If you find yourself manually processing a large number of leads, wasting time on low-quality leads, or dealing with a ton of conversions without knowing which leads to prioritize, it’s time to start using lead scoring in your business.
Lead scoring in marketing involves evaluating leads based on their level of engagement and activity, enabling you to maintain the interest of your prospects by providing them with personalized communication when it matters most.
In this extensive guide, you will find everything you need to score leads: from an explanation of what lead scoring is in marketing and its benefits, to the most popular models, practices, and criteria to consider, and a simple method to calculate your lead score.
What is Lead Scoring?
According to the lead scoring definition, it is a strategic approach that assesses and ranks prospective leads according to their probability of transforming into customers. The lead scoring process involves assigning numerical values, usually between 1 and 100, to various attributes and actions displayed by leads, such as their interaction with content, visits to the website, and engagement with marketing materials.
The formula is simple: the higher the score, the greater the chance the prospect will convert.
What Are the Benefits of Lead Scoring?
After discovering the definition of lead scoring, you may wonder why you need to use it and how it can benefit to your business.
Well, let’s dive into the benefits that lead scoring can bring to the table.
Lower Marketing and Acquisition Costs
If you know how to score leads by implementing best models, practices, and systems, at its simplest, this enables your sales and marketing teams to spend less on marketing and acquisition endeavors.
For successful B2B lead scoring businesses can optimize resource allocation by simply assessing and ranking leads according to their potential for conversion. This lead scoring system with a focused approach ensures that marketing efforts are directed towards leads with a greater chance of converting, minimizing unnecessary expenditure on less promising prospects. As a result, the efficient use of resources not only improves the return on investment (ROI) for marketing initiatives but also enhances cost-effectiveness in customer acquisition strategies overall.
Higher Conversion Rates with Less Time Wasted
According to research, sales teams save 20 hours each week using lead scoring best practices and systems.
Hence, lead scoring benefits sales teams by focusing their efforts on leads that have shown higher interest and engagement, reducing the time spent on prospects with lower conversion potential. As a result, with a practical lead scoring model, the sales cycle becomes more efficient, and resources are allocated more effectively, leading to a higher conversion rate.
Better Sales and Marketing Alignment
If you find yourself working in marketing and sales teams, chances are you’ve witnessed the ongoing debate between these two groups over who brings in more sales. The good news is that lead scoring is here to finally settle this never-ending debate.
Using a structured system to score leads, both sales and marketing teams can collaborate to identify and prioritize leads based on their probability of conversion. This benefit of lead scoring not only enhances communication but also reduces conflicts between departments.
It’s no secret that each business aims to generate high revenue. But did you know that you can increase revenue by implementing lead scoring models?
Effective lead generation strategies can lead to an increase in sales revenue. Knowing how to score leads plays a crucial role in this process by enabling marketers to continuously improve their strategies through data-driven insights.
How Does Lead Scoring Work?
Lead scoring in marketing is similar to giving grades to your potential consumers based on their actions like clicking on your website reading your newsletters, etc. As mentioned above, it is a quite simple scoring system: the higher points the higher the likelihood of becoming customers. Therefore, companies apply this simple lead scoring system to prioritize the most interested individuals, thereby simplifying the process of converting them into satisfied customers.
It is based on several crucial models, types, criteria, and attributes which we are going to discuss in the following sections.
Lead Scoring Models
A lead scoring model is a method of giving each of your contacts a score based on their level of interest in your business and the likelihood of them purchasing your product or service. This score practice helps determine which prospects should receive lead nurturing actions like marketing messages or sales outreach.
📌Note: It’s important NOT to simply copy a lead scoring formula from another company and apply it to your own business. Every company has its unique business model, customer base, and marketing strategy. Therefore, it’s crucial to create a system that aligns with your specific business needs.
To find the lead scoring model that best matches your business, you need to explore some scoring formulas to learn how to measure leads and get inspiration and ideas. We have compiled the most efficient ones for you below.
1. Website Visitor Scoring
This is one of the most frequently used models, incorporating several lead scoring best practices. Businesses give visitors scores depending on how they interact with the website. For example, if they visit important pages, spend more time on the site, or download resources, they might get higher scores. Conversely, if visitors have minimal engagement like short visits, or do not explore important pages, they could end up with lower scores.
Who can use it: This model of scoring leads works great for e-commerce platforms that rely on online marketing and SEO to generate leads.
2. Suitability and Activity
This model of lead scoring takes into account both the demographic fit (suitability) and engagement level (activity) of leads. Factors like industry, company size, and job title can boost scores if they match the ideal customer profile. On the other hand, activity scores are determined by how leads interact with the company, such as attending webinars, filling out forms, or responding to emails. A lead with high suitability and activity scores is a great fit for the business, increasing the chances of successful conversions through targeted efforts.
Who can use it: This model can be used by businesses across various industries as one of lead scoring best practices. Employ this if you lean towards simple solutions.
3. B2B Lead Scoring
The B2B lead scoring model assesses potential customers in B2B relationships by taking into account factors such as company size, industry, the lead’s role in decision-making, and their engagement with B2B content. To illustrate, a lead who works for a large company holds a decision-making position and actively interacts with B2B lead scoring resources like whitepapers and webinars may receive a higher score, indicating their potential as a valuable business customer.
Who can use it: This B2B lead scoring model is ideal for businesses that sell products/services to other businesses, not individual consumers.
4. Email Engagement
This model of scoring leads works by assessing leads according to their actions with email campaigns. Leads are given scores based on how engaged they are, such as if they open emails, click on links, or respond to messages. So, for instance, a lead who always opens emails, clicks on product links, and shows interest in promotional content would get a better email engagement score, showing that they’re very interested and more likely to convert.
Who can use it: If your business heavily relies on email marketing campaigns, this model is perfect for you. However, even if you don’t use email marketing frequently, incorporating this scoring system for leads can still benefit your team.
Traditional (Manual) vs. Predictive Lead Scoring
This section will explore two types of lead scoring processes – traditional or manual and predictive – and how they can revolutionize your company’s marketing and sales systems from within.
Traditional Lead Scoring
Traditional lead scoring in marketing aims to assess the potential of a lead by evaluating explicit and implicit data, to identify those that are most likely to result in sales.
For a long time, marketers have relied on traditional lead scoring to collect data, refine and evaluate the scoring system, analyze outcomes, and pinpoint more promising leads. By using customer relationship management (CRM) tools, this process can be made more efficient and seamlessly integrated with the sales team. However, although traditional lead scoring practices have been proven effective, it is somewhat oversimplified.
Explicit and Implicit Data Scoring
As stated above, the traditional model involves two methods – implicit and explicit. The implicit lead scoring system utilizes behavioral data to assign scores based on engagement, whereas the explicit model relies on information directly provided by leads.
Explicit Lead Scoring
Collecting information directly from leads themselves, typically through forms or surveys, is the main focus of explicit lead scoring. This collected information includes:
- Demographic details-including age, gender, occupation, industry, and more.
- Firm demographics-that include company revenue, annual budget, and years in operation.
- Job information-including particular departments, decision-makers, management grades, etc.
- Form replies-including survey results, questionnaire answers, etc.
- Experience history-including purchases, events webinars participation etc.
Simply put, explicit data is used to give scores to leads according to criteria set by the marketing team, a fundamental aspect of lead scoring best practices. For instance, Within a real estate company, explicit data can be collected by using online forms or surveys. For example, if a potential homebuyer shares explicit data like their desired location, budget range, and specific property needs, they may receive a higher lead score according to the lead scoring criteria. This explicit information enables the real estate company to prioritize and customize their interactions, concentrating on leads that closely match the ideal criteria and are more likely to become happy customers.
Implicit Lead Scoring
The Implicit lead scoring system refers to the process of collecting data and examining a potential customer’s online activity or behavior during their interactions. These actions, which are not explicitly stated by the prospect, are usually monitored using marketing automation tools, heatmaps, or web analytics platforms. The actions include:
- Online behavior on the website-including the number of web pages visited, time spent on the website, pages accessed, etc.
- Engagement with website content-including watching videos, downloading files, etc.
- Engagement with email-including open, click-through, and reply rates, clicking links, and more.
- Activity on social media platforms-including likes, shares, comments, etc.
- Response to online ads-including clicks, engagement, and more.
- Interactions with customer support-including live chat messaging, support tickets, and so on.
To summarize, assessing indirect actions such as website visits, content downloads, email opens, clicks, and social media interactions assists businesses in determining lead score criteria according to their level of engagement and interest.
Predictive Lead Scoring
Predictive lead scoring combines the advantages of the traditional model with the efficiency and effectiveness of machine learning algorithms.
So, why rely merely on small datasets and manual metrics, when you can use big data to analyze the important behaviors of both existing customers and potential leads, implementing best practices of lead scoring and refining its criteria?
In predictive lead scoring, data points are automatically assessed on a scale to distinguish between leads with a greater likelihood of converting, staying engaged, or making a purchase with the business. Through the automation of sales identification and conversion processes, the predictive model of scoring leads, being one of the best practices of lead scoring, empowers businesses to enhance their campaigns and allocate resources more efficiently, leading to a quicker return on investment (ROI).
Predictive lead scoring has a ton of advantages for businesses of all types. Here are some of them:
- Eliminating human error-by using machine learning algorithms, the potential for human error or subjective judgment is eliminated, ensuring adherence to lead scoring best practices.
- Bringing rapid results-while the setup process may require some time, but once predictive lead scoring is operational, you can expect to receive results much more quickly compared to when a human is handling the task.
- Creating metrics based on big data-predictive ways to score leads are capable of creating metrics by analyzing extensive data to gain insights and make more informed decisions.
- Uncovering patterns-machine learning algorithms are capable of uncovering crucial patterns that humans might miss out on.
Generally, predictive lead scoring is ideal in cases when marketing and sales teams have been facing challenges in recognizing top leads and cannot follow up with every individual that enters the database, predictive lead scoring might be the solution for this. However, it is crucial to find and use software that is suitable for your business model and goals.
How to Calculate Lead Scores
There are 2 main options for measuring and calculating lead scores: doing it manually or using software. Using software will allow you to calculate lead scores by working with large amounts of data in a short time. On the other hand, manual lead score calculation will provide you with a more profound comprehension of the scores. Below, you will find steps on how to measure leads and implement a simple lead scoring calculation.
Calculate The Lead Conversion Rate
To manually calculate the leads score, you need to start by figuring out the percentage of leads that actually become customers. This can be measured by dividing the number of converted leads (those who take a desired action, like making a purchase or signing up) by the total number of leads, and then multiplying the outcome by 100 to represent it as a percentage.
Suppose you generated 100 leads through your email campaign and 20 out of them have become paying customers. The formula will look as follows:
20/100=0.20 (0.20 x 100 = 20%)
Assessing the effectiveness of a sales or marketing strategy relies heavily on the conversion rate, which is a fundamental metric.
Choose Important Attributes
In the lead calculation process, it is important to identify and choose specific attributes that are important in evaluating the quality and potential of leads. This stage plays a vital role in lead scoring system, as each attribute is given a weight or score to measure its importance in determining the quality of the lead. These attributes can include demographic information, behavioral patterns, levels of engagement, or any other factors that match the ideal customer profile.
Calculate The Conversion Rates of Each Action
After selecting the relevant attributes to measure for lead scoring, the next task is to determine the conversion rates linked to each specific action or attribute. This entails figuring out the percentage of leads that successfully convert or achieve a desired outcome based on each identified attribute.
Calculate Close Rates
After determining the conversion rates for each action or attribute, it’s time to evaluate how effectively these leads perform in the final stage of the sales process – closing the deal. This involves calculating the close rates, which indicate the percentage of leads that successfully move through the entire sales funnel and result in a closed deal or conversion.
How to Identify Which Data Matters Most?
Understanding the most important data for lead scoring requires a strategic approach that takes into account the needs of your sales team and the preferences of your customers. Effective communication plays a crucial role in this process.
Stay in Touch With Your Sales Team
Make sure to have open and frequent communication with your sales team in order to understand the qualities and behaviors they consider important when it comes to potential leads.
Listen to Your Customers
Collect feedback from your current customers directly to determine the factors that influenced their choice to convert.
Rely on Analytics
Analyze, analyze, and analyze! It’s preferable to use analytics tools to examine past data and discover trends connected to effective lead conversions
Don’t Forget About Negative Scoring
Remember to take note of actions like unsubscribing from emails or frequently visiting refund policies. Negative scoring can be used to identify and remove leads that may not match your ideal customer profile.
The lead scoring definition refers to a highly efficient approach that not only assesses the value of your leads but also helps save time, money, and resources for your business. By implementing a suitable model and process, you can coordinate your marketing and sales teams to focus on the appropriate leads, at the right moment, with the right message to accelerate conversions. Understanding what is lead scoring in marketing, knowing best practices for B2B, and how to measure leads are crucial for business growth. Although it may take some time to fine-tune the formula, it has the potential to enhance your overall profitability and generate more sustainable business opportunities.