Lead Scoring 101

Building a model that organizes your pipeline and makes your marketing and sales teams happy

A LEAD LIZARD WHITE PAPER

LEAD SCORING 101

∂ INTRODUCTION 2

Your database is full of prospects, but only a small percentage of them are sales-ready. So how can you tell which ones are almost ready to buy and who will be spending the next several months in “consideration” purgatory?

Enter lead scoring. It’s a way to help you determine which leads are ready for the sales team. A great model draws on quantifiable data—the kind you can’t argue with. It ranks each lead and tells you which prospects fit your ideal customer model. Plus, a prospect’s lead score will tell you whether he or she is informed and nurtured enough to talk with a sales rep. As long as you have a marketing automation platform and CRM, you can create a lead scoring program that ensures leads that land in front of Sales are truly “hot.”

“Lead scoring is the shovel of your marketing automation toolkit that helps get

you where you need to be,” said Mathew Sweezey, Manager of Marketing Research and Education with Pardot, and author of Marketing Automation for Dummies.

Once you get the hang of lead scoring, you’ll win big points by helping:

π Ensure early-stage leads are nurtured through your sales funnel before they reach sales reps

π Save time and reduce frustration for your sales team

π Prove the value of your marketing team’s efforts

π Increase overall revenue for your enterprise

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To increase revenue

To increase sales-ready leads

To increase Sales productivity

To boost Marketing effectiveness

Other

Let’s take a look at some of the many benefits to lead scoring. It helps you …

Prove your marketing team is working hard AND

smart. It’s not always easy to get love from Sales and upper management. Let’s face it: Marketing is often seen as costing money, rather than making it. Well, no more! Lead scoring helps prove your value by directly associating revenue to the original lead source you bring in. Since your work will be more closely connected to the company’s success, you will be more accountable (read: have more opportunities for love). You’ll be praised and adored by all.

Enable your sales team to win deals faster with fewer

roadblocks. Without lead scoring, sales teams have gobs and gobs of leads … and very little information about them. They might unknowingly chase dead ends or, worst of all,

miss their sales goals. With lead scoring, reps can see where and why each lead is in the funnel. They receive only the Marketing-Qualified Leads (MQLs) that are truly qualified (and quantified). That means reps can close the deal instead of rejecting the lead and sending it back to Marketing.

Increase your company’s total number of sales-ready

leads. So now that you have great MQLs, Sales can more seamlessly accept those leads as Sales-Qualified Leads (SQLs). “Lead scoring helps with the MQL to SQL conversion rate. The better qualified the leads are, the more of them will be accepted by Sales, which helps build trust and collaboration between Sales and Marketing,” said Arpine Babloyan, Senior Manager of Online Demand Generation and Lead Management with Avid.

WHY BOTHER SCORING LEADS?

Eloqua Topliners Community poll results, February 2014.

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Build a better internal relationship between

your sales and marketing teams. Speaking of trust and collaboration, most of us are familiar with the proverbial “wall” between Sales and Marketing. “We haven’t always had a perfect relationship with Sales over the years,” said Chip Burgard, Senior Vice President of Marketing with CitiMortgage. The problem? Marketing feels underappreciated and undervalued, while Sales feels unsupported and overworked.

“Sales would argue that we weren’t giving them enough leads—and we’d say that they weren’t closing enough of the leads that we passed them. Since [we implemented a lead scoring system], Sales really can’t ask Marketing to change its process and metrics. We created automated strategies for Sales that enabled them to better close the leads that they had and in turn established a friendlier relationship,” Burgard continued. The process of creating and managing a lead scoring program inherently gets your sales and marketing teams working together. With this, you’ll see and discuss each other’s pain points— and make plans to fix them.

Increase your company’s overall revenue. In addition to improving relationships, lead scoring improves a very tangible thing, too—money. Lead scoring decreases the amount of money you have to spend on winning the average lead, which frees up cash for more lead generation campaigns, which circles back to more leads, and ultimately more sales. And you can take that strategy to the bank.

Increase KPIs. Your job performance (and your department’s reputation) depends on high-scoring KPIs. Most can be directly linked to the benefits of lead scoring, such as revenue and MQLs/SQLs in the pipeline. “Our biggest KPI is to increase the number of MQLs going over to Sales … and ensure they are truly qualified,” said Sterling Bailey, Global Demand Generation Marketing Manager with McAfee. “Lead scoring helps us with that because it’s an automated way to identify who those people are and how they are engaging, and get them to Sales in a timely fashion.”

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The foundation of any scoring model relies on your marketing and sales teams’ ongoing relationship.

Here’s how you can start making magic:

1 Form a small committee that represents (and understands) both your sales and marketing teams. Ask members to define the attributes—both demographic and behavioral—of an ideal lead. Then identify the differences between an ideal lead, a decent lead, and a poor lead. These will be the thresholds for your scoring model.

2 Build a scoring framework. Your committee will need to identify behaviors and demographics that add to a lead’s score—as well as attributes that subtract from it. For instance, you may decide watching at least two webinars is the best indicator of an SQL (a positive behavior). On the flipside, perhaps you know that a lead below a manager level won’t have purchasing power. This negative demographic attribute would subtract from his or her score.

3 Write your lead scoring formula. Now, assign scores to each attribute. These scores will help you create a formula that identifies where a lead is in the buying cycle. Look at the thresholds you created in step 1. What score indicates when a lead should become an MQL? An SQL?

4 Build a service level agreement (SLA). Lay out what happens to a lead once it enters the sales funnel through Marketing and the next steps for how Sales will follow up—along with a timeline. Include what happens to recycled leads and if the scoring system starts creating too many unqualified leads. This is an important agreement between Sales and Marketing. A lack of shared definitions is one of the most common problems in lead scoring.

“We work closely with our sales team, so we absolutely define what constitutes a lead—together,” said Burgard with CitiMortgage. “We work with them in three main ways: To define what a lead is; to discover what Sales’ capacity is—so that we don’t over-deliver; and to figure out how to maximize conversion.”

5 Test before you implement. It’s always a good idea to test a program before you open the floodgates. Run a random assortment of leads through your scoring model, including leads from each stage in the buyer’s journey. Do the closed leads match your highest score? Are there opportunities that didn’t get captured correctly? Identify the reasons why and adjust appropriately. Rinse and repeat until you’ve got a solid program.

Not everyone remembers to include some of the most important stakeholders—the sales team. 43% of marketers don’t ask Sales to weigh in on criteria before building their scoring models.

SO HOW DO I CREATE A SCORING PROGRAM?

Eloqua Topliners Community poll results, February 2014.

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How is a lead scored throughout the buyer’s journey? “We

start with gross response. From there, we get into leads,”

said Burgard with CitiMortgage. “Once we have basic contact

information and can reach out to someone, we consider that

a lead. For example, this could be anyone who landed on our

website, completed a form, and had us contact them for an

outbound call or chat session.” Here’s an example of what that may look like within a lead scoring program:

She has amassed enough points

through your lead scoring qualification

process to become an MQL. Next up, she’s passed on to a sales rep.

WHAT DOES A SCORING PROGRAM LOOK LIKE?

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The best programs score leads based on fit and interest (demographic and behavior), and where the prospect is on the buyer’s roadmap. Here are some tips:

π Map your buyer’s journey or roadmap. Take inventory of each asset according to the stage of the sales funnel it’s associated with. (Here’s a hint: White papers before webinars before case studies before data sheets.) Look at past customers for clues. For example, you might find that most buyers downloaded a white paper, read a case study, and then visited your pricing page.

π Score the behavior the lead makes, not on the asset itself. Think of each step the prospect must take with each asset. For example, instead of applying a score to a white paper, apply a score to a lead filling out a form to receive the white paper, clicking the link in an email, and downloading the white paper.

π Include negative scores. Don’t let your lead scoring system work only in one direction. What happens if a student is on your website for a report on your company? He can trigger all the required actions to become an MQL if there are no negative points assigned to his demographics. And what if a lead shows no behavior for a few months? Apply negative points to her lagging interest. This is called “score decay.” The length of time between behaviors is important. For example, if two leads have the same behaviors, but one is quicker to act, that lead is hotter. This calls for more points added to his score.

π Define high- and low-velocity leads. While looking at the length of time a lead moves through the sales funnel, understand the capacity of your sales department. If Sales has enough leads coming through the gate that reps have to prioritize who to contact first, velocity may be important. Assign extra points to leads moving at a faster-than-average pace. These fast-movers might be showing characteristics of a deadline-driven decision, and bumping them to the front of the line can help avoid a missed sales opportunity. On the other hand, a lead with score decay won’t need immediate action. This will greatly help your sales team prioritize an already full pipeline.

π Consider account scoring. Most of the time, a group of people from a company decides on its purchases, not just an individual. You’ll want to increase the score of individuals within that organization if you receive multiple leads from the same company. You can also assign leads to an account, and then score the account based on their collective scores.

A FEW POINTERS FOR YOUR FRAMEWORK

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There are two ways to evaluate a lead for scoring: implicit (behavioral) and explicit (demographic) data. Let’s take a closer look.

Explicit data is the hard information you get from a lead. It usually comes from forms or data services. This includes industry and contact information, along with the company’s revenue and number of employees. This information seems to be straightforward; however, it can be tricky.

“Avid’s audience includes some very creative people, so it’s possible for someone with the job title ‘dude’ or ‘guru’ to be a great prospect for us,” said Babloyan with Avid. “In the past, we scored based on standard job titles, and prospects with more original titles were not scored appropriately. Now, [we score prospects] regardless of their title.”

Keep an open mind when scoring explicit data, and take care to weigh it appropriately in your framework. Don’t add or subtract too many points just because of a job title; a lead’s behavior speaks volumes over his or her role.

“Our new lead scoring philosophy is to look at how the contacts are engaging with us, determine the score, and then determine if they should be sent to Sales,” said Bailey

IMPLICIT VS. EXPLICIT DATAwith McAfee. “Our previous lead scoring was too heavily focused on job titles. If someone is engaging a lot, they are a lead at that point, and we want to talk to them.”

Which brings us to implicit data. This is information you collect about a lead’s digital footprint or behavior, such as:

π Website visits (Tip: Rate pages and content based on their value in the sales funnel. For example, a webinar page is worth more than a careers page.)

π Form submissions

π Marketing campaign clicks

There’s a delicate balance between implicit and explicit data in lead scoring. It’s important to consider both.

“The explicit data—job title, region, revenue—only goes so far. You need to measure prospect interest through implicit data—online behavior. You can’t fully rely on one or the other; you need a combination of the two,” said Sweezey with Pardot. “We put more weight on implicit data. Demographics are only big because marketers made them big. So as the old saying goes, actions speak louder than words.”

Eloqua Topliners Community poll results, February 2014.

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Once you’ve got a lead scoring program up and running, give yourself a high five. However, your work doesn’t end there. Lead scoring programs are effective only as long as they are cared for. Hold regular meetings between Sales and Marketing to get feedback. Here’s what you should have on your agenda:

1 Review leads that were scored as sales-ready, but

didn’t turn into opportunities. Look at their implicit and explicit data, discuss the possible reasons for the missed opportunity, and modify your program. “We review each individual lead to see if there is a trend, or whether it’s just a one-off issue,” said Babloyan with Avid.

2 Is Sales receiving too many leads? You could create more levels of “readiness” in the program to help your sales team prioritize. Or you could adjust the program so that more leads go through a lead nurturing track before reaching Sales.

REVISIT AND IMPROVE3 Have you changed your website or added new

content? Make sure to add them to your program.

4 Keep track of any adjustments to the scoring model so you have a history of when, why, and how it’s evolved.

Remember: There’s always room for improvement. “Be cautious of any company that tells you they have perfect lead scoring,” said Sweezey. “It doesn’t matter if you’re a marketing automation vendor or the best marketer in the world, everyone has a learning curve and is always improving their lead scoring model.”

Building your scoring framework and managing it can be overwhelming. Luckily, you have a ton of resources. “Don’t create your lead scoring program alone,” said Bailey with McAfee. “Learn best practices from industry experts and seek lead scoring resources prior to building your model.”

Eloqua Topliners Community poll results, February 2014.

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BANT is a classic way to measure leads. It stands for:

π Budget: How much do they have to spend?

π Authority: Can they even make the purchase?

π Need: What are they looking for?

π Timeframe: Are they looking now or in the future?

It’s been a handy tool to informally “score” a lead, but it has flaws. Today, marketers debate on whether or not to throw out BANT altogether. However, here are some ways to incorporate BANT into your lead scoring program:

BUDGET

π Flaw: Pricing is usually provided on websites now, so it’s often known before a lead engages. Given this, deals are usually won or lost because of other criteria, such as features or compatibility. On top of that, asking leads for their budgets usually results in skewed or inaccurate answers.

π Salvageable? No. Budget is not relevant in scoring.

AUTHORITY

π Flaw: In a BANT framework, Sales would only want to talk with someone who can make the buying decision. However, the real power may rest with an exploratory committee, not a CEO. People who inform buying decisions are often the real decision makers, even if they don’t make the final sign-off.

π Salvageable? Yes. Authority should be split into two categories: level and role. For example, an IT specialist (role is IT, level is specialist) may have more say in vetting the purchase of new software than a marketing specialist. It’s also a good way to incorporate account scoring.

TO BANT OR NOT TO BANT? TIMEFRAME

π Flaw: Asking for a lead’s timeframe by form is unproductive. Lead nurturing can help you engage a buyer without asking for this information. Also, the answer may be inaccurate or subject to change without you knowing.

π Salvageable? Yes. You can measure timeframe through implicit behavior. Where is the buyer in his journey? Is he discovering or considering? You can read into a lead’s behavior to determine her timing and adjust her score accordingly. Is she deciding? Time to boost the score.

NEED

π Flaw: None, as far as we can tell.

π Salvageable? Absolutely. Need is the most important by far. Without knowing what someone is looking for, Marketing and Sales can’t respond effectively. But if someone’s need matches what you can deliver, your scoring program will let you know. Leads that are likely to close will rise up, and dead-end leads will fall down.

“When developing our new lead scoring model, [BANT] was one of the first things we discussed. However ... it’s difficult to know whether or not someone truly has the budget or authority. The key is having good, clean data.”

—Sterling Bailey, Global Demand Generation Marketing Manager, McAfee

“If you’re just getting started, start simple because it’s going to get more complex. If you start complex, there will be mistakes, and you may go crazy.”

—Mathew Sweezey, Manager of Marketing Research and Education, Pardot

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Reports can tell you so much. They ultimately show what your lead scoring program is producing: Good or bad MQLs. The following reports are great indicators of your model’s success:

π Opportunities won and lost

π Converted MQLs and rejected MQLs

π Inactive leads

π KPI performance

There are loads of other reports to pull. “We are setting up reports in Salesforce.com to measure the number of open leads, qualified leads, conversion rates, and ultimately the pipeline,” said Babloyan with Avid.

One other way to gauge the success of your program is through your sales reps. After all, they’re the people who end up using the results of the scoring model. It’s a pretty simple question. “Measure it by the happiness of your sales department. Are they happy with the leads you’re passing over?” said Sweezey. If they have feedback on the current model, they can guide you in tweaking it—and ultimately, improving the results.

HOW DO YOU KNOW IF YOUR LEAD SCORING PROGRAM IS A SUCCESS?

In a nutshell…Lead scoring is an art and science. It digs through your pipeline and finds the leads that need to be addressed. It helps your sales team work efficiently and with fewer headaches, and it helps your marketing team show its value to the organization. And at the end of the day, lead scoring increases revenue.

When developing your lead scoring model, keep in mind that it needs to follow the buyer’s journey every step of the way. Put yourself in the buyer’s shoes and identify all of his or her characteristics and behaviors. Lead scoring should be a guide that lets Sales know who is researching, who is evaluating, and who is ready to buy.

If lead scoring simply becomes a task of assigning points just so you know who downloaded the latest white paper, or you let it run without regular tune-ups, it will fail. If you look at lead scoring as a dynamic, inter-departmental, and comprehensive system for identifying leads that fit with what you’re selling, then you will make a lot of people in your organization very happy.

About Lead LizardLead Lizard is a leading marketing automation agency for B2B companies. Our demand generation experts build world-class marketing automation programs and strategies. We specialize in helping enterprises in technology, healthcare, and financial services. We work and play in beautiful Portland, Oregon.

1111 NE Flanders St., Suite 101

Portland, OR 97232

leadlizard.com

Need help building your first lead scoring program or improving your current one?At Lead Lizard, we get excited about lead scoring. We strive to understand your business, your goals, and your ideal lead so that we can help you develop a lead scoring program that fits just right. Lead scoring can be daunting—don’t do it alone. Here are some ways we can help:

π Build lead scoring programs within your marketing automation platform

π Evaluate current lead scoring models and identify opportunities for improvement

π Identify customers at different stages in the buyer’s journey

π Identify digital body language cues

π Audit your content to determine how it fits in your sales funnel and lead scoring framework

π Develop reports and dashboards to measure your scoring program

Want to learn more? You can reach us at info@leadlizard.com.

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