What is Lead Scoring?
Learn all about what lead scoring is with Nozak Consulting.
Many top-tier marketers and marketing firms point to lead scoring as the main driver of increased revenue. It is well known that paying more attention to leads is important, as a large number of lost leads are due to lack of attention.
No one argues that leads are important, but what is lead scoring, and how does it work? Lead scoring, to put it simply, is a means by which value is assigned to leads based on a variety of criteria. This value is almost always a point total which represents the value that lead brings to the organization or company.
How to Score Leads
So now that we know what lead scoring is, how is it done? First, this is a data-driven process, which requires knowledge about current leads as well as past leads. It is from assessing the behaviors of past leads we can find a way to score new leads.
For instance, when we score leads we are looking for behaviors that indicate their value. This can mean demographic information, do they fit a company’s average persona, are they already browsing a shopping page?
The more positive behaviors they engage in, the higher they will score. This may seem simple, but depending on the scope of your customer base, how many leads you’re dealing with, and the size of any databases, it can become very confusing.
Here are a few examples of lead scoring models to help you determine what is best for your company.
1. Scoring Demographic Information
Every business or brand has a segment of the population they appeal more to. An extremely obvious example of this would be a company that makes diapers. This would appeal to people who are around the average age for having children, expecting parents, and people who already have young children.
So what type or group of people does the company’s products or services align with? How are you going to get this information? One of the best ways is to have demographic information forms on your landing pages, or as part of your registration process.
This way you get the information you need to begin to determine who is drawn to your products and services. Future leads who fit into that demographic will be scored higher because they will be more likely to purchase from the company based on historical trends.
This layer of information can represent anything from age, sexual orientation, gender, country of birth, place of residence, and so on. The more specific the information you have, the more accurate your lead scoring will be later on.
3. Scoring Social Engagement
In the United States, 72% of adults use at least one social media app. The use of social media is high across the board, regardless of age, gender or income. This means that social engagement is essential and should be scored when considering the value of leads.
The more someone interacts with a brand or company on social media, the more likely they are to purchase goods and services from them. If a lead is regularly interacting with a social media page, they should be scored higher. If a lead has no engagement with a company’s social media presence, it should be scored lower.
This information can also be used to streamline and perfect the demographic understanding of customers. You don’t have to ask on social media for demographic data, it’s freely available.
4. Business Specific Scoring
There are reasons and circumstances that are specific to certain industries that should be scored differently. For instance, if you’re a B2B business, you should have a good idea of what other businesses need your services or products. If a lead is from one of those businesses, they should score higher.
For niche industries, the list could go on, but there are a few things to look for:
- Consistent engagement with the brand
- Historical trends and how they relate to current customers
- Market trends and current behaviors
- Email actions and responses
These are just broad categories that each business can fill in details on as needed. The more specific the scoring criteria the more accurate it will be in defining which leads are promising and which aren’t.
5. Disqualifying Factors
Just as having positive traits should indicate a higher score, there are some indicators that should remove points. The internet will still be the internet, so bot traffic and other spam elements are possible, any hint of that should immediately reduce the value of a lead.
What Factor Is Most Important?
When it comes to lead scoring, one of the critical distinctions that have to be made is what criteria is the most valuable. For each business this answer can be different, so what is most important when it comes to lead behavior and scoring for your company?
How do you find out what is most important?
Any front-line employee who has direct contact with customers can help. They can tell you how potential customers act who are more likely to make a purchase. They will also be able to give you valuable anecdotal evidence of demographic and social engagement.
Good salespeople keep track of what works so they can repeat it. Ask them, what content or piece of marketing has been the most successful in their experience. This information can help streamline both the marketing and scoring process.
It can be easy to forget about asking the customers direct questions. Everything we do is about taking care of existing customers and growing leads into new ones, so ask them what made them decide to make a purchase. What appealed to them most, what features, what content.
If you get this information and can draw from it, you will know which pieces of content, features, and deals make more impact on your target customer. These can then be assigned a higher point total so that lead scoring can be more precise.
Trust in the analytics that is being collected. While anecdotal evidence from salespeople and customers is great, the real proof is in the analytics. Here you will get hard data that you can use to set up value structures for your business.
Analytics will reveal who searches and clicks on what, and if those people end up being customers or leads that get away. This will help you form a positive engagement cycle, knowing exactly what is making an everyday difference in how your leads should be scored.
How to Calculate Lead Scores
Now that we know how to score leads, it’s time to talk about bringing it all together. There are numerous methods used to calculate scores, but this will give you a good idea of what is required.
1. Calculate Conversion Rate
A lead-to-sale conversion rate is easy to find. Simply take all of your new customers and divide them by all of your new leads. The resulting number is your conversion rate, or how often a lead becomes a customer.
This serves as a benchmark, you want to exceed this number in the future.
2. Choose Valued Criteria
This is going to take a combination of analytical understanding and instinct. Figure out which criteria matter most, such as downloading free deals, starting free trials, or even something as simple as expecting mothers. Rank the most valued criteria highest.
Make sure that your instincts and the data don’t contradict. These will be your most important leads.
3. Compare and Contrast
Calculate the conversion rate of those with the attributes you’ve selected as being most important. Then compare that to the overall rate of lead conversion you have. The goal here is to make sure that you’ve chosen attributes that indicate a higher chance of a conversion.
While this type of calculation is easy to do on your own, it is not the most accurate. There are data mining algorithms that can identify and categorize attributes and criteria with much less error than a human can. Consider switching to a lead scoring software solution once you’ve gotten a handle on the process.
Benefits of Lead Scoring
Now that we have a better idea of what lead scoring is, and how it can be done, what are the benefits of engaging in lead scoring? There are several benefits, but we’ll go over the most important of them.
The interplay between the sales and marketing departments is critical. This is how leads are managed through the sales funnel. Lead scoring helps by making that transition more effective and efficient. Leads will be transferred at the right time so that closing a sale is easier than ever.
For large businesses, better integration between marketing and sales can be a game-changer. For smaller businesses, this sets the ground rules that will help in the management of leads so that the business can grow and prosper.
Fewer Lost Leads
Having a score for each lead makes it easier to assign them to the appropriate place. Since most leads that are lost are done so through a lack of attention, those with good scores should be kept center and engaged. This will reduce the amount of lost business a company experiences.
The entire point of better integration, fewer lost leads, and lead scoring is to increase revenue. If done right, lead scoring has a major impact on the revenue a business generates.
High-quality leads that are dealt with properly are more likely to become customers. This helps a business target its resources and focus where it needs to be, on growing revenue and increasing profit.