What is Lead Scoring in CRM? A Guide to Prioritizing Leads
Let’s paint you a familiar picture: you want to get your sales leads and prospects into your pipeline as quickly and efficiently as possible. There may not be a miracle method to do so, but you should absolutely leverage lead scoring capabilities of your CRM.
But what is lead scoring in CRM, and why should you care about it? Right now, all you need to know is that a lead scoring system makes it easier to set priorities. Like everything we recommend at The RevOps Team, implementing this technique can help you scale your business. If you’re looking for a way to make more sales, we’ve put together this lead scoring guide to help you determine where your sales team should focus their efforts.
What Is Lead Scoring in CRM?
Lead scoring is a methodology used to determine how likely someone is to buy from your business. Sales reps usually score leads in their CRM system on a scale of 0-100, so you can think of these scores almost like grades. The higher the score, the more likely it is that a person or business will become a paying customer.
Why Is Lead Scoring Important?
You know that to make sales, you need qualified leads, or leads that fit your ideal customer profile (ICP), that intend to buy one of the products or services you offer. But that’s easier said than done.
Without an appropriate scoring model, trying to separate good leads from junk leads is like throwing darts while wearing a blindfold. Sure, you could try it, but do you really want to spend hours just to score a few points?
Lead scoring has several benefits for businesses of all sizes:
- Time savings: The main purpose of lead scoring is to avoid wasting your time on leads that have a snowball’s chance in you-know-where of converting. Once you implement a scoring model, it’s easier to find quality leads.
- Reduced costs: Lead scoring also allows you to home in on your most and least effective marketing tactics. For example, if the leads with the lowest scores all come from the same channel, you can adjust your strategy accordingly. This has the potential to save you thousands of dollars on ineffective marketing efforts.
- Increased alignment between sales and marketing teams: If your sales and marketing staff are always butting heads over lead quality, implementing a scoring model can help. As long as your marketing team uses the scoring model as intended, every lead they send to the sales team will be qualified.
What Is a Good Lead Score?
Higher scores are better, but that doesn’t mean you should ignore new leads with mid-range scores. Typically, scores of 50+ indicate a lead has a good chance of buying from your company. People with scores of 20 to 49 may need some lead nurturing before they’re ready to buy. A lead with a score lower than 20 probably isn’t a good fit for what you’re trying to sell.
The Lead Scoring Process
Before you do any new lead generation, you must review your sales and marketing data. This makes it easier to identify the characteristics of people who are likely to become paying customers. For example, you might notice that your best customers fall into a specific age group or found your business through the same marketing channel.
Next, talk to the people in your sales department to find out if they can add any insight. Even if you use Salesforce or another CRM system, your sales reps may have valuable information they haven’t added to the database. For example, a rep may tell you they have the most productive conversations with people who find your company on social media.
Finally, talk to your customers. Many companies skip this step, but it’s essential for determining why members of your target audience decided to buy from you instead of going with one of your competitors. Make sure you talk to long-term customers as well as those who stopped working with you after just a few months.
Scoring a sales lead
Now you need to come up with scoring criteria. The best way to do this is to create a customer journey map. This map represents what someone is doing, thinking, and feeling every time they interact with your business. A customer journey map also helps you identify the best way to move someone from one level of the sales funnel to the next.
It’s also helpful to create two or three customer avatars, or representations of your ideal customer. Creating each avatar helps you identify the firmographic or demographic information you need to determine if someone is likely to be a good fit for your company and its offerings.
Now that you have dozens of data points, you can start assigning point values. If company size doesn’t seem to have much of an impact on your conversion rates, you may want to make it worth just one or two points. Generally, behavior is more important than firmographic or demographic data, as it helps you determine how a prospective customer is likely to respond to your marketing efforts.
Here are a few examples of desirable attributes and corresponding point values:
- Visited pricing page of company website: +10
- Attended a company-sponsored webinar: +20
- Downloaded free report on your website: +10
- Visited a landing page: +7
- Job title: +3
- Opened your marketing materials at least three times: +5
- Clicked a link in a marketing email: +5
- Downloaded a free trial or demo: +30
Negative scoring
You should also use negative scoring to eliminate poor leads and give your salespeople a better chance of succeeding. Instead of adding points to a lead’s score, you take away points for negative attributes. These attributes may indicate a lead has almost no chance of buying from your business:
- They provide fake contact information.
- They unsubscribe from your mailing list.
- Their job title indicates a lack of decision-making authority (for B2B leads).
- They don’t live in your service area.
- They view the careers page of your website, which indicates an interest in working for you instead of buying from you.
Once you implement negative scoring, get ready for your close rates to increase. After all, you’ve removed all the leads who are likely to shoot down your offers.
Lead Scoring Metrics To Know
Lead scoring isn’t like Ron Popeil’s Showtime Rotisserie; you can’t just “Set it and forget it!” You have to follow up and make sure your scoring rules are having the desired effect. If your salespeople report poor results, you may need to pick new criteria or assign different numerical values for each attribute.
Lead engagement rate
Lead engagement involves building relationships with high-quality leads as part of your sales process. A lead is engaged when they have some type of interaction with your business, such as requesting an estimate or reading one of your blog posts.
To calculate this metric, divide the total number of desired interactions by the total number of leads in a batch. For example, if 10 of 100 new leads subscribe to your email newsletter, you have a lead engagement rate of 10%.
Unsubscribe rate
Unsubscribe rate is easy to calculate. Simply divide the number of people who unsubscribe from your email list by the number of emails delivered.
Sales cycle time
Sales cycle time tells you how long it takes to close a deal once you’ve had your first interaction with a prospect. If the buying cycle gets shorter after you implement your lead scoring model, you’ll know you’re on the right track.
Upsell and cross-sell rates
Upsell rate is the percentage of your revenue that comes from upselling, while cross-sell rate is the percentage of revenue generated by cross-selling. The terms are similar, but each one has a slightly different meaning.
- Upselling encourages the customer to upgrade the initial product. If you’ve ever purchased fast food, you may have noticed standard and deluxe hamburger options on the menu. The standard burger usually comes with beef, cheese, and condiments, while the deluxe version may come with lettuce, tomatoes, onions, and pickles. The toppings enhance the original product, making this an example of upselling.
- Cross-selling involves enticing customers to purchase complementary products. During the summer, many grocery stores set up displays with marshmallows, chocolate bars, and graham crackers; all the things you need to make s’mores. If a customer buys all three items when they only intended to buy the graham crackers, that’s cross-selling.
Lead Scoring Models To Know
For effective lead management, you also need to know about some of the most common scoring models.
Purchase intent model
The purchase intent model looks at the behaviors a lead typically exhibits before making a purchase. Reading blog posts, reviewing product descriptions, participating in a webinar, and signing up for a free trial also demonstrate the intent to buy something.
Firmographics/demographics
Demographic information describes individuals, while firmographic information describes businesses. Common demographic data points include age, gender, household income, marital status, and education level. If you sell B2B products or services, you need to know each firm’s size, industry, number of clients, and technology capabilities, among other information.
Convert Your Best Leads Into Paying Customers
Many small businesses don’t have the resources needed to use machine learning and other high-tech tools for lead scoring. The good news is, you can still benefit from creating your own methodology. Subscribe to our newsletter for helpful tips on maximizing your company’s revenue growth.