The ROI of Lead Scoring
According to the Content Marketing Institute, more than 85% of marketers consider lead generation to be their top priority in 2016 – a telling statistic on the priorities of the modern marketer. However, lead generation neglects a critical element for creating a real return on investment: lead scoring.
As evidenced by the CMI study, many small business owners and marketing practitioners are laser-focused on new lead generation through content creation, digital marketing, conversion rate optimization and the like. But the unintended consequence of our collective lead generation obsession is that the task of actually determining which of the leads generated are sales-ready is relegated to the back-burner. That ultimately results in sales teams being sent troves of contacts who are either unable or not ready to buy.
Lead quantity vs. lead quality
Regardless of your company’s size or industry, focusing on lead quantity over quality is almost always a mistake for the simple reason that the intermediate result (increased lead generation) isn’t properly aligned with the ultimate business goal (gaining new customers).
Often, this is a product of the “quantity drives quality” line of reasoning – the higher the volume of leads generated, the more likely it is that some of them will be “good.” Of course, this is (1) not necessarily true, (2) sets the stage for a massive waste of sales resources and (3) usually results in the “good” leads being squandered along with the “bad” ones.
Implementing a lead scoring system addresses this issue and bridges the divide while providing tangible, bottom-line benefits to your company. In fact, Marketing Sherpa found that companies using lead scoring mechanisms increased their ROI for lead generation activities by 77%; a later study found that 68% of “highly effective and efficient” marketers attribute their success to lead scoring processes.
What Exactly is Lead Scoring?
At its most basic level, lead scoring is the process of ranking leads based on their perceived value to your company. Traditionally, this is accomplished in one of three ways:
- Profiling = evaluating a lead based on how closely it resembles your ideal buyer persona (company size, role, budget, location, industry, etc.)
- Behavior Scoring = evaluating a lead based on the observed activities and behaviors of the individual across multiple channels (attending a webinar, viewing an RFP, downloading a thought leadership piece, scheduling a call with Sales, etc.)
- Hybrid = uses both Profiling & Behavioral Scoring to assess the viability of each lead
The important thing to note from the definition above is that lead scoring measures that value of a lead to your company. The individual behaviors recorded and data points assessed will differ from company to company and industry to industry – but the result is a consistent, data-driven framework for prioritizing and segmenting all of those leads generated by your content and marketing initiatives.
For your sales team, a well-designed lead scoring program means pre-qualified, high-potential leads on which to focus all of their efforts; your marketing team gains audience segments that can be nurtured through automated programs until they are sales-ready, and an increased understanding of which types of content are effective at driving/nurturing leads (along with which ones are simply ineffective); finally, your company profits from higher close rates, fewer leads lost and increased sales productivity.
How Lead Scoring Increases Marketing ROI & Sales Productivity
The goal of a lead scoring program is to provide a data-driven framework to evaluate leads through the lens of your business – after all, what good is done by having sales call a lead who can’t afford your product or who works in an industry you don’t serve?
Each lead passed onto sales comes with a price tag: not only is the salesperson’s time valuable, but each bad lead has a pair of hidden opportunity costs: (1) it takes away from the time that sales can spend building a relationship with the “good” leads and (2) trying to sell leads before they are ready to buy often alienates them – resulting in the loss of a potential future customer and a sunk lead acquisition cost.
It’s important to note that a lead generation program is not a panacea to bad marketing and lackluster salespeople; it’s a tool to be used as part of a broader new business strategy. When used appropriately, it will help your organization increase revenue, cut unnecessary expenditures and deliver better customer experiences by:
- enabling you to see what content, tactics, and channels are driving qualified leads;
- ensuring that you are appropriately “segmenting” leads generated based on their sales readiness
- focusing your sales team’s time and effort on those leads that are qualified
- creating a personalized user experience for each lead based on their interests, behaviors, and readiness to make a purchase
- providing a mechanism to continuously re-engage those leads who aren’t sales ready in a productive manner
Getting Started: The Next Steps To Implement A Lead Scoring Program
Many companies I’ve worked with have had the same reaction when the topic of lead scoring is discussed: “That sounds complex and expensive.”
Nothing could be farther from the truth.
The first step to creating a successful lead scoring program is bringing together your executive leadership, marketing team and sales staff to sketch your ideal buyer persona(s), behavior(s) and customer journey(s). This need not be an exhaustive, in-depth process (although if you are interested, Marketo provides an excellent guide) – start by reviewing your business offerings and past sales. Some key questions to consider for creating your target buyer profile:
- Who is an ideal customer for us (industry, company size, revenue, etc.)?
- Where are our ideal customers located?
- How long is the sales cycle for an ideal customer (week, month, year, etc.)?
- Who are the decision makers at an ideal customer (CEO, VP, Director, Manager, etc.)?
- Where in the buying cycle is this lead (timeline)?
While that may sound like a lot of information to gather in a simple lead form, the good news is that many companies provide accurate data appending services – so you need only ask a few questions (Name, Title, Company, E-mail) on the form; the rest of the blanks can often be completed by the data appending company. Given that forms with fewer fields tend to result in higher submission rates and more accurate information, it’s usually safe to say that an appending service will pay for itself.
The above questions provide key insights into your ideal buyer – the next critical piece is determining which behaviors indicate that your buyer is “ready to buy.” Assuming you’ve configured your analytics goals, you can often see what behaviors drive goal completions; from your CRM, you should be able to track which goal completions ultimately resulted in sales.
Working backward from converted leads (i.e. leads that became customers), examine the individual goal completion paths. Look for what pages on your website those individuals tended to visit. Did they view a product demonstration, request a free trial, sign up for an account, download a whitepaper, watch a webinar or visit a services page? Identify those pages that frequently appear in the journey of your customers – and assign each a value just as you would for an analytics goal value.
Finally – and this is critical – make sure you assign “negative” values for behaviors and profiles that indicate the prospect is not legitimate or interested. This might include: having a title like “student” or “intern”, unsubscribing from your e-mail newsletter, cancelling a free account, visiting to a “Careers” page or not not opening more than X e-mails – this helps to filter out “false positives” and ensure that you are delivering the best leads to your sales team.
Once you’ve completed the above steps, determine an appropriate threshold value for “profile” scores and “behavior” scores – those above that level are “sales-ready”; those below can be placed into a lead nurturing program. Keep in mind that your lead scoring program can be as complex as you would like it to be – you can have seven different “threshold” values for both profile and behavioral scores, along with a customized path for all 49 different customer types. You can have multiple buyer personas. It’s your lead generation program.
As you are going through this process (and often, it takes companies less than 2 hours to complete once everyone is in the room), remember that the goal is to begin to foster alignment and secure buy-in from everyone involved. This approach works because it aligns everyone’s efforts – and that’s only possible if everyone is bought in and willing to do their part.
Once you’ve outlined your program and how you’d like to score each lead, find a platform that can implement what you want to do – too many companies find a vendor first, then are frustrated that the scores they want simply aren’t possible with the out-of-the-box versions of the software provided.
First understand what you want to measure as part of your lead scoring program, then find a partner with the technology to help you do it. This same approach whether you’re a small family business or a large corporation – and there are solutions out there for any budget. As an example, Saleswings start at just $11 per month and InfusionSoft provides an all-in-one CRM for just $199 per month.
In the end, remember that lead scoring is essential if you want to get the most out of your marketing initiatives and sales team. While it may seem daunting, there are hundreds of web resources to help you through the process.
Sam Ruchlewicz is the resident data expert and Senior Digital Strategist for Warschawski, a Baltimore-based Advertising, Marketing & PR Agency. He’s successfully helped companies across the B2B, B2C & B2G spaces use their data to overcome their marketing and customer acquisition challenges – and is always willing to help. Drop him a note here.