In TV shows that focus on home design, designers often place seemingly a large amount of importance on the entry of the house. Why? Well, it’s the place where you first show your home and create an impression.
Sales teams are often the entrance way into their company. Creating an excellent sales experience will lead to higher conversions and generate loyal customers. Because companies are always trying to become more efficient, efficiency within sales can be increased by the use of a key tool – lead scoring. In this post, we’ll cover:
- What are lead scores
- Where lead scoring fits into your sales funnel and for what industries
- Basic advice for building one
- Use-cases for businesses.
So, what is lead scoring?
Marketo explains lead scoring as the process of ranking prospects in terms of the sales-readiness, or willingness to convert or buy. Lead scores take many forms from a simple number or a more advanced probability. Whether a number or probability, the processes around lead scoring should be the same.
To be clear, lead scoring will not increase the number of prospects you have. But, it may well help you make the most out of your current prospects by reducing the need to increase acquisition of more prospects.
Specifically, lead scoring optimizes the process of taking Marketing Qualified Leads through to Sales Qualified Leads, and ultimately successful sales.
At a glance, benefits of a lead score can include:
- Increased sales velocity
- Increased sales volumes
- Increase customer happiness and retention.
Where is lead scoring suitable?
Whilst the intention behind lead scores can be applied to many industries, I’ll focus primarily on SaaS sales funnels, however I will make references to other industries and business models where it is also relevant.
To really benefit from a lead score, the business will have an Inside Sales team who contact leads. Companies without a Sales team or with an already really, really short sales cycle are likely to less benefit from the lead scoring described in this article.
Similar styles of model can be used for pre-trial/prospect situations or even e-commerce sites to optimize allocation of social spend for advertisement retargeting, with the goal of reducing Cost of Acquisition (CAC), whilst maintaining sales. This is a particular area of research that I’m interested in, which has unique challenges in regard to scoring. Particularly around lack of information and no clear path to a sale/conversion.
A commonly held view is that lead scores work best in resource constrained sales environments – a situation in which you have more leads than you or your sales team can handle. However, I believe lead scores are applicable to many companies, regardless of the size and resource level.
If you operate in a resource constrained environment, a common use-case for a lead score would be to use it to identify what leads to contact vs what leads to disregard. I’ve written previously on the importance of Sales and Marketing spend, where in constrained environments it’s all about squeezing the environments it’s all about squeezing the most value out of sales.
Lead scores can help sales people focus their efforts in two ways:
- Disregard low-ranked leads to focus on higher probability leads
- Potentially leaving the highest probability leads to convert untouched by Sales.
Both of these help sales people increase their # of prospects touched and decrease their sales cycles, leading to a more efficient sales process.
The way you manage the sales environment depends on how resource constrained you are and the level of service you offer, which is likely guided by your market position.
When resources aren’t constrained, lead scores can help guide conversations to go beyond conversion and instead drive retention and upsell.
A good example of this is contacting higher ranked leads without the ‘Close’ mentality, but instead steer the conversation to upsell or to create loyalty to help aid retention effects.
How do you build a Lead Score model?
There is often a desire and pressure to have advanced predictive models targeted towards conversions. However, these require expertise, time and infrastructure that is beyond smaller businesses. They’re certainly useful if you have the resource, and deserve posts on their own.
Importantly, a good lead score is one that you have. With that intention in mind, a basic lead score doesn’t need a lot of work, and can be formulated from the information you already have.
The basic idea of this style of lead score is to assign ‘points’ to favourable actions and characteristics that help lead to a successful conversion. Typically in a SaaS environment, this can be data such as:
- Use of a product
- Pages visited before signing up for a trial.
In Enterprise sales, the job title of the person you’re talking to can be a useful indicator as well.
With these factors, to create a simple lead score, you simply assign ‘points’ to each action, resulting in ranking your prospects. For example:
|Visits Homepage||+ 10|
|Visits Pricing||+ 20|
|Starts a trial||+ 50|
|Is located in prime market||+ 30|
|Opens marketing email||+ 10|
There are many great resources on building lead scores like this, Hubspot has a great guide which is applicable for many businesses.
Some general tips are:
- Try to use demographic or static information as well as actions taken by user
- If they’ve signed up for a trial or marketing communications, do they engage?
- Remember, a good lead score is the one available to you now.
Going beyond lead scoring
Despite all the above, lead scores are limited in their usefulness. Their reach rarely extends beyond a ranking system of prospects related to who may convert or buy. In many contexts, people who spend less money are more likely to convert at a faster pace.
Lead scoring can help identify these people and are great for optimizing sales volume with a slimmed resource. But, you may find that whilst sales volume increases, average revenue (ARPU) decreases.
The easiest way to handle this would be to think of a 2 model approach. This idea is comes from Brendan Duncan and Charles Elkan in this extremely helpful paper. I also explain this trade off and how to mitigate it here.
Another caveat is that lead scoring normally represents leads as if nothing happened to them - that is, no additional campaigns or interventions take place. This, of course, isn’t normally the case, and looking to re-frame your lead score to examine probability of converting given the campaign is an excellent way to go beyond a simple lead score.
In summary, lead scoring can be used in many businesses and doesn’t require a lot to start with. It’s a proven way to increase sales team efficiency and achieve growth.
Do you want advice on your sales funnel and how lead scoring can be applicable?
Feel free to reach out to me at: firstname.lastname@example.org
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