Lead scoring is a methodology used by sales and marketing departments to determine the worthiness of leads, or potential customers, by attaching values to them based on their behavior relating to their interest in products or services. The "value" of each lead varies from company to company, but generally is characterized by the interest shown in the company or their places in the buying cycle. Companies assign point-based systems in qualifying leads or simply refer to them as "hot," "warm" or "cold" based on the history of interactions.
The first goal of companies is to get sales leads or prospects into their pipeline, but once a substantial number of leads have been obtained, it's important for companies to focus on the prospects that are most interested in buying, which is where lead scoring can play an important role.
Lead scoring process
Sales teams and marketing departments need to agree on the definition of a qualified lead for the lead scoring process to begin. To score a lead, information is gathered about the lead's occupation and role in that industry to determine whether they're appropriate to sell to. Information about a lead's activities, demographics or areas of interest also come into play when figuring out whether that lead would be interested in a company's products or services.
Each action is assigned a point value depending on how likely the software predicts that action will lead to a purchase. Leads who are an ideal fit and who have expressed a high interest in a company are deemed marketing-qualified leads and are typically passed to sales departments, whereas those who are deemed a good fit but with minimal interaction are sent to marketing teams for lead nurturing.
Metrics that companies use to measure a lead's interest include which email messages leads respond to; which pages they visit on the company website; and how long they visited, any forms they filled out or downloaded or whether they clicked on a blog post or connected via social media. The importance of various metrics can change depending on whether the company is selling a product or service and what industry they are selling into.
Importance of lead scoring data
Companies use historical data from processes such as marketing automation to predict a typical path that a customer takes before a sale is made. Using practices such as inbound marketing, marketing automation, customer data and lead nurturing, companies can examine which pieces of content are most engaging to customers and how many interactions between the company and prospect it took to turn that person into a customer.
It's partly through this lead scoring process that allows sales teams to separate a customer's interest in products from their intent to buy. For instance, website page views or downloads of certain documents may indicate that a prospect is merely interested but not intending to buy anything, and these actions will be scored lower than customers who send buying signals by requesting a trial or viewing a pricing page. Determining the value of actions such as this typically requires input from marketing and sales teams.
If companies invest in lead scoring software to improve their overall sales process, it's important that marketing and sales teams closely align their lead management efforts. The technology must also be properly set up with the right metrics and should be used consistently. Otherwise, the lead scoring data may paint an incomplete picture on potential prospects and lead sales and marketing reps down a disadvantageous path.
Lead scoring actions
Companies use various actions to determine the success of lead scoring efforts, and the importance of those actions varies from company to company. Examples of lead scoring actions include the following:
- Unsubscribe rates on emails can measure the effectiveness of marketing campaigns and diagnose inaccurate targeting methods or flaws in the content itself. Conversely, response rates, or "clickthrough" rates -- the rate in which prospects open certain marketing materials or otherwise perform an intended action -- can measure the quality and effect of the produced content.
- Average engagement per lead is determined by comparing lead scores -- or engagement scores -- of nurtured leads against leads that haven't been touched by any sort of materials. A drop in this metric signifies a need to update content or explore new channels of engagement. If companies focus on guiding prospects to perform a specific activity, the success of those efforts can show the effectiveness of certain types of content as well.
- The source of information a prospect receives can be an indicator of how interested they are in becoming a customer. If they find content on a third-party site and click on it or download it, the prospect may be just gathering information on the software market. If they exhibit buying signals by following or interacting with social media accounts, requesting trials or demos or visiting pricing pages, they may gain a higher lead score.
- Sales cycle time is the length of time it takes for a lead to become a customer. The shorter the sales cycle, the better the lead nurturing and scoring process is because of the cost benefit of gaining that new customer.
- Upsell and cross-sell opportunities help determine the revenue per customer. Companies aim for highly engaged leads that are well-versed on products that they might want to buy.
Lead scoring tools
There are many software tools that can help companies implement lead scoring. Most large CRM vendors have some form of lead scoring tools, including Salesforce Einstein Lead Scoring, Microsoft Dynamics 365 for Marketing, Adobe Campaign, as well as offerings from Oracle and SAP.
Beyond the large CRM vendors, many independent software companies offer third-party lead scoring tools to plug into marketing and sales tools. This includes companies like Lattice Engines, 6sense, EverString, Marketo, Televerde, Leadspace, Velocify and many more. Lead scoring tools help companies capture leads and nurture them by monitoring their activity and then scoring it. Lead scoring software offers little value on its own, but when plugged into CRM systems and pipeline workflows, it can provide tremendous value by putting sales reps and marketers in front of the right prospect at the right time.
There are several features that lead scoring tools need to provide to be helpful to marketing and sales teams:
- Create and manage ranking scales for leads, based on company objective and market position. If your company focuses on enterprise customers, nurturing small and medium-sized customers as leads would be detrimental to your sales reps.
- Allow users to assign scores to leads based on predefined criteria established by the company's sales and marketing departments. If a company targets enterprises, its lead scoring tools should score enterprise prospects at a higher score than small businesses.
- Provide reporting and analysis to sales and marketing departments that match with company benchmarks to align incoming prospects with what the company seeks in a customer.
- Integrate with sales and marketing software, as well as analytics and artificial intelligence
- Provide importing and exporting capabilities for companies to import data from other sources such as surveys or industry statistics. Lead scoring results must be easy to export for use in reporting tools.