would need to sit down together to define the activities of importance.
2. How an activity contributes to taking the lead forward and backward in the sales process.
3. Experience and anecdotal data – look at your database, talk to your sales and marketing people and you would be able to identify which activities push the leads down the sales funnel.
Let’s take a few activities as examples:
Marketing Related Activities
a) Newsletter subscription form filled = +2
b) Product Inquiry form filled = +20
c) Unsubscribe or email bounce = -50
Sales Related Activities
a) Sales person had an awesome conversation = +30
b) The prospect said not interested to buy your product or service = -100
As you can see, I have assigned scores based on the importance of the respective activities to the sales cycle. Even though newsletter subscription is a positive activity, it doesn’t say much about whether or not the lead is interested in spending money with you, therefore, the score assigned is comparatively less. On the other hand, an awesome sales conversation is a definite positive in the direction of sales closure, so a higher score has been assigned to that.
c) Recency Scores
Now, most sales closures are time-bound. If a lead was actively looking for a solution, and evaluating your offering 6 months ago, but is not active anymore, that might be because they chose another solution over yours, or temporarily dropped the idea of buying a solution. In both cases, these leads are relevant for your marketing team for nurturing, but not for immediate sales. Therefore, you must score your leads based on the recency of their interactions with you.
The last 2 points – relevance and recency are achieved by using engagement score.
4. Define a “prospect to opportunity” score threshold
This would vary for different businesses, and you need to start scoring before you can define a threshold. After a few closures in your new scoring framework, you would be able to identify the average score after which the leads are sales-ready. One of our clients from real-estate business shared that when a lead crosses a score of 200, it is ready for a serious sales conversation.
This would differ for you, depending on the scores you assign to different activities, and the length of your sales cycle.
5. Test. Analyze. Repeat
After you start, you need to periodically take feedback from your sales and marketing teams, and look at the conversion data to see if the relevance assigned to a particular activity is alright or not, and if the model needs some modifications. Like all things, your scoring framework also needs to be tested from time-to-time.
So, this is how you can get started with Lead and Engagement Scoring. Your turn! What are you doing to qualify your leads, and align your marketing and sales functions?