There are no companies that have unlimited funds. When there are more customers’ requests than managers can process, a collapse happens. What is the usual way to solve this problem? Managers call customers according to a list. Customers can be sorted by the date of their request or, for instance, alphabetically. But what if that very customer who is ready to make a purchase has a surname starting with the last letter of the alphabet. In that event, such a customer will get a phone call when another company is already rendering services to them. What should be done to avoid such scenarios? It is suggested that lead scoring should be employed in your marketing. It will allow you to prioritize your customers by their importance. In this piece, we are getting into the notion of scoring, why and how this method is used in business.
What is lead scoring?
The scoring system originally appeared in banks to assess a client who applies for a loan. Banks examine their customers’ paying capacity, credit record and other aspects. According to the collected data, every customer gets their own credibility rating. This practice was later borrowed by marketers.
In marketing, lead scoring is ranking leads by certain features that determine their value.
In this term,
- lead stands for a prospective customer
- scoring stands for ranking a customer and giving them special points.
In layman’s terms, lead scoring allows you to determine whether a client is ready to close the deal or not.
Each client receives a scoring point for some action: visiting a website, subscription and so on. These special criteria are chosen by the company before scoring. Then the points are summed up and a scoring rate is obtained. According to it, a company determines which customer is more important. The higher the score, the more likely this customer will make a purchase. After that, managers contact other customers, whose score is lower.
To make the process clear, all leads are divided into several categories. The easiest way to do it is to classify all leads by their degree of «warmth»:
- «Cold» leads do not know much about the brand. They have just started to interact with it: clicked on the ad, visited a website, signed up for the newsletter. It is unlikely that such a person will buy something right after the manager’s call.
- «Warm» leads are a bit closer to making a purchase, they have the need to do it. However, they may have some doubts. Or, such a person chooses between several options.
- «Hot» leads are those who are ready to make a purchase here and now. All you have to do is to remind them about it and make a favourable offer.
Another way of ranking your customers is to picture them in terms of a funnel:
- At the top of the funnel are the users who have just become acquainted with the brand: signed up, subscribed to social networks or newsletters.
- The users who have shown their interest in the product: got a lead magnet, and are actively interacting with the brand.
- The proven leads which have been forwarded to the sales department. Marketing has already worked with them and «warmed them up» enough. They are almost ready to make a purchase, but their objections need to be worked out.
- Leads at the bottom of the funnel are those who are ready to buy something here and now. These users have already explored the ways to order a product and/or added some items to favorites or to cart, but have not completed the order yet.
In both of these categories, the most important ones are those leads who are ready to make a purchase: «hot» leads/leads at the bottom of the funnel. Lead scoring will help to identify who is who on the basis of data, and not on such abstract thoughts as «these leads are more important because I think so».
Why do you need lead scoring?
Lead scoring saves businesses from wasting resources:
- human ones — it saves the time of a manager who calls irrelevant customers in vain;
- financial ones — the salary of this manager and the cost of the channels to communicate with customers.
You need to employ a scoring system when:
Your business has a long purchase cycle and a complex system of working with clients. When it is not quite clear which client is more important, and a lot of criteria should be taken into account.
When your company has a large influx of incoming requisitions, and managers cannot cope with them. Even if there are no urgent matters yet, there may come a moment X, when there are not enough resources. Lead scoring will help to prevent such a situation.
When a specialist who processes the requests is a high-skilled one. If such a specialist wastes their time, the company invests more in the employee than it gains.
Lead scoring also helps to:
To evaluate the effectiveness of customer acquisition channels
If a channel brings you thousands of leads, it is not effective yet. Out of a thousand requests, only ten people can actually make a purchase, and CAC will not pay off. Quality assessment of your leads will show which channel actually brings you profitable ones.
To decline irrelevant requests
Not everyone who has responded to your marketing efforts will be your customer. Some will say that your products are too expensive, others will not understand the offer. Besides, some people can click the links accidentally. Scoring identifies unsuitable leads before you start actively working with them and assigns them the lowest priority.
To optimize your work
Without lead quality assessment you can be trapped in one opinion, that is of your supervisor who thinks that these customers are more important than those customers, and it cannot be the other way round. Even employees themselves do not always know which customer will be more valuable. Scoring will help you to evaluate leads objectively based on analytics. This approach will establish order in the joint effort of the marketing and sales departments. It will always be clear with what kind of client your manager works, whether their interest needs to be heightened or you can offer them to purchase something immediately. With the proper evaluation of leads, one department will not do the work for another.
To evaluate your managers’ work fairly
It may be that some managers are doing their job better than others. And it is not always about efficiency and skills. If one manager always gets «cold» customers and the other one always gets «hot» ones, it will be easier for the latter to close sales. Scoring is an opportunity to redistribute leads more fairly.
The main benefit of scoring is a rise in profits of the company, which will no longer lose «hot» leads and learn how to optimize the work of employees.
How to conduct lead scoring
For scoring, you need to describe what kind of lead is of good quality for your business. Besides, you need to determine the evaluation criteria, establish a certain value for each, and then conduct the evaluation.
Step 1. Determine the criteria
Two types of data are usually distinguished. Explicit — external information about customers: their characteristics or data of companies where they work. Implicit — a customer’s actions that a company can track on its platforms. All data is grouped into a customer profile. It is a kind of benchmark with which you will compare your leads during evaluation.
What criteria can be used:
Demographics — gender, age, interests, habits, and other features of your audience. If your audience are men over 35 who have cars, a person who does not own a car will be a lower priority in your evaluation.
Information about the company is relevant for B2B, when your customer is a business representative. You can include place of employment, position, size of the company, and its industry in your criteria. For an in-depth evaluation, you can add a customer’s experience, the income of the company and its location (if it is important) to the list.
Users’ behaviour: how they interact with ads and newsletters. For evaluation, the number of clicks per user, subscriptions, information requests, lead magnet downloads, sending contact information and even attendance at online brand events are taken into consideration. Users’ «last seen», their reaction to advertising campaigns and posts on social networks are also examined.
Data quality. Sometimes a customer can turn out to be a spammer or an agent of dishonest competitors who want to spoil your statistics with their actions. So, leads with incorrect, false or insufficient data find their way into your database. For example, a set of random characters instead of an email address is a sign of spam. Besides, poor quality leads are those who have left a personal email instead of a corporate one, though the information is for corporate customers.
How to understand which criteria are really important
First of all, ask your employees to arrange a brainstorming session or to conduct a survey. Salespeople work closely with customers and know their needs well.
Secondly, ask your customers themselves what influenced their decision to buy.
Thirdly, focus on the analytics and see which customers bring you more profit. It is useful to employ attribution.
Step 2. Determine values
Each criterion should have its own weight on a selected limited scale. The higher weight will be given to the criteria of more profitable leads, whose conversion rate is better.
For example, we know that customers with higher education purchase twice as much on average as those with secondary education. In this case, the lead with higher education gets a higher score.
Negative criteria (minus values) are also important. Even the highest quality lead can «burn out» and stop being active.
Minuses in the scoring should be given for:
- unsubscribing from the newsletters;
- visiting a career page on the website: a person may hunt for a job and is not going to buy anything from you;
- a lead’s position or industry does not fit your customer profile;
- a lead is from a competing company;
- low activity — a person stopped clicking on your newsletters.
Step 3. To conduct evaluation
You have criteria, you have points. Now it is time to evaluate. But you should start with threshold values. Determine from what number of points your customer is assigned a low, medium, or high priority. Do not over- or underestimate the values. Start with an average one and adjust it in the process.
Scoring can be conducted by one manager or a team. In the case of the latter, the points of all participants in the assessment are summed up. At the end of the evaluation, customers are ranked from higher priority to less valuable ones.
Example of customer evaluation
Let’s imagine a prospective customer N, who has left their data.
Now let’s set priorities according to the number of points:
- High — 15–20 points.
- Medium — 10–15 points.
- Low — up to 10 points.
The maximum score a customer can get is 20.
Below you can see an example of a simple table with a customer’s evaluation.
Tools for lead scoring
Lead scoring can be conducted in two ways:
A simple but time-consuming one: Google Sheets or Excel. In this case, you will have to calculate the results manually or set up formulas, which is quite time-consuming. You will also have to transfer all your customers’ data into sheets/tables.
An automated one: marketing platforms make it possible to conduct lead scoring simply and quickly.
The platform pixels track users’ activity on company resources and third-party resources: websites, social networks, blogs, mobile apps and services in the browser, even the company’s CRM.
Each action counts as a target for which a certain value or weight is assigned. Lead scoring is conducted according to these values. On our platform, you can track data on anonymous profiles, which will be later added to a user’s official profile.
Companies dream of streams of clients, but once the dreams come true, they cannot handle it sometimes. Prioritizing customers by their value during peak times is a sensible approach. Although it is better to foresee certain situations to prevent a disaster, such as lost customers, downgrade of service and even employees’ nervous breakdowns. Everything is possible if you do not arrange work properly.
Lead scoring helps to optimize different processes and not to waste time on unprofitable customers, to coordinate the work of the marketing department and the sales department, and as a consequence, to earn more.
The article was originally published here.