What Is Lead Scoring And 6 Ways It Can Boost Your Performance
Today, we’re going to talk about lead scoring. This is a fundamental aspect of your inbound marketing strategy, very closely linked to lead generation. Some small business owners don’t know anything about lead scoring, but it’s something you should learn right away. It can generate lots of benefits for your business, which you’ll read about throughout this article.
Naturally, you most likely have some burning questions relating to this topic. In this guide, you will learn everything you need to know about lead scoring and how it can boost your performance.
Lead scoring is where you give leads a score or rating when you generate them. It tends to be a numerical value, so it’s easy to distinguish between good and bad leads. Obviously, the leads with the best scores will become a high priority. These are the ones that show a significant interest in your business, so you’re more likely to convert them. It can help you avoid wasting time on cold leads that are barely interested in what you sell.
Scores are calculated by creating your own system, alternatively, you can use a lead-scoring software all well. We’ll speak about this in the next section, but you basically pick a set of criteria and assign points for each one that’s met. For example, Lead A may meet 5 of your lead scoring criteria, while Lead B only meets 1. Lead A ends up with a much higher score, so you know to retarget then and push for a sale.
How to Create a Lead-Scoring Model
To set up your lead-scoring model, you need to use sales analytics tools to access lots of vital data. This lets you see how leads behave when they interact with your business. It can show you things like:
The list goes on and on, but it delivers information on lead behavior. From here, you can look at the analytics and speak to your sales team to work out which actions are the most valuable. The data from your sales analytics tools should help you here – it can point to patterns through previous leads/customers.
For example, you might see that the majority of your leads become customers after filling in a ‘Contact Us’ form. So, you assign this a high point value as it’s clearly indicative of a strong lead. By contrast, visiting a landing page might have little influence on your sales, so it gets assigned a lower value.
Most lead scores are between 0 to 100, with a higher score being better. Essentially, each lead gets assigned a score based on all of the data you’ve collected. Now, you can easily look at your leads and distinguish which ones are worth putting time and effort into.
6 Ways Lead Scoring Can Boost Your Performance
You’ve learned what lead scoring is and how to implement your own scoring model, but why should you do this? What benefits will it bring to business performance? Well, let’s find out:
#1 Aligned sales and marketing
The basis of lead scoring brings your sales and marketing teams together. As mentioned in the previous point on lead-scoring models, your marketers will work with the sales department to figure out what makes a lead ‘sales-ready.’
Realistically, this gets your sales and marketing teams on the same page. The sales team will underline the ideal attributes and behaviors from good leads, and your marketing team can build campaigns around this.
Overall, it lets your marketing team create strategies and campaigns geared towards sales-ready leads. They now know what to look for, so they can target these prospects with more accuracy than ever before.
#2 Your revenue will grow
What happens when your sales and marketing align? You guessed it, your revenue will grow. It’s simply a case of understanding which leads to spending time and money. So many companies waste precious time and resources on cold leads that will never convert. As a result, you often neglect the hot leads and miss out on sales opportunities.
There was an Eloqua study of 10 B2B companies that all used lead scoring systems. Overall, the companies saw revenue increases of 18% and 17% in revenue per deal. This was combined with a whopping 30% increase in close rates.
With lead scoring, you will get a true insight into how effective your marketing efforts are. As a result, you can identify marketing channels that perform much better/worse than others.
Consequently, you will use this information to spend more money on the areas that perform well all the time. Thus, your budget is put to better use and your marketing efforts pay off. Without lead scoring, you have a minuscule amount of information on your leads and prospects. You don’t know which methods and channels are providing new customers. So, you can spend a lot of time and money on marketing campaigns that simply don’t work.
Go back to the first point on aligning your sales and marketing. Lead scoring lets you figure out how to market your business to the hot leads. Therefore, your efforts will almost always pay off as you focus on people that show a strong interest in your company.
#4 Higher conversion rates
Lead scoring also has a direct influence on conversion rates. As a brief summary, conversion rates are the rate at which you convert leads into customers. Most businesses have low conversion rates as it’s relatively easy to generate leads, but hard to get them to convert.
This is where lead scoring is so helpful. Think about it, by understanding which leads are most valuable, you can ignore the ones that won’t convert. There’s a significantly higher chance of converting a lead that has a high lead score. A good way to visualize this is to imagine a retail store with people inside and people on the street outside.
There’s more chance of a sales rep getting a sale by speaking to someone inside the store. Why? Because they’re already clearly interested in what the store offers, and they might have spent a lot of time there or been there multiple times throughout the week.
Conversely, it would be a shot in the dark to go outside and try to coax people in. If two sales reps did an experiment with one focusing on people outside the store, and one looking inside, the sales rep that stayed inside would see a higher conversion rate.
Such is the case when you use lead scoring for your business. The stats also back this up, one study found that 38% of businesses experienced higher lead conversion rates thanks to lead scoring.
Sales forecasting is the act of predicting your future revenue. You look at your products/services and estimate how many you will sell within the next week, month, year, etc.
You can improve the accuracy of your sales forecasts by using lead scoring. It lets you see how much weight to give each lead when running your calculations. Look at sales forecasting without leads scoring to help explain things.
With no lead scores, there’s a lot of guesswork involved in telling if a lead will convert or not. Your final sales figures could be way less than you forecasted. By contrast, lead scores give a deeper insight into things. You know which leads are more likely to convert, and you can work this into your calculations.
#6 ROI you can measure
Finally, leads scoring lets you see a measurable ROI. You understand which leads deserve more investment than others, and you can see how successful the conversion rates are.
Consequently, it’s easy to measure the ROI of your marketing strategy by looking at the most effective leads. You stop wasting money on marketing techniques and channels that simply don’t yield any results. Instead, your money is invested in hot leads of high quality.
By analyzing all of the data through lead scoring, you will know which channels deserve more future investment. If you’re using social media for lead generation, you can use analytics tools like Twitter analytics tools, Instagram analytics tools, etc. to check out what’s working best for you and what’s not. If your email marketing proves to be a massive lead converter, you know to spend more money in this domain. The results show that you generate an excellent ROI, so this will help you boost your revenue even further.
Wrapping it up
In summary, lead scoring is one of the best ways to nurture leads. It lets your business figure out who is worth your attention, and who should be avoided. You’ll concentrate on leads that have a high chance of converting, which will create significant advantages for your business.