No matter how many sales you make, lead scoring is important for the growth of your business. Why? It's because leads are a great opportunity to grow your customer base and generate more revenue. But what does lead scoring entail? What about calculating the score? And which models should you use? In this blog post, we will answer all these questions!
What is Lead Scoring?
Lead scoring is the process of assigning a value to each lead based on their predicted conversion rate. The value is assigned in the form of a numerical point. The higher the score, the more likely they are to convert.
How to Calculate Lead Score?
There are many ways of calculating a lead score but one popular method is using conversion rate and probability of conversion which uses an equation with two variables in it- "Conversion Rate x Probability".
For example, if a lead has a conversion rate of 60% and probability of converting at 20%, the equation would be:
60 x 20 = 1200
This means that this person is worth 1200 points using the calculation method outlined above.
The higher their score, the more you should concentrate your time on them as they are predicted to convert more often than other leads who have lower scores.
Why is Lead Scoring Important?
- Lead scoring is a way of measuring lead quality and helping you to identify the best leads.
- Lead scoring allows you to focus your time on high-quality prospects, which in turn will increase sales conversions over time.
- The whole point of creating lead scores is that it gives marketers information about how likely they are to convert so that higher value leads can get more attention than lower ones do.
- Lead scoring is determined by various factors but most importantly, it's based on where they are in the sales funnel and how often they interact with your content or company.
- Other benefits that lead scoring offers : It helps with lead nurturing &improves your overall marketing strategy and ensures that you're not wasting time on leads who are never going to buy from you.
By being able to segment, target, and nurture more qualified leads in a shorter period will save companies both money and valuable resources.
All of these benefits make creating an effective lead scoring model worth the effort.
5 Types of Lead Scoring Models
1. Demographic Information -
Information based on demographic factors such as gender, age, location and education.
This can be done by assigning points for each category a lead falls under which will give them an overall point value.
For Example: Female = 20 pts; Male = 30 pts; Age 25-34= 40 pts etc. This type of scoring is effective for predicting what types of people might buy from you.
2. Company Information
Information about the company such as the number of employees, industry and annual revenues.
This type of scoring is effective to predict how large a customer might be for your business.
For Example: Industry size is determined by points assigned for each industry the lead falls under which will give them an overall point value.
Industry size: Banking and finance = 40pts; Manufacturing = 30 pts; Construction= 20 pts etc.
3. Social Media Interactions
This model score leads based on the level of social media interaction. This model is useful for predicting how well a lead will respond to your company's products or services.
Number of Likes on Facebook Page - 20 Points
Follows on Twitter - 30 Points
Send Web Chat message - 40 Points
4. Email Interactions
This type of model score leads based on the frequency and quality of email interaction.
This is a useful metric for predicting how engaged or responsive your lead is to what you have been sending them.
Number of Emails Opened= 20 pts; Email Click-through Rate = 40pts.
5. Behavioral Data
This model involves information collected about the behavior of your leads.
This is a great metric for measuring how often and how much activity has been seen on social media, email, or other online activities to see if there's any correlation with their response rates.
Number of Posts on Social Media= 20pts; Number of Engagements= 40 pts., Number of Likes on Video Interactions=50 pts.
Here you can easily decide that Video Interactions generate more leads.
5 Tips for Designing Lead Score Model:
Based on the data and information you have you can create your lead score model. Here are 5 tips to help you crack the design of the lead score model:
1. Identify your Key Metric
Choose the one single variable that you would like to monitor. This can be anything from a lead's response rate, the number of social media engagements, or even how much they've clicked on specific content. Be sure it aligns with what your company is trying to accomplish and then get an idea of where in the sales funnel this data should fall so you know when will be the best time for them to contact someone about their interest level.
2. Categorize your Leads
This is where you'll divide your leads into those who are qualified, not yet qualified and unqualified. You want to assign different point values so that when someone views their lead score they can understand what the likelihood of conversion for any given lead might be.
3. Set Thresholds
You need a minimum threshold before assigning points or deciding if a user should receive an email notification. There also needs to be some kind of maximum value assigned as well so you don't overwhelm customers with too many emails.
4. Assign Point Values
This might sound like common sense but how much do each one of these actions make up in terms of your key metric? For example, let's say 100 social media engagements equals 50 points – it would take 400 social media engagements to equal 100 points.
5. Identify Which Actions Matter
What are the key tasks or behaviors that lead someone on a path towards conversion? For example, if you're trying to drive leads for your eCommerce site, then emailing them after they have been browsing and left without buying anything is less effective than when they've added an item to their cart and then abandoned it.
If you've been wondering how to find out what leads you should focus on more, lead scoring is the path for you.
It's a way of understanding where people stand on your funnel and if they're likely looking for help that will move them higher up the chain.