What is Lead Scoring?
Lead scoring, as the name indicates, is assigning numerical values to your leads, thus ranking them to assess their readiness to buy your product or service. Gartner defines lead scoring as a method of evaluating the quality of sales leads by using a relative and objective ranking of one lead against another based on a variety of buyer profile fit and behavior criteria. Point values are assigned to all leads generated, based on their multiple attributes and behaviors as exhibited along their customer journey. When a prospect reaches a certain numerical score at which the chances of converting him into a customer is high, he is considered a hot lead for your business.
Lead scoring helps sales and marketing teams assess better the stage of sales funnel each lead is in and how close he is to making the purchase. By reaching out to prospects who have already reached a certain step in the sales funnel (such as asking for a free quote), sales people are more likely to be able to lead the consumer to compete a purchase.
Studies have shown that companies that adopt lead scoring systems tend to have better lead qualification rates, higher conversion rates and greater revenue growth. A good lead scoring system helps marketing generate a good volume of qualified leads which will be acted upon by sales to boost the revenue of a business.
A good lead scoring model can catalyze conversion rates by identifying the most qualified leads for the sales team. Prospects who show higher levels of intent to purchase are assigned higher scores. Once identified, sales teams can focus their efforts on encouraging those qualified leads to make the purchase. Similarly actions on the part of prospects showing less interest earn them negative scores. Thus lead scoring serves to provide specific insights into where a prospect is in his buying journey and is critical in maximizing middle-funnel strategies. The insights thus obtained can be used to nurture leads and improve sales.
Why Lead Scoring Important to Businesses?
Businesses with efficient marketing funnels zero in on the right customers much faster, thus reducing the Customer Acquisition Costs (CAC). This helps sales teams to use their time more productively by focusing on the most qualified leads. Lead nurturing campaigns powered by a good lead scoring system helps increase the marketing funnel efficiency of any business. Businesses can use marketing automation tools to create lead scoring algorithms to improve both customer experience and their own marketing funnel efficiency. Lead scoring systems can help sales and marketing teams work toward realizing the personal and organizational goals of improving sales.What are the Impacts of Lead Scoring on Marketing and Sales ?
No love has ever been lost between marketing and sales teams! Traditionally, both these departments have been organizational silos where Marketing identifies leads that are passed to sales. The only thing these two departments have ever seen eye to eye on has been the fact that leads are important. Often marketing feels sales has failed to follow up the leads they have provided while sales remains perennially unhappy with the volume and the quality of the leads handed over by the marketing teams.
Lead scoring is one automation tool that can help close the gap between marketing and sales.
Businesses that have an efficient lead scoring system in place have shorter sales cycles. Category scoring is yet another aspect of lead scoring that ensures faster conversions and shorter sales cycles. In short, lead scoring demands that marketing and sales teams align closely to effect better sales and improved bottomline.
A lead scoring system can be based on lead engagement or lead fit or even both.
Customer Engagement-based Lead Scoring
Prospects who engage more with your brand are more likely to end up as your customer than the ones who engage less. Businesses that use a built-in lead scoring system in their e-mail marketing campaigns, categorize leads into e-mail marketing workflows based on the levels of their engagement. Subsequently, prospects will receive e-mail content pertaining to their respective stages in the sales funnel. Less engaged prospects receive top of the funnel content, medium engagement earns middle-of-the funnel content while high levels of engagement calls for content meant for the bottom of the funnel. As the prospect progresses through the various stages of his buying journey, he will be automatically shifted from one pre-built e-mail workflow to the next, thus enhancing his overall brand experience prior to buying.
Fit score-based Lead Scoring
Lead scoring can help marketers focus on a prospect’s fit score. Graded from ‘A’ to ‘F’ a prospect’s profile fit score indicates how well his profile suits your business’ Ideal Customer Profile (ICP). A, B and C grades are considered a good fit and passed to the sales team while the marketers focus their efforts on nurturing the rest of the leads having the remaining grades and convert them into good fits. Marketers often design e-mail workflows to suit particular fit scores by focusing on unique aspects manifested by leads having a certain fit score. E-mail segmentation and personalization based on fit score render e-mail marketing campaigns more effective while making lives easier for sales teams.
5 Ways Lead Scoring can close the gap between sales and marketing
- Set up a Fit/Engagement Matrix.
Sales and marketing can team up to set up a fit/engagement matrix, ranking prospects for fit on one axis and for engagement on another to generate the right prospects with higher levels of fit and engagement. The fit axis lists demographic parameters such as role of the prospects in the organization, geography, size of the organization, etc. The engagement axis lists the actions or behaviours on the part of the prospects like attending webinars, opening emails, downloading white papers, etc. Pardot marketing automation from Salesforce combines the demographic and behavioural data of prospects to identify good leads. The marketing and sales teams get a clear idea of the right course of action to be taken when these parameters are plotted on a quadrant.
- Plan a customer journey to nurture leads and prime them for making the purchase
As already stated, prospects with high fit and engagement deserve immediate action. Such prospects more often than not quickly decide to purchase your product/service. Sales and marketing teams should work together to devise plans to improve the engagement and fit of the other segments. High fit and low engagement segment merits account based marketing (ABM). Nurturing campaigns that target low fit low engagement segment can include invitations to webinars and propositions to download content. Overall, prospects get a better customer experience all through their customer journey, thanks to the lead scoring system.
- Employ Category Scoring
A lead score can help identify a hot prospect while a category score defines what exactly the so-called hot prospect needs. A category score explains what a lead score means in terms of multiple categories like product/service, customer pain points, etc. A category score warrants that sales and marketing join hands to refine the leads, interpret what lead score actually means and provide sales with as much relevant data as possible. For example, an FMCG distributor would want to know what products his prospective retailers would want to buy from his long product line of toiletries, packaged foods, cosmetics, paper products, etc. A sales representative who has access to those details can easily provide the right kind of information, thus shortening the sales cycle. Also, automation helps sending relevant messages when a category score reaches a certain point.
- Set a limit on Lead Score in terms of its value and timing
A high lead score doesn’t necessarily indicate a hot prospect all the time. The time the prospect took to reach the score matters. A long period of, say, two years to reach a very high lead score would mean that the prospect is not hot for your product or service anymore. The sales and marketing people must sit together and decide whether to set the score back to zero from time to time if their average sales cycle is short or reduce points for specific periods of prolonged inactivity. Businesses with long sales cycles needn’t set the score back to zero when a prospect remains inactive for a long time. This again calls for a joint discussion between sales and marketing.
- Employ feedback from sales to adapt your Lead Scoring system
A lead scoring system may not offer the desired results right from the word go. You may not get your lead score right initially which again calls for a serious discussion between sales and marketing. If the lead score fails to capture what the prospect wants, the system needs to be tweaked for which feedback from sales is vital. Sales and marketing must work together to decide on the changes that need to be made to the lead scoring system so that it can identify and filter out the best qualified leads to close sales.
An Oracle study says “Molex, a global manufacturer, increased marketing qualified leads (MQLs) by 93% and sales pipeline by 380% after implementing lead scoring”.It goes on to say
that “lead scoring increased the win rate by 103% for business services company ADP”, subsequently causing its revenue to increase by 48%.
Lead scoring facilitates better relations between sales and marketing by helping the former focus on the most qualified leads while enabling the latter to focus its efforts on identifying the right prospects. It also offers better transparency and visibility to each lead profile identified by marketing to help sales close deals faster.
In a nutshell, a good lead scoring system aligns the efforts of marketing and sales to increase the effectiveness of marketing and sales campaigns by objectively analyzing the potential worth of a new lead and convert them into customers within a short sales cycle.