Generating sales is key to your startup’s success. But as a small business owner, you don't have time to run down every potential customer. You need a process to qualify your leads and determine where you should devote your time and resources.
But how do you do this systematically? How can you sort good investments from wastes of time and ensure that a sales lead is truly qualified? What method can you employ to get the highest ROI on your sales investment?
Lead scoring can provide the answer. This article breaks down what lead scoring is, why lead scoring is helpful, and how to start lead scoring. That way, you can stop throwing time and money away on long shots and dead ends. Instead, you can direct your efforts to high-value potential clients who can fuel the next stage of your growth.
What Is Lead Scoring?
Not every potential client is the same. Some have a profound interest in your product and a deep well of resources. Others have more of a browsing mindset and severely limited budgets. At the same time, you only have so much sales capacity to spread around. You need to invest your time and effort in the prospects who are most likely to create revenue opportunities.
Enter lead scoring. This process creates a quantitative measure of individual leads, letting you focus on the ones with the highest potential value.
[Lead scoring] creates a quantitative measure of individual leads, letting you focus on the ones with the highest potential value.
In many ways, lead scoring just systematizes a process that salespeople have always done. Judge the interest level and quality of potential clients. Then, focus your energies on the prospects most likely to lead to sales.
Lead scoring formalizes this endeavor. It turns gut reactions into algorithms. That way, you have a clear, measurable statistic to guide your sales effort.
How Can Lead Scoring Help Your Business?
Lead scoring can make a major difference in getting the most from your sales budget. In fact, one study conducted by Marketing Sherpa indicated that using lead scoring boosted ROI for lead generation by more than three-quarters (77%).
This enhancement can provide a major multiplier effect when combined with other marketing efforts. Here are some of the specific benefits you'll get from a strong lead scoring system:
Accelerate Growth: By increasing your conversion rates, your overall pace of revenue growth will get a lift.
Improve Efficiency: Not only will you close deals faster, but you'll do so more efficiently. This means that your margins will be helped as well, as your cost of customer acquisition decreases.
Boost the Value of Other Marketing Efforts: Your other marketing efforts become supercharged if you can effectively score your incoming leads. You'll be able to target investments to higher-value prospects, because you'll have a quantitative system to guide you.
How to Create a Lead Scoring System
The details of your lead scoring system will depend on your particular industry. The specifics of your individual company will come into play as well. After all, you want something that directly speaks to your ideal customers.
As such, don't settle for an "off the shelf" system. These generic lead scoring systems can provide a good template, a starting point that lets you avoid some of the grunt work of building a process from scratch. But you should still tweak it based on your lived experience closing sales.
Even though you can't count on finding a general product that suits you perfectly, there are some broad rules that any lead scoring system will follow. Here are a few steps you'll likely need to take when you set up your own structure:
- Determining what data to incorporate
- Assign point values
- Defining a qualified lead
Let's look at each of these individual parts of the process:
As you build out your lead scoring system, you need to decide what data to include. Consider all the information you can gather about a potential client. Then, look at the factors that most correlate with successful sales.
Here are a few items to consider:
- Date the lead was received
- Date of the most recent contact
- Company profile (size, etc.)
- Position in the company of your lead contact (decision-makers are better than low-level employees)
- How did you get the lead?
- Did they open a marketing email?
- Did they view a webinar/download an e-book?
- What parts of your website did they visit?
Assigning Point Values
Once you develop the categories to be scored, assign point values to each one. Sometimes these will be based on quantitative measures (like the date you last contacted a sales target). Other times, you’ll have to assign a number based on a qualitative assessment – like taking a survey.
From here, you can create an equation to combine the scores assigned to the various categories. This will spit out a single number that represents the overall score for the lead. The higher the score, the better the lead.
When creating your system, watch the way point totals interact. On the one hand, you want a relatively simple system in order to streamline implementation. However, it's easy to create an imbalanced algorithm this way.
Let's say you have four categories and each of them gets a score between one and five points. Are you sure each category should receive the same weight? Maybe the age of the lead should receive a 1-5 score, but the company profile category should get more weight -- say, a double value, with scores ranging from 2-10.
Also, make sure to test your lead scoring process. Compare your pre-process scores to eventual conversion rates. If you're scoring your leads correctly, higher lead scores should correlate with better closure success. Any other result would mean it’s time to tweak the system.
Make sure to test your lead scoring process. Compare your pre-process scores to eventual conversion rates. If you're scoring your leads correctly, higher lead scores should correlate with better closure success.
Defining a Qualified Lead
How do you separate the good leads from the bad ones? After all, that's the point of creating a point system in the first place. You need to determine a point threshold that signals a qualified lead.
This will separate your high-value prospects from the rest. Concentrate your efforts on your highest scoring leads and work your way down the list from there.
In addition, the scoring system can help you target your other efforts. Think about a scenario where all your incoming leads have a relatively low score in your system. Something might be missing from your lead generation process.
Under these conditions, you should consider other ways to find sales prospects. You'll want to create a system that delivers potential customers that surpass your ideal point threshold.
Creating Your Own Lead Scoring System
A proprietary system lets you match your lead scoring process with your established operations, like your workflow and your sales experience so far. You can create a model that fits perfectly with your existing systems. You can also fine-tune details to match your needs exactly.
Of course, this takes sizable resources. You need competencies that might not be related to your core business -- expertise like computer programming, statistical modeling, and design.
For a small business or startup, this might be more than you can handle. (It’s often more than large businesses can handle.)
But even if you can't create a proprietary system from the ground up, be sure to still value flexibility. You want a lead scoring system that you can fit into the way your organization operates.
Using a Third-Party Software
There are dozens of potential prefab software packages to choose from. You can choose from products offered by some of the biggest names in the industry:
- Oracle DataFox
- Salesforce Sales Cloud
- HubSpot Marketing Hub
Or you can turn to more specialized products. You'll have to conduct research to see if there is a program that fits you perfectly. However, to get you started, here are a few names with a high reputation in the industry (you can also check out some reviews here and here and here):
As you weigh your options, keep factors like price and ease of use in mind. In addition, think about how it will fit into your overall sales structure. Like we said, flexibility is key to building a system that will give you the best bang for your buck.
Getting the Most from Your Sales Investment
Your sales and marketing efforts should represent an integrated process. Lead scoring makes this easier. This technique is designed to align your marketing and sales efforts, as well as improve your overall sales efficiency.
Here, we've laid out some of the basics of lead scoring. By implementing these systems, you can fuel growth and improve the ROI of your sales spending. Master lead scoring and your small business will have the information it needs to become a sales juggernaut.