Sales-driven organizations gather leads in a lot of different ways. One organization may focus on pay-per-click advertising and building an exciting e-newsletter, while another thrives on personal referrals and gathering potential customer information at special events.
Some use telemarketers, while others make routine follow-up calls to past customers to gauge the possibility of more business. Still others use print and digital advertising to get the word out to their most likely customers.
Most companies, though, use some combination of these methods, drawing leads from a blend of paid advertising, online search results, and personal referrals. Every sales-based organization, regardless of how they promote their business and gather leads, needs to understand lead scoring, which is a specific aspect of lead management that can significantly influence the day-to-day operations of a business, as well as its profitability.
What is Lead Scoring?
Lead scoring is the process of evaluating and assigning a numerical score to each prospect to determine how to respond to each one, including determining which ones should be prioritized by your sales team. A good lead scoring system allows you to avoid treating all prospects as if they have the exact same potential value, which you know from experience, isn’t true.
Imagine that you are selling an expensive product that is only useful to a very small number of people in a specific industry. You intuitively know that spending your time trying to sell this product to people outside of that industry, people who don’t have the necessary budget, or people who can’t use the product is a wasteful expense of your resources. However, if you don’t have an efficient method for evaluating the names on your prospect list, how much time might you waste figuring out that the person you’ve got on the phone is never actually going to convert to a sale?
Lead scoring helps you prevent that kind of time loss. It also means you can be the first person to contact a motivated prospect who is likely to spend their money with you, rather than your competitors reaching them first because you were busy with someone who was never going to turn from lead to sale.
How Do You Use Lead Scoring?
Companies that utilize lead scoring typically create a worksheet that is unique to their products, services, and ideal customers or use a software like HubSpot. Using a generic tally sheet can create problems down the line. Characteristics of potential customers are awarded positive or negative point values that determine an overall score. The score then helps your sales team determine which contacts are closest to closing (which they should be prioritizing) and which prospects are a little higher in the funnel and need further nurturing before they are ready to buy.
For a company that needs to prioritize sales to individuals with large budgets, the worksheet is going to award extra points to purchasers for large corporations and fewer points to people who work for smaller companies with tighter budgets or smaller distribution. That same company may also focus on working directly with the individual who has the purchasing power in a company, rather than with someone who is going to have to get permission to take the next step.
But that’s not what every company needs to focus on, of course. If a business needs to get the attention of an active social network (an influencer), then they may create a lead scoring system that targets individuals with large numbers of followers and tons of activity on specific media platforms, regardless of budget. A small sale from a vendor with tens of thousands of followers on Instagram may end up being far more important than a larger, one-time sale from a fairly isolated individual or company who won’t pass the word on.
Attributes of a Lead Scoring System
The attributes of a lead scoring program, while unique to each company and industry, do include some broad similarities. There is usually an analysis of the demographic attributes of the contact: who they are, what their position is in their company, whether or not they have purchasing authority, what their budget is, what the profile of their company is, etc.
Then there are the behavior-based attributes: whether or not they have spent time on your website, how often they have purchased similar items in the past, what their social media and digital footprint looks like, and whether or not they have asked questions, made suggestions, or sought follow-up information from someone on the sales team.
Negative points are typically assigned to pretty obvious oppositional behaviors, including: unsubscribing from an email list, putting themselves on a Do Not Call list, expressing hostility, failing to return to your website, failing to open an email, etc.
If lead scoring is done well, there are several important benefits including:
- More effective marketing, targeted to the ideal customer
- Better connections between the marketing and sales department, due to shared vision and goals
- Increased sales
- Increased revenue
This sounds great, right? So what is the issue?
Disadvantages of Lead Scoring
While lead scoring can be a very powerful tool for your sales team, that doesn’t mean that there aren’t issues that may arise. Every businesses’ lead scoring program needs to be unique to their business, customers, and services. Here are some of the pitfalls of lead scoring to be aware of:
- Not creating a lead scoring system unique to your needs.
There are plenty of lead scoring worksheets and rubrics out there that can help to get you started with your lead scoring program, but every business has different needs. Traits and actions that signal a highly qualified buyer for one business may signal a bad lead for another. In order to be successful with lead scoring, you must create a system that matches your business, your customers, your process, and your products or services.
- Creating a lead scoring system once and forgetting about it.
Lead scoring isn’t and can’t be a set it and forget it system. Businesses change, we learn, we grow, and we do all of this (hopefully) by reviewing and analyzing data. When you first start out with your lead scoring system, you’re likely making some educated guesses about which signals are most (and least) important to identifying a good lead. As you use the lead scoring system, you will undoubtedly see trends and new data that will help to continuously mold and shape your program. Don’t forget about your scoring, it needs to be updated regularly!
- Using incomplete or faulty data to make decisions about lead scores.
Like I just mentioned, when you start out you’ll likely be using some educated guesses to frame your system, but as you start to collect more and more information you will be able to use actual data to set your rules instead of guesses. Use your data!
- Creating an overly complicated scoring system. Remember - this should be powerful, but simplistic.
Lead scoring is not supposed to be something that you need a PhD to understand. It’s supposed to be simplistic and easily understood by anyone using it. Creating a long set of hundreds of rules makes the process very convoluted and confusing for everyone involved. The more complex you make the system, the less useful it will likely end up being.
- Only using positive scores.
We see this one all the time. Only using positive values is a disservice to your lead scoring program. Negative activities are just as important as positive ones. Remember, the whole purpose in lead scoring is to create a better way to identify bottom of the funnel leads that are ready to buy. These are the leads that your sales team should prioritize. If you’re only using positive values, you may miss the fact that a lead has taken a dramatic step towards disqualifying themself such as opting out of emails or even changing jobs!
Is Lead Scoring Right for You?
What does this mean for companies who want the benefits of lead scoring without the drawbacks? Like anything else in life and business, “one size fits all” solutions are usually not all that effective. They may “fit,” but are they really the best fit? Probably not.
Sales lead scoring should be dynamic, regularly updated, and very specific to the company. It should facilitate good conversation between marketing and sales, rather than creating divisions between them. It should also be rooted in data and analysis of that data, rather than hunches and guesses and interpretations of potential customer behavior and demographics.
Most importantly, good lead scoring is going to connect your salespeople with individuals who are open and amenable to buying your product or service, rather than people who end up being turned off by what feels an awful lot like a cold call. Following good lead scoring guidelines can make a huge difference in your company’s profitability, but it should be done with guidance from folks with a proven track record of converting leads into sales.