Lead Scoring Best Practices
Improve Lead Conversions by 20 to 40%
Highlights
- Lead scoring is a way of measuring and ranking the quality of sales leads. When you implement a lead scoring system you send fewer but higher quality leads to the salesforce. That delivers an increase in the number of leads that make it through the sales funnel.
- Successful scoring enables marketing to prioritize leads, send only sales-ready leads to the salesforce, nurture the not-yet-sales ready leads until they become qualified and reduce the perennial problem of lead leakage.
- Lead scoring best practices show how to increase sales lead conversions, improve sales productivity, improve the buyer experience, and drive more revenue with less effort.
Lead Scoring Best Practices
Salespeople incur two challenges with sales leads. They either don't get enough or the ones they get are crap. At least that's what they say.
Calculating sales lead scores can fix these challenges.
Lead scoring determines the sales-readiness of a lead by assigning point values to buyer attributes and behaviors that measure and rank their fit and propensity to buy. Buyer activities and associated point value sum to a score, as illustrated below.
Scores accumulate and shift over the course of the buyers purchase cycle. But whenever the lead score reaches or exceeds a defined threshold value, indicating the lead is sales-ready, the lead is transferred to the salesforce for immediate follow up and to commence the sales cycle.
The Sales Lead Problem
Most prospects consuming content and visiting the company website are in an early exploration.
Buyers complete about two-thirds of their purchase journey performing online research and self-education. At this point, they generally don't want to speak to a salesperson until they have down-selected a small group of vendors that appear to be the best fit.
Reaching out to these prospects before they are ready annoys them and wastes valuable sales time.
A better approach is to insert them into a nurture marketing campaign that periodically delivers valuable content to aid their purchase education. You can then measure their online behaviors and only forward the lead to the salesforce once buy signals demonstrate the prospect is at a point where sales engagement makes sense.
Without this type of approach, leads distributed to sales are hit or miss and sales invests a lot of time with unqualified prospects that don't convert.
Unfortunately, this sales lead problem is commonplace. An oft cited Marketing Sherpa B2B Marketing Benchmark Report revealed that 61% of B2B marketers sent leads directly to sales, but only 27% of those leads were qualified. The problem remains pervasive.
The Solution - Sales Lead Scoring Best Practices
Lead scoring identifies where a lead is in the buying cycle and whether it should be nurtured or if it is qualified enough to invest sales resources. The score may also advise the lead is not qualified, never will be and should be terminated.
When sales leads are objectively scored and determined to be sales-ready, marketing passes fewer but higher quality leads to sales. By eliminating low quality leads, the qualified leads get more attention, sales productivity is improved and sales conversions increase.
From a payback perspective, the Marketing Sherpa report advised that "On average, organizations that use lead scoring experience a 77 percent lift in lead generation ROI."
Research shows that "On average, organizations that use lead scoring experience a 77% lift in lead generation ROI."
Click to Tweet / XAccording to a lead scoring survey by DemandGen Report:
- 53 percent of participants improved marketing and sales alignment
- 43 percent found qualified leads that otherwise would have been overlooked
- 43 percent realized a higher volume of marketing qualified leads
I've implemented these models for about two decades and without fail this process helps salespeople prioritize their outreach to the most qualified prospects.
7 Sales Lead Scoring Best Practices
Lead scoring best practices share techniques to increase sales productivity, accelerate sales velocity, reduce lead leakage, improve sales and marketing alignment, and increase the volume of leads that make it through the sales funnel.
Here are several lead score best practices based on our research and over two decades of firsthand consulting experience.
Design a Holistic Process
Start by sequencing the lead score steps in an end-to-end process that can be automated, measured and iterated upon for continuous process improvement.
Most marketers pursue this process in pieces. That's a mistake.
Piecemeal pursuits take longer and deliver fractional improvements. Holistic pursuits get to the end goal more quickly and deliver linear improvements.
Vision the complete process from the beginning and then begin your journey. Understanding how some processes will jump start others will accelerate your progress and deliver a much bigger impact to what's most important, such as maximizing the number of leads that make it through the sales funnel.
Define a Sales-Ready Score
The sales-ready lead score is the score at which the lead is transferred from marketing to sales.
Marketers sometimes make the mistake of trying to define this score arbitrarily or without sales collaboration. Instead, defining the lead score should be a concerted and on-going process mutually determined by both sales and marketing.
Together, sales and marketing can identify and weight the buyer characteristics and activities that measure customer fit and purchase readiness.
For the most part, the company's Ideal Customer Profile (ICP) should designate customer fit and act as the first gate.
Purchase readiness will be defined as the point where that lead has advanced far enough through the sales funnel to speak to a salesperson.
To find this point, you want to identify the behaviors most often associated with serious buyers. Salespeople are much closer to the prospects. They know when a lead is a window shopper or committed to a purchase. They know what decision makers need to be involved, what pain points need to be present and what problems need to be solved.
We have found it helpful to revisit won and lost sale opportunities when identifying activities and behaviors that should be used to calculate lead scores.
We have also found it helpful to develop a few different lead score dimensions. The sales-ready score will be a numeric value defined on a scale of 0 to 100. With the same effort, we can also designate a lead temperature (i.e., Hot, Warm, Cold) and a lead lifecycle stage (i.e., MQL, SAL, SQL, etc.) Comparing these views will flush out criteria that need to be adjusted to improve results.
Recognize this is an iterative process. The first lead score calculation is just your starting point. Sales and marketing staff should get together periodically to review actual sale opportunities and adjust. In the beginning you may want to get together frequently, but after 3 or 4 iterations you may reduce your cadence to bi-monthly or quarterly.
Measure Explicit and Implicit Criteria
This lead score best practice builds upon the prior.
Customer fit and purchase propensity are best measured with explicit and implicit criteria.
Explicit criteria measure customer fit. They include things like firmographics (i.e., company size, location, industry, etc.) demographics (i.e., contact title, role) and psychographics (i.e., BANT (budget, authority, needs, timeline)). This information may be provided by the prospect, already exist in your CRM system or be acquired through third-party data providers.
This criteria are important but recognize that they only show how interested you are in the prospect and not how interested the prospect is in you.
Implicit criteria measure the prospect's propensity to make a purchase.
They include observed activities and behaviors, or what are commonly called digital footprints. Examples include capturing and scoring prospect behaviors such as the volume of visits to the website, the specific pages read, the type of searches performed, the type and number of collateral downloads, email click-throughs and social media shares.
A lead scoring best practice is to make explicit criteria a go or no-go gate, and then weight the implicit criteria more heavily than the explicit once the gate has been passed (i.e., once it is determined the lead falls within your target market).
It's important to recognize that explicit criteria only identify how interested the company is in the prospect while implicit criteria identify how interested the prospect is in the company.
Include Negative Scoring
Sometimes during the buyer's online exploration, they determine your company is not a fit and move on. Other times, they were never a prospect, they just visited your website for some reason other than to make a purchase.
Both scenarios can be identified with online activities that subtract points from the lead score or remove the lead altogether.
For example, a lead may be discarded if he makes multiple long visits to the company website career page. This suggests he's not looking to make a purchase, he's looking for a job.
Or lead score points may be deducted to reflect reduced engagement. Activities that should apply negative points to reduce the lead score include not opening emails, unsubscribing from email, incurring email bounces, experiencing a reduction in online behaviors and a lapse of activity.
Many marketers apply a time decay point reduction whereby points drop off over successive periods of inactivity. That may mean deducting a point value every 30 days from the date of last activity.
Measure What Matters
Don't score activities that do not correlate to lead conversions. Just because an activity can be tracked doesn't mean it should be.
When implementing lead score models with clients there's often an unjustified desire to assign points when a lead opens an email. But does that activity really correlate to a propensity to purchase? Maybe, you won't know until you test it.
You will also find that it depends on the email (test by email subject category) and that post-open events such as email click-through to the website are far more indicative of a serious buyer.
Developing a good scoring model is really a weighting exercise. You can figure out what to measure pretty quickly but determining the relative value of how those measures impact lead conversions takes several iterations.
High impact behaviors often include things like the prospect completing a landing page conversion, viewing the pricing page, clicking through CTAs (calls to action), reviewing website pages that describe offers or services, submitting a Contact Us form, and visiting the company's social channels. Each of these online behaviors should be measured for number of occurrences, frequency of occurrence and time spent.
Another very high impact activity that directly correlates with purchase propensity is a prospect that searches for your company name. We have found this is a tell-tale of a very qualified lead, so place a higher point value with this activity.
Also, recognize that even high value behaviors can create inflated lead scores when they are repeated multiple times. That's why it's a good idea to assign point caps to each activity.
A lead score best practice that really separates the best-in-class from all others is calculating lead score by account, not just by contact. B2B selling rarely sells to an individual. Instead, sellers are selling to buying committees. So, an example of a very high impact behavior that should be heavily weighted is when you measure multiple contacts from the same company spending significant time on the customer case studies pages.
Include Live Qualification
Lead management technologies do a great job of tracking and measuring lead scores, but at some point, a human touch is needed. Having inside sales or SDRs (sales development representatives) perform a live qualification is often the final verification step before lead transfer.
And it's a high impact step. Live qualification will improve the Sales Accepted Lead (SAL) rate by 20 to 40 percent.
It will also accelerate lead response rates because when sales reps know the leads they receive are qualified and not a waste of time they follow-up with those leads much more quickly. That's critical because research shows how lead response time impacts lead conversion rates.
The lead qualification process will vary but at the minimum should include validating buyer fit, purchase intent, contact information and agreement to engage a salesperson.
Our experience has been that when a live lead qualification acts as the final step before lead transfer, about 35 percent of the leads are found to have inflated scores and are not really sales-ready at that time. As the score calculation matures, this figure will decline.
Get Real-time Lead Performance Reporting
You must measure score effectiveness and its impact to conversions.
Defining a lead score is not a one-and-done exercise. It's a process of continuous improvement and lead management reporting will show you what's working and what can be improved.
The reporting will show you when you are qualifying leads too soon or too late. For example, if you incur delays in the MQL to SAL rate, there may be a delay in lead response time and you should consider a different lead transfer strategy. But if you incur delays in the SAL to SQL conversion rate, you are passing leads to early and need to increase your sales-ready threshold score.
The most important key performance indicators (KPI) are SAL rate, average lead response time, SAL to SQL velocity, average lead recycle rate and lead leakage rate.
Also, your marketing campaign ROI will increase in parallel to improved lead scores.
The Point is This
Successful lead scoring aligns marketing and sales objectives, improves salesforce productivity, increases lead conversions, and drives more revenues with less effort.
Although sales and marketing alignment can appear to be a less tangible benefit, it has very real revenue implications. According to SiriusDecisions, B2B companies with aligned marketing and sales departments experience 24 percent faster revenue growth. Lead scoring provides the perfect opportunity for these two groups to collaborate and morph what are often two siloed processes into a single buyer journey.
Lead scoring best practices increase sales conversions but remember that a successful program will initially send fewer but more quailed leads to the salesforce. However, over time, nurtured leads that were held back will later act to increase the volume of sales leads that get worked by sales.
Sales productivity increases when salespeople stop wasting time calling unqualified leads and focus their time on the accounts most likely to buy. Our experience has been that clients increase their sales win rate by 3 to 6 percent when lead scoring filters out unqualified accounts. Increased sales productivity also allows sales managers to win more business with fewer reps.