What Is Lead Scoring? Identifying Leads for Better ROI

Ever wondered how to distinguish ‘hot’ prospects from ‘cold’ prospects? That’s where lead scoring comes in.

In this article, we’ll answer the question, “What is lead scoring?” and explain how you can use it to create more effective lead generation campaigns.

Key Takeaways

• Lead scoring is a methodology that ranks potential customers based on their engagement and demographic information. It optimizes the efficacy of sales teams by targeting the most promising leads.
• Kartra is the sales funnel platform we use for lead scoring. However, the principles in this article can also be applied to any funnel building tool with a lead score feature.
• A lead score allows you to assign point values to leads based on their interactions and behaviors. Features like point expiration ensure that scores reflect current engagement levels.
• Successful lead scoring implementation involves collaboration between sales and marketing teams to decide the appropriate number of points to award for each lead interaction.

What is lead scoring?

Lead scoring is a process that ranks customers using criteria to determine which leads are ready to purchase and which leads are unqualified.

Sales and marketing teams most often use lead scoring, but it can be useful for all departments in your organization. Lead scoring prioritizes leads, improves company communication and productivity, reduces customer acquisition costs, and increases overall revenues.

Lead scoring can offer solutions for generating traffic, researching quality leads, and accurately measuring ROI.

The effectiveness of lead scoring is underpinned by its capacity to:

• Pinpoint those individuals who demonstrate a high level of interest, thereby directing your sales team’s efforts towards the most promising opportunities.
• Grant better control over your sales pipeline.
• Pave the way for more accurate revenue forecasts.

Why use lead scoring?

Lead scoring can help prioritize your core customers, increase conversion rates, and improve communication between your marketing and sales teams.

Generating leads is critical to maintaining your business. However, the more potential clients you have, the more savvy you need to be.

While your company’s marketing group is focused on bringing in new customers, closing the deal is left to the sales team. It seems like a simple process when each department utilizes its strengths, but it’s not that simple. According to a report by consulting firm RAIN Group, less than 25% of new leads are ready to buy. How do you maintain and drive the remaining 75% of sales to close?

This is done with an effective lead scoring strategy.

How does lead scoring work?

Evaluating potential customers requires creating specific criteria for your business’s industry or customer base and assigning a numerical value (usually between 1 and 100) to these data points. If you are new to evaluating leads and don’t know what criteria to include, start with BANT (budget, authority, need and timing). Using these data points is a great starting point for prioritizing leads.

Pay attention to key factors from both conversion sources and critical areas that keep leads from making a purchase. The total amount a lead receives will help you determine the conversion threshold for all leads. The higher the lead’s score, the more likely they are to buy.

In addition, consider models for evaluating potential customers. For example, if a customer converts 100% of the time after watching a video sales letter, that lead should be prioritized even if it doesn’t reach the conversion threshold.

Once you have set the thresholds, use this data to connect to your preferred customer relationship management (CRM) software. A CRM system can send you real-time notifications when a lead reaches a threshold, allowing you to follow up before a competitor does.

Lead evaluation categories

The main categories for evaluating potential customers are demographics and firmographics, behavioral data, email interaction data, and social interaction data.

• Demographic and firmographic data. Demographics and firmographics are information related to location, industry, company size, and job title. These details can be explored through the website or social media or voluntarily fill out an online form. This does little to help with scoring, whereas behavior and email interaction are more determinative. Summarizing demographic data into four or five categories is considered sufficient.
• Behavioral: behavioral data refers to how a lead interacts with your company. Measure implicit data on how a lead visits your website, starts a free trial, interacts with your social media channels, or signs up for additional services. CRM can track the customer journey step-by-step, giving you the data you need to accurately assess potential customers.
• Email interaction: lead scoring assigns points to leads based on open rates and click ratings. With lead count automation software, you can keep your sales team in the loop by setting an expiration date via email. Ultimately, your sales cycle should determine the shelf life of your sales cycle.
• Social engagement: this type of data shows how active leads are on your social networks. Are they commenting, sharing posts, or clicking on links?

The Role of Lead Scoring in Marketing and Sales Teams

When the sales and marketing teams operate in sync, it creates a harmonious environment beneficial to any business leader. Lead scoring acts as the orchestrator in this scenario.

It’s the secret sauce that ensures marketers pass the baton to sales at the perfect moment, with both sides confident in the lead’s potential.

It enhances discussions on nurturing strategies and the timing for transferring leads to sales, ensuring that every prospect is engaged at the most opportune stage.

The goal is to meticulously nurture interested leads, ensuring that when they reach the sales team, they’re prepared to engage in a detailed discussion about your offerings.

The Kartra Advantage: Understanding Its Lead Scoring Capabilities

Kartra is the software we use to score leads. It allows you to assign scores to leads based on their transactional and engagement behaviors. With Kartra, the lead scoring process isn’t static; it’s dynamic, thanks to features like point expiration that add a temporal dimension to lead qualification.

Assigning Point Values with Kartra

With Kartra, the adage “every action counts” takes on a literal meaning as users can assign numerical value points to leads, enhancing the precision of prioritization.

Kartra (like most other lead management tools) allows you to set up “If this then that” automation. Here’s an example of a Kartra automation I set up that will add 20 points to a lead that plays a video:

Because Kartra is an all-in-one marketing tool, it allows you to assign points to leads based on various actions include (but not limited to):

Openning emails

• Clicking on emails
• Purchasing products
• Registering for a webinar
• Attending a webinar
• Filling out an application or survey form
• Scheduling a call
• Visiting a page on your website (or sales funnel)

And more!

With Kartra, lead points can be added when leads take positive actions and subtracted when leads take negative actions (e.g. registering for a webinar but not actually attending it).

Points aren’t forever in Kartra’s world.

They can have an expiration date, ensuring that your lead scoring system remains a true reflection of a prospect’s current interest level.

Before points come into play, leads must be part of your Kartra universe, ensuring that the scoring system is both comprehensive and up-to-date.

Expanding Beyond Kartra: Lead Scoring Across Platforms

While Kartra is a significant player in the field of lead scoring, it’s not the sole competitor. The digital landscape is teeming with sales funnel software solutions, each offering their unique spin on lead scoring capabilities.

Whether you’re a solo entrepreneur or at the helm of a vast enterprise, there’s a tool tailored to meet your lead scoring needs.

Tools like Salesflare, which offers a personal touch, and HubSpot, known for its broad analytics, aim to track, analyze, and prioritize leads, serving businesses across all scales and sectors.

With the flexibility to create multiple lead scoring systems, these platforms offer businesses the agility to adapt their strategies to different products, services, or market segments.

Comparing Lead Scoring Tools

Each tool comes with its own set of features and customization options that can make or break your lead prioritization strategy. For instance, ActiveCampaign allows the setup of multiple lead scoring programs, providing the customization necessary to tailor scores for different characteristics and engagements.

HubSpot, on the other hand, automates the lead scoring process, assisting in the prioritization of leads most likely to convert. While this feature isn’t part of the free platform, it demonstrates the value of investing in a system that simplifies the process of identifying sales-ready leads.

Zendesk Sell also steps into the ring with an automatic function that aids in assigning lead scores, sharpening the focus on the most promising sales opportunities.

Creating a Lead Scoring Model That Works

Creating an effective lead scoring model is an art form, a balancing act that requires a thoughtful approach and constant refinement. It begins with setting the stage by establishing minimum criteria for what defines a potential customer, ensuring that your efforts are channeled toward viable prospects.

Then, it’s about defining the scoring criteria, the point values, and the vital customer data points that will serve as the foundation of your model.

Your model should mirror the reality of sales. Here are some tips to consider:

• Assign point values based on actual close rates of attributes and interactions.
• Account for various types of online engagements, such as form submissions and page visits.
• It’s a dynamic system that requires routine updates based on continuous learning about customer behavior and sales outcomes.
• Ensure that your scoring model remains sharp and effective.

Identifying Key Actions and Behaviors

Crafting a lead scoring model that resonates with your target audience requires collaboration between marketing and sales teams to pinpoint the key actions and behaviors that signify a high-quality lead. This collaboration ensures that the lead score reflects both ‘fit’—the explicit data matching a prospect to the ideal customer profile—and ‘engagement level’ gauged through online behavior.

For example, Kartra’s scoring system exemplifies this dynamic nature, allowing for:

• Automatic deduction of points after certain expiration deadlines
• Keeping the score indicative of the most recent engagement levels
• Ensuring that the model is always in sync with the customer’s current interest
• Allowing for a more accurate and responsive lead scoring process.

Balancing Fit and Engagement in Scoring

A proficient lead scoring model doesn’t overly depend on demographic fit or behavioral engagement but balances them equally. By doing so, it generates qualified leads that have a higher chance of conversion.

New prospects’ quality signals, such as demographics and website engagement, are balanced with existing customers’ interactions and product activity, contributing to a more holistic approach to conversion.

Moreover, the recency and frequency of engagement are pivotal aspects that must be integrated into the scoring model.

These factors reflect a lead’s interaction frequency and interest level, both of which are indicative of their readiness to make a purchase.

By incorporating both positive and negative scoring, the model effectively manages lead quality, enabling sales teams to:

• Improve the prioritization of prospects
• Increase conversion rates
• Maximize sales productivity
• Optimize marketing efforts

Predictive Lead Scoring: The Future-Forward Approach

Predictive lead scoring serves as a foresight tool in the sales arena, providing insights into a lead’s potential for conversion based on past and present data.

The use of machine learning, AI algorithms and AI-powered lead generation tools are revolutionizing predictive scoring by analyzing data points to prioritize leads with a higher probability of becoming customers.

It’s a forward-thinking approach that reduces the guesswork and manual evaluation, enhancing the system’s ability to spotlight the most promising leads.

Platforms like Explorium have embraced this cutting-edge technology, continually refining lead scoring models with predictive modeling and machine learning.

They showcase the potential that these emerging technologies hold in optimizing the scoring processes. With this predictive technology, businesses can steer their efforts towards leads that are not just interested but are statistically more likely to convert.

Machine Learning Enhancements in Lead Scoring

Machine learning isn’t just a buzzword in the realm of lead scoring—it’s a powerful engine driving the accuracy of predictive models. These algorithms learn from many data patterns, from device types to user locations, and enhance their predictive abilities with each new interaction and data input. This means that the system continually improves, delivering more precise predictions over time.

The predictive scoring software offers the following benefits:

• Segmentation of customers
• Forecasting of vital business metrics such as conversion rates and customer lifetime value
• More targeted marketing campaigns
• More informed strategic decisions

This level of insight allows businesses to make the most out of their data and optimize their operations.

Implementing Your Lead Scoring System Effectively

Effective implementation of a lead scoring system requires accuracy, comprehension, and ongoing upkeep. Here are some key steps to follow:

1. Ensure you have high-quality data that offers a clear view of where prospects are in their customer journey.
2. Use this data to determine if prospects are sales-ready and should be passed on to the sales team.
3. Optimize the marketing-to-sales handoff to increase conversions and uncover opportunities to accelerate revenue.

By following these steps, you can fine-tune your sales process and drive better results for your business.

Training Sales Teams on Lead Scoring Utilization

For sales teams, comprehending and using the lead scoring system for effective lead prioritization and engagement is not merely advantageous but crucial.

When sales reps are well-versed in the nuances of lead scoring, they can better identify leads that are most likely to blossom into high-value customers.

This training isn’t about adding another layer of complexity to their workflow; it’s about equipping them with the insights necessary to hone in on opportunities that have the highest potential for conversion.

Beyond prioritization, sales teams can also contribute to the scoring system by sharing their experiences of which marketing materials and interactions lead to successful conversions.

This feedback loop is invaluable. It helps fine-tune the scoring model to reflect the actual sales landscape, ensuring that marketing and sales efforts are aligned and synergized for maximum impact.

Measuring Success: Evaluating Your Lead Scoring Efforts

Evaluating the success of your lead scoring initiatives goes beyond applauding victories; it’s about adjusting your strategy for ongoing success.

By tracking key metrics such as unsubscribe rates, response rates, and lead engagement, you gain insights into the effectiveness of your lead scoring model. These metrics not only provide a gauge of current performance but also illuminate paths for future improvement.

Regular updates to the system are vital, as they reflect the changing patterns of customer behavior, audience segments, and other market dynamics.

Effective lead scoring leads to a more predictable pipeline and reliable revenue forecasts, which are indispensable for strategic business planning.

Additionally, insights garnered from customer interviews can be a goldmine for refining your scoring model. Understanding the factors influencing buyer decisions can help you adjust your scoring criteria better to match the profile of your most profitable customers.

Tracking Conversion Rates and Sales Cycle Efficiency

The lead-to-customer conversion rate is one of the most revealing measures of lead scoring effectiveness. This metric shows how well the scoring model aligns sales-ready leads with the sales team’s efforts.

A high conversion rate suggests that the scoring model is effectively identifying and prioritizing leads that are primed for the sales process. Conversely, a lower rate may indicate the need for adjustments in scoring criteria or sales approaches.

The efficiency of the sales cycle is another critical measure of your sales success.

By shortening the sales cycle, a business can accelerate revenue generation and improve cash flow. Moreover, evaluating the sales cyclecan reveal insights into which people are moving swiftly through the buying cycle and which are stagnating, enabling further refinement of scoring models and marketing campaigns.

This continuous optimization process is vital for staying ahead in a competitive marketplace.

Conclusion

By implementing a lead scoring system, businesses can prioritize leads with precision, ensuring that sales efforts are focused on the prospects that are most likely to convert into valued customers.

Embrace this lead generation tactic as a key part of your sales strategy and witness your business thrive.

With the knowledge you’ve gained, you’re well-equipped to build a lead-scoring model that works for your unique business needs, train your team to leverage it effectively and continually refine your approach based on solid data and insights.

Frequently Asked Questions