March 21, 2019
Lake One’s Guide to Lead Scoring
If you’re being buried in leads or you feel like you’re taking shots in the dark to figure out which leads should get the attention of your sales team, it’s time to take a look at Lead Scoring. We’ve put together an A-Z guide on Lead Scoring to help you understand it from the basic concepts to implementation. We’ve broken down everything from the very definition of Lead Scoring to the why, when, and how. We cover all of the necessary components of the Lead Scoring process as well as how lead nurturing plays into the process. We’ve even provided a step-by-step guide to implement your own Lead Scoring Model. Enjoy!
- What is Lead Scoring
- Why Use Lead Scoring
- When to Use Lead Scoring
- Lead Scoring vs. Lead Nurturing
- Necessary Components of Lead Scoring
- Lead Scoring Process
- Lead Scoring Tool
- Ways to Leverage Lead Scoring
- How to Build a Lead Scoring Model
- How to Measure Lead Scoring
Lead scoring is a systematic and scientific way of ranking leads based on their readiness to purchase a product or service from your company. Scores are assigned to certain criteria such as a lead’s fit for your product or service, expressed interest through different activities like filling out a form or watching a webinar, and position in the buying cycle. [Click here to read our blog on lead scoring basics.]
Difference between traditional lead scoring and predictive lead scoring
With traditional lead scoring, it’s up to your team to go through all of your past data to identify trends in customers that have made a purchase and leads that have been lost. Once trends have been discovered, the team will need to decide which attributes pertain to those trends most directly then assign each of those individual attributes a value or score, either positive or negative. Once a score is assigned, it is essentially a try-and-check system where A/B tests are run to find out if you are using the best attributes. It is never really over as it will need to be checked periodically and updated to ensure accuracy.
Predictive lead scoring takes advantage of technology and algorithms to automate the entire process above. The tool compiles all of the information in your database and uses its algorithm to determine which attributes are the most relevant for your customers. One of the biggest perks of predictive lead scoring is it is fully automated so it continues to learn and adjust every time new data comes into your database. So, the longer you use it, the smarter and more accurate it will become.
Nothing drives a wedge between your sales and marketing teams faster than missed goals and unsatisfactory results. When there is no structure- or service level agreement- in place for evaluating and determining Marketing Qualified Leads (MQLs) or Sales Qualified Leads (SQLs) you’ll end up with individuals making a lot of guesses. Marketing will send leads that aren’t ready over to sales, and sales will be so busy spinning their wheels on those unqualified leads, they won’t notice or get to the hot, new lead that comes in. Simply put, lead scoring helps with sales and marketing alignment. Lead scoring can be documented and agreed upon in a sales and marketing SLA (Service Level Agreement). Teams that do this, tend to credit marketing as a top driver of leads.
Lead Scoring provides a reliable, predictable, recurring means for deciding which leads are sales-ready, and ordering them by importance takes the guesswork out for both teams.
Over time, lead scoring should increase the volume of qualified leads and conversion of those leads into sales opportunities, increase productivity on both teams, and shorten the overall sales cycle because both marketing and sales will be focusing on the right leads at the right time.
Believe it or not, there is a right and wrong time to start using lead scoring. If you are a small business, just starting out with your sales process, it’s actually best to speak with as many of your leads as possible. Part of implementing your marketing and sales process will be discovering what level of understanding and kinds of questions people have about your products early on based on the information on your website and in your marketing materials.
In order to begin to create an understanding of what qualified leads and good opportunities look like, it will be helpful to gain that early feedback from all of the leads you can. If you take the lead scoring approach too early, you run a risk of filtering out leads that could have actually potentially been good.
As you grow, once your marketing is firing on all cylinders and you have so many people coming through the funnel that your sales team can’t possibly handle them all, this is the ideal time to implement lead scoring into your process to help categorize and prioritize.
Within every funnel, there are stages that a lead passes through to get to the bottom and become a qualified opportunity. Some pass through the funnel faster than others. For those that are taking a bit longer, lead nurturing is a means of helping them through the funnel to the next stage. Lead nurturing is a process of developing an understanding of groups within each stage of the funnel in order to provide them with targeted marketing and communication to predictively answer their questions or ease their concerns.
The Lead Generation Marketing Effectiveness Study found 68% of successful marketers cite lead scoring based on content and engagement as the most effective tactic for improving revenue contribution from lead nurturing. Within the lead scoring process, marketing maintains responsibility for the lower scoring leads, and lead nurturing can help encourage those leads to take actions that will build up their lead score and ultimately become a qualified lead.
Things you need prior to lead scoring: Cooperation and alignment between your Sales & Marketing teams and consensus around the following:
- Customer Personas – These are your ideal customers and their common traits- you can and probably should have more than one.
- Target Audience – This should be primarily defined from market research done by marketing combined with customer persona information.
Customer Journey – What are the steps your current customers took to become customers? This may change as your company grows and products expand, etc., but you should have an understanding of what this looks like currently as you go into building a lead scoring system.
Explicit Data/Demographics: Information provided directly from a prospect typically collected from website forms, such as email address, job title, budget, etc.
Implicit Data/Actions or Behavior: Information you collect based on a prospect’s actions around your website and with your marketing content such as email open & click-through rates, gated material downloads, and webinar views.
Scoring Criteria for Each Data Type: This is where you identify which data points exist within each category and start to decide which data points are the most relevant to a lead eventually becoming a customer or being disqualified.
Score Allocation: Once you’ve identified all of your most relevant data points, you’ll essentially rank them by providing each point with a certain score. The scores can and should include positive and negative values.
Testing & Evaluation: Before you begin your first round of lead scoring, you should have a specific amount of time you’d like to run the scoring until you gather all of the new scoring data and evaluate the accuracy of the data points and scoring allocations you’ve started with. Especially in the beginning, you should do quite a bit of A/B testing and refining the data points and values for accuracy.
The lead scoring process can be tedious and involves many important steps, but if done right the first time, it will pay off big time once the system is in place.
To identify common behaviors that your customers have taken throughout their journey to become customers, you’ll want to first have a handle on all of the possible behavior options they have available to them.
This means sifting through your entire web site and current marketing materials which will take some time and effort, but it should be quite enlightening and may even help you clear out some old items that could be confusing to your prospects and lead them astray from the ideal customer journey.
Some items you’ll want to note:
- Website: page views, time on site/s, time between visits, interactions with chat
- Gated Material: submissions, views, multiple views, shares
- Email: signing up for subscription, open rate, click-through rate
- Additional Misc.: blog views, link clicks within blogs, podcasts listened to, social media actions, webinar registrations and/or interactions
There are a couple of ways to assign scores once you have all of your data points. You could attempt to rank them all from top to bottom and assign values in that same order. However, what you’ll most likely find is that you start to group behaviors into buckets. These could be high, mid, and low priority behaviors and demographics.
For example, requesting a demo should be part of your high group, while retweeting a tweet may be in the low category. That tweet means they have their eyes on your company and are interested in what you have to say, but that demo request means they are directly interested in learning about your product and how it can help them. You can assign scores based on your buckets, so your highs might get 15-20 points, while your mids get 5-10, and your lows get 1-5.
There can and should also be a negative bucket meaning that if someone takes a negative action it will reflect in their overall lead score. Negative actions could be things like not showing up to a webinar they registered for or unsubscribing from your email list.
One final category should be score degradation which essentially means a score will drop if a lead doesn’t take any action for a certain amount of time.
Lead Scoring Tools
All of the information in the previous couple of sections is for if you are going to be doing traditional lead scoring, which is a manual process. To take the work off of your hands and save your teams a ton of time and headaches, you could look into getting a lead scoring tool. Here are a few things you’ll want to look for in a great lead scoring tool:
- Ease of Use: The entire point of acquiring new software is to make your life easier, make sure to gather as much information as possible and get a demo to ensure the lead scoring tool will be easy to implement and use.
- Integration with your CRM: If you don’t want to rewrite your entire process and software stack, you’ll want to make sure early on that the lead scoring tool will integrate with your current CRM system. You could start by seeing if your CRM provider offers a lead scoring tool.
- Lead Management & Prioritization: Ideally, with predictive lead scoring, the tool should manage and present the highest priority leads first removing any guesswork and room for human judgment errors.
As a HubSpot partner, we highly recommend checking out HubSpot’s Lead Scoring tool.
If you aren’t going with a predictive tool, you’ll need to do the work of setting up a system for prioritization by score. This is where those buckets or direct correlation with your funnel will come in handy.
High Priority Leads: Hand Over to Sales ASAP
At this point, you should have your salespeople in charge of following up with the leads with the highest scores. Create a system to distribute the leads amongst you sales team. One way is to have the sales manager assign leads evenly, one by one from the top down. You could also assign leads by territory, round-robin, alphabetically, or so on- whatever method works for your team as long as you know there will be somebody in charge of taking a lead once it’s been handed off from marketing.
Mid Priority Leads: Strategize & Personalize
At this level, you should have a pretty good idea of what this prospect looks like and what they are seeking. Marketing efforts should be fairly personalized and specifically targeted to steps that will get them to a qualified point.
Low Priority Leads: Nurture & Learn More
You don’t know a whole lot about these people yet, but your goal should be to get them to continue taking action so you can learn as much as possible. You could create some specific campaigns that you could enter these prospects into to guide them to resources you believe may be valuable.
End-of-Life Leads: Know when to let go
One of the most difficult things to do in marketing and sales is to let a lead go. But, it is necessary to let the lowest level leads find their own way a bit, and release the ones that have been lingering for twice as long as your typical sales cycle. This important step frees you up to focus on the higher priority leads to make sure none of them slip through the cracks.
How to transition from marketing to sales
A make-it-or-break-it point in your lead scoring process is your handoff from marketing to sales. This is the step that has the most potential to either derail the entire system or enable both teams to achieve massive success.
Some keys to a successful handoff from marketing to sales are:
- Specific score for handoff: This will actually most likely be a range instead of a set number, it can be tied into score ranges for MQLs and SQLs, but it is really up to you. The most important thing is to ensure you have consensus and understanding across the entirety of both teams.
- Timing: Ideally, if a lead is hot, you want someone to reach out to them almost immediately. That means, marketing has to have a way to identify those in real time and send them over immediately. [Here are some tips on how to follow up without being over-eager or creepy.]
- Prioritization & distribution process: Determine how the leads will be evenly and efficiently distributed amongst the individual sales people. (This will most likely be handled by the sales side or automated through CRM).
Building your Lead Scoring Model will involve all of the Necessary Components of Lead Scoring from earlier combined with a contract called a Service Level Agreement (SLA) between the entirety of your marketing and sales departments. Here is a breakdown:
Step 1: Consensus from sales & marketing on personas, target audience, and customer journey.
Step 2: Decisions on all implicit and explicit data points to include.
Step 3: Weighted scoring of each data point.
Step 4: First round of testing for a predetermined amount of time. Even if it seems like things aren’t working the way you’d hoped right away, you should stick with your testing until you can at the very least identify what isn’t working.
Step 5: Evaluation of the first round of data. This should be a deep dive into the overall results done by sales and marketing leadership. Followed by a meeting with the sales and marketing departments to discuss findings compared to their experience.
Step 6: Tweak anything that performed below what you were expecting or predicting
Step 7: Complete steps 4-6 again.
These steps will allow you to put together your lead scoring model, but the real first step is to put the entire process, including your funnel metrics, as well as specifically which department is responsible for which steps at specific levels of the process into an SLA. Once you have the SLA complete have every member of the team agree upon and sign it. As a way to motivate and get people excited, you can also tie incentives into the SLA.
Measuring your lead scoring system will take a bit of science and math, as well as some patience and finesse. As it is a bit of a guided guessing game in the beginning, you should measure successes and look for areas to improve. The big picture will become more clear as you refine the process over time.
- Number of leads that are closed/won at each level – Your highest bucket of leads should have the largest close rate and as you improve your process, the gap between high and everything else should become larger.
- Adherence to SLA – Processes only work when an attempt is made to stick to the process throughout a testing period. Did everyone perform their assigned tasks?
- Velocity increase – As the process is refined, leads should begin to move through the entire funnel more quickly.
Discover Improvement Opportunities
- Number of high priority leads that are lost – This could point to issues in the scoring, or with sales prioritization or productivity.
- Data points that haven’t contributed as much as you believed they would
There should also be a human process to this in the form of regular meetings between members of your sales and marketing teams. They should get together to discuss successes they’ve had since the last meeting and struggles they’ve come across to identify potential areas for improvement or updates to the process.
If your lead scoring model is working, there should be a direct correlation to the growing number of leads your sales team is closing and the revenue being brought in. Marketing Sherpa found that using lead scoring boosted lead generation ROI by 77% over those that didn’t use lead scoring.
There will also be some residual cost savings in that your sales people will be focused on selling to leads that make the most sense and are the most ready to buy, therefor wasting less time spinning the wheels with people that don’t have the budget or aren’t ready yet, or worse, will never be a good fit for your product.
There are many benefits to utilizing a lead scoring model and the benefits may be different based on your situation and how you set it up and utilize it, but here are a few benefits to look for as you evaluate your successes:
- Less time spent per lead
- Increased lead quality
- Increased lead velocity through the funnel
- Fewer lost opportunities
- More effective targeting by marketing
- A more harmonious relationship between your sales and marketing teams
- Increased ROI per lead