Lead Scoring: What It Is and How to Use It for Your Business

Abe Dearmer

Dec 15, 2022

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18 min read

Marketing

Every business wants to know how to create and nurture qualified leads to turn them into paying customers. But what's the best way to do this? Lead scoring may be the answer. This process rank leads according to their likelihood of converting, so you can focus your time and energy on those most likely to close. In this article, we'll explain how lead scoring works and show you how to use it for your business. Let's get started.

What Is Lead Scoring, and Why Is It Important?

Lead scoring is a method of rating leads based on their level of interest and the likelihood that they'll become customers. Lead scoring helps prioritize which leads should be contacted first and can efficiently optimize the sales process and maximize marketing efforts.

The Benefits of Using Lead Scoring

There are many benefits to using lead scoring in your business, including:

• Increased efficiency: Automating the lead scoring process eliminates manual work, ensuring leads are identified, evaluated, and acted upon quickly. This can help businesses identify high-value potential customers and respond to them faster.
• More accurate prioritization: Lead scoring enables you to prioritize leads based on their likelihood of converting into paying customers, allowing you to focus your resources on those most likely to produce the best results.
• Improved targeting: By assigning scores to new leads based on attributes (e.g., demographic data or previous interactions with your business), you can target them more effectively and create campaigns and offers tailored specifically for them.
• Better ROI tracking: Having a score assigned to every lead makes tracking and measuring the ROI of your lead generation efforts much easier.
• Increased customer satisfaction: By scoring leads and responding to them quickly, you can give customers the experience they expect from you, resulting in improved customer satisfaction and overall close rates.
• Improved customer loyalty: By having sales reps respond with a quick follow-up and tailoring offers to quality leads based on their lead score, you're more likely to foster customer loyalty and repeat business. You can further boost your results by adding email marketing software to your marketing strategy so that these follow-ups can be automated. Just ensure each email falls within compliance regulations and includes unsubscribe features.

How to Create a Lead Scoring System

Many factors go into creating an effective lead-scoring system. A simple guideline for a system would include:

1. Establish what constitutes a successful conversion: This will vary depending on your business. For some companies, it might be getting someone to buy just one product; for others, it might be getting someone to sign up for a free trial or subscribe to a mailing list. You need to decide what's significant so that you can measure how well your leads are converting.
2. Create a scoring system: Once you know what methodology constitutes a successful conversion, create a way to score your leads. Creating a lead scoring system involves understanding the key characteristics that make up your ideal customer profile (ICP) or buyer persona. This helps determine what criteria to use for each lead. The most common data points include demographics, firmographics, contact data accuracy, activity levels (how often the lead engages with your content), website behavior (what pages have the lead visited), and more. Once you've identified the criteria, use a point system to assign points to each criterion to create a lead score. This can be done using online software or manually in a spreadsheet. For example, if you determine that having a "CEO" job title is a crucial criterion, you could assign five points to leads that meet this criterion. Keep this system up-to-date and adjust it over time as your customer profile changes or new data emerges.
3. Automate the process: Once you’ve determined how you'll score leads, use automation tools such as marketing automation software or CRM systems. This helps streamline the process of adding point values to leads and tracking progress. Additionally, these tools can tweak or segment leads based on their score, so your sales team can focus their outreach efforts on higher-scoring leads.
4. Track results: Finally, track the results of your lead scoring system so that you can adjust it if necessary. How many of your leads are converting? Are certain types of leads more likely to convert than others? You can constantly refine and improve your lead scoring system by tracking your results.

Factors That Influence Lead Scores

Lead scoring is the process of assigning a value to a potential customer, which reflects how likely they are to buy from you. This value is calculated using data about the person, such as their contact information, engagement with your content or website, and other demographic information. You can then prioritize leads according to their score to focus your time and energy on those most likely to convert into customers.

Several factors influence lead scoring criteria. 

Contact Information

When it comes to lead scoring, contact information is one of the most critical factors. After all, you can't score a lead if you don't have any information about them. When a lead has more data-rich contact information (e.g., detailed job title, company size, etc.), a business can better understand the lead and assign a higher score accordingly.

Tips for collecting higher-quality contact information:

• Ask users to fill out forms with as much detail as possible, and make sure there's an incentive or reward for doing so.
• Use lead magnets such as ebooks, whitepapers, and webinars to entice leads to provide more information about themselves.
• Integrate contact form plugins on your website that can collect detailed information from visitors quickly and easily.
• Use apps or plugins that automatically capture contact information from visitors who are logged in to social media accounts.

Engagement with Content

How often is the potential customer interacting with your website or content? The more engagements they have with you, the more likely they'll be interested in your product or services.

Tips for measuring engagement:

• Track how often leads are visiting your website and interacting with content.
• Measure how long they spend on each page to understand their interests better.
• Track the number of downloads or views of any gated content, such as whitepapers.
• Track the number of email opens, clicks on email links, and other interactions with emails.
• Use heatmap tools like Hotjar or Crazy Egg to track where visitors click on your website.

Demographic Information

It's important to consider demographic information when assigning lead scores. Depending on your business, certain demographic groups may be more likely to convert into customers. For instance, a B2B company might give higher scores to leads who work for larger companies, as these individuals have a budget for their products or services.

Tips for gathering demographic information:

• Use quiz-style forms or surveys to collect demographic information.
• Integrate a contact form plugin on your website that collects demographic data quickly and easily
• Use LinkedIn to research potential leads and gain useful demographic information about them.

Lead Source

Where's the lead coming from? Are they finding you through organic search engine results, an email campaign, PPC advertising, or another marketing channel? Knowing where a lead is coming from can provide insight into their level of interest and can help you prioritize those who come from channels with a better track record of converting into customers.

Tips for tracking lead sources:

• Integrate tracking codes on your website to track visitors and where they come from.
• Create a separate landing page for each marketing campaign, which allows you to track the success of each one.
• Use UTM parameters in email campaigns or PPC advertising to measure how many leads are coming from those platforms.
• Install tracking tools such as Google Analytics on your website to track different lead sources.

Purchase Intent

Regarding lead scoring, purchase intent is one of the most critical factors. After all, you can't score a lead if they're not interested in your product or services. There are several ways to measure purchase intent, and each can provide valuable insights into whether a lead is likely to convert into a customer.

Tips for measuring purchase intent:

• Look at the language that potential customers are using on your website. Are they talking about their needs and how your product or service can solve them? Or are they asking questions about pricing and availability?
• Track how many leads visit your "add to cart" or "checkout" pages.
• Track the duration of their time on your product or service pages.

Social Media Activity

Social media is one of the best places for businesses to find leads and measure their level of interest. If a potential customer is actively engaging with your brand on social media, chances are they'll have a genuine interest in what you offer.

Tips for measuring social media activity:

• Track the number of followers a potential customer has on their social media accounts. A highly influential lead may take priority over a lead with fewer followers since you can collaborate with the former to maximize your reach.
• Track the number of interactions a potential customer has with your posts, such as likes and shares.
• Look at what type of content they share and engage with on social media. Are they interacting with content related to your business or industry?
• Track any mentions of your brand or products by potential customers on social media.

Previous Customer

Suppose a potential customer has previously purchased from you or interacted with your brand in some way. In that case, they may be more interested in doing business with you again. Therefore, assigning higher scores to these leads is essential as they offer a better chance of becoming repeat customers.

Tips for tracking previous customer behavior:

• Check their purchase history and see if they've made any purchases from you before.
• Constantly update your customer database when a customer purchases or interacts with your brand.
• Monitor their engagement in any loyalty programs or promotions you may have running.

Adjusting Your Lead Score Thresholds

Lead score thresholds determine where a lead is placed in a funnel. Low or negative scoring may indicate that a customer isn't ready to purchase and needs more lead nurturing. Higher scores demonstrate a higher level of interest and should be put at the top of your sales funnels. Adjusting your thresholds should be done regularly, as it can help you determine which leads are more likely to convert.

Use your current campaign analytics to understand which types of leads are more likely to convert and set your thresholds accordingly. Additionally, consider how much time, money, or effort you're willing to invest in nurturing leads at every funnel stage. If your threshold is too low, you may end up wasting resources on leads that aren't sales-ready.

• Conduct A/B testing with different segments of leads to see which ones perform better. This allows you to refine your criteria and ensure that you're targeting the right audience.
• Analyze customer data from previous campaigns or sales cycles and use it to adjust your lead scoring system accordingly.
• Review and adjust your lead score thresholds based on the number of resources you're willing to allocate to nurturing leads.
• Test different types of content, engagement or offers to determine which ones are more effective at converting leads.

Using Predictive Analytics to Score Leads

Predictive lead scoring uses artificial intelligence (AI) and machine learning (ML) algorithms to analyze customer data and predict conversion likelihood. It can identify leads that are more likely to purchase and prioritize them accordingly.

Once you understand what factors influence lead scores, you can use predictive analytics to assign leads automatically. This is an effective way of quickly and accurately scoring leads as it considers all the relevant factors in real time.

Take note that marketing teams should first learn the basics of lead scoring before implementing predictive analytics into their processes. Once you have a solid understanding of the principles, you can start looking into predictive analytics to gain better insights or scale up your lead scoring system.

Tips for using predictive analytics:

• Start by identifying patterns in customer data and use them to create models that predict which leads are most likely to convert.
• Make sure you have adequate data available before implementing a predictive analytics system. Without enough data, the models may not be accurate.
• Create a feedback loop to identify any issues or errors and adjust accordingly quickly.
• Analyze customer behavior trends over time to better understand what they're looking for and create models based on this information.
• Set up automated alerts that notify sales teams when lead scores change so they can act quickly.

Automating the Process of Scoring Leads

Lead scoring can be automated to take the guesswork out of the process and ensure that leads are being scored accurately. Automation tools such as customer relationship management (CRM) systems or marketing automation platforms can help you track customer interactions and score leads automatically.

These tools can also create automated campaigns and workflows that nurture leads through each customer journey stage. This effectively ensures that all potential customers get the right message at the right time, increasing the chances of conversion.

Tips for automating lead scoring:

• Integrate your CRM or marketing automation platform with your other systems, such as email and web analytics, so you can track all customer interactions in one place.
• Set up automated triggers based on customer actions or certain thresholds so that you can quickly score the best leads and prioritize them accordingly.
• Create different lead-scoring models for each segment of your target audience to ensure that the right messages are sent to the right people.

Evaluating and Improving Your Lead Scoring Process

Lead scoring is a must for any business, but it needs to be managed and evaluated regularly to ensure it delivers the best results. Evaluating your lead scoring process can help you identify areas of improvement and optimize your system accordingly.

Tips for assessing and improving your lead scoring system:

• Review performance metrics such as conversion rates or customer lifetime value regularly to better understand your lead scoring system's performance.
• If lead follow-ups are done manually, ensure that team members are updated monthly with lead scoring examples and what actions should be taken for high-value leads.
• Analyze customer feedback data to determine types of content or offers are working best with different segments of customers.

Conclusion

A good lead-scoring strategy is a must for any business looking to maximize its bottom line and create targeted campaigns that reach the right people at the right time. It's important to note that there's no one-size-fits-all approach to lead scoring. Businesses must take the time to understand their target audience and create models that accurately reflect customer behavior. Whether you're a startup, a small business, or a large enterprise, implementing lead scoring and predictive analytics can help drive better results and increase conversions. To get the best results, it's essential to review performance metrics and customer feedback data regularly to identify areas of improvement. With the right lead scoring system, you can maximize your sales efforts and drive more conversions.

If your business wants to improve lead scoring and automate much of the customer journey with a CRM, reach out to FiveCRM for advice and solutions. We specialize in custom CRM solutions for businesses of all sizes so you can get the most out of your customer data. 

Contact us today at hello@fivecrm.com for a demo of our CRM system.

Frequently Asked Questions (FAQ)

Q: What is lead scoring? A: Lead scoring is a methodology used by businesses to assess the value and potential of leads based on various criteria. It involves assigning a numerical score to each lead, typically based on factors like demographics, engagement level, online behavior, and interactions with your brand. This scoring system helps prioritize and focus efforts on leads that are most likely to convert into customers.

Q: Why is lead scoring important for businesses? A: Lead scoring is crucial for businesses because it allows them to identify and prioritize high-quality leads, saving time and resources. By focusing on leads that are more likely to convert, businesses can streamline their sales and marketing efforts, improving efficiency and increasing overall revenue. It helps in identifying the most valuable leads and nurturing them effectively throughout the customer journey.

Q: How can I implement lead scoring in my business? A: Implementing lead scoring requires a systematic approach. Start by defining the criteria and attributes that make a lead more likely to convert into a customer. This may include factors such as job title, industry, engagement with your website or content, and previous interactions. Assign weights or scores to each criterion based on its importance. Then, use a lead scoring system or software to automate the process and calculate scores for each lead based on the defined criteria.

Q: What are some common lead scoring models? A: There are different lead scoring models you can use, depending on your business and objectives. Two common models include:

1. Explicit Scoring: This model assigns scores based on explicit information provided by leads, such as job title, company size, or industry. It focuses on demographic and firmographic data to determine lead quality.

2. Implicit Scoring: Implicit scoring assigns scores based on implicit behaviors and interactions with your brand, such as website visits, email opens, content downloads, or social media engagement. It focuses on lead engagement and interest levels.

Q: How often should I review and update my lead scoring model? A: It's important to regularly review and update your lead scoring model to ensure its accuracy and effectiveness. Market dynamics, customer behavior, and business objectives can change over time. As your understanding of your target audience deepens, you may discover new criteria or factors that contribute to lead quality. Consider reviewing and updating your lead scoring model at least once a quarter to keep it relevant and aligned with your business goals.

Q: Are there any potential challenges with lead scoring? A: While lead scoring can be highly beneficial, it's essential to be aware of potential challenges. Some common challenges include:

1. Data Accuracy: Lead scoring relies on accurate and up-to-date data. Incomplete or inaccurate data can lead to incorrect lead scores and flawed prioritization.

2. Subjectivity: Defining lead scoring criteria and assigning weights can involve subjective decisions. It's crucial to involve key stakeholders and align on criteria to ensure objectivity.

3. Evolving Customer Behavior: Customer behavior and preferences may change over time. Regularly review and update your lead scoring model to adapt to these changes.

Q: Can lead scoring work for all types of businesses? A: Lead scoring can be beneficial for businesses of various sizes and industries. However, the specific criteria and weights used for lead scoring may vary based on the nature of your business, target audience, and objectives. It's important to customize your lead scoring model to align with your unique business needs and goals.

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