What’s the ROI on lead scoring?
Lead scoring has gained a lot of attention among marketing executives and professional marketers. What’s the big deal about scoring leads? Is it really possible to see double digit improvements in business metrics by doing it? If so, where do you start?
What is Lead Scoring?
Lead scoring is the process of ranking leads based on their quality and likelihood of conversion, and how sales ready they are.
Various points based systems may be used to give merit to a lead based on a variety of factors. Though the easiest and simplest way to score leads is using a lettered system.
A leads: The best, and most ready to close
B leads: Qualified leads that still need some nurturing
C: leads: Qualified leads, but not urgent or likely to make an immediate decision
D: Leads: May not be qualified or a good fit for you
Why Do it?
As far back as 2012 CMOs were reporting as much as 138% increases in ROI when using lead scoring, according to the Marketing Sherpa blog and Benchmark Report.
Back then only around 21% of B2B companies were doing it. Know that many more marketers and organizations are recommending and practicing it, there may be more pressure to apply lead scoring in order to remain competitive and profitable.
If triple digit ROI sounds too good to be true, Kentico says businesses can see 38% better conversions. Business 2 Community says it increases lead generation ROI by 77%. However, to really understand the potential, businesses need to get how broad and deep lead scoring can help.
How Lead Scoring Helps
Saving wasted time on dead end leads
One of the biggest points of contention in any business is between sales teams and management, and the need for more leads. The frontline reps always want more leads, and better leads. Management gets frustrated by the reams of leads not being worked or converted. Lead scoring can really help quantify this. It allows both sides to look at the numbers, be objective, and focus on solutions versus battling each other. When it turns out that a certain 20% of the database are D level leads, you are not going to be butting heads if they aren’t being worked so hard, and you’ll be glad your teams aren’t wasting time on redials that aren’t going anywhere.
Focusing labor on the most profitable leads
This simultaneously enables your teams to consciously focus 80% of their time, on the top 20% percent of leads. Once they are closed, they work on the next top 20, and so on. This also helps rank new leads as they come in, and delegate them to the best reps, or farm them out equally.
Gaining a better understanding of your customers
In this process you’ll also gain a far better understanding of your customers. It’ll help you relate better and create better solutions during sales conversations, and tailor information and sales funnels better from beginning to end, as well as in honing your front end ads.
Investing your budget for the best returns
When you know which leads are going to actually convert, and have your team spend their time on those, you create a lot of labor savings. These savings can either be used to invest more labor time in growing your sales, or on marketing that produces more A class leads. Infer’s calculator for predictive lead scoring projects that if you have 10 sales people making $55,000 per year, and a conservative 30% of their time is wasted on bad leads, you’d save $165,000 a year from lead scoring. You could use that to hire 3 more reps, or plow it into advertising to your best customers.
Avoiding staff burnout and turnover
Bad leads, and using poorly chosen metrics to push teams inevitably leads to burnout and high staff turnover levels. Many companies haven’t really done the math on what lack of engagement in the workplace, or turnover costs. The numbers are high, and it is draining on the whole company.
Better serving the most profitable leads
When your teams know who the best and most profitable leads are, they’ll make the effort to serve them better. There’s nothing worse than losing a great client or sale to the competition. Without the data you just really don’t know who those great leads are, not even by what they wear.
Not burning good leads that need time and nurturing
Some leads may not be ready to close this month. Yet, they may be ideal leads in the next 90 days or 12 months. You don’t want to burn these either. You don’t want to ignore them or push them too hard when they really aren’t ready. You just need to know what bucket to put them in.
Equipped with this knowledge businesses can pinpoint the optimal types of marketing and nurturing for each lead. For some that may be live outbound calls and sales emails. For others it may be drip campaigns, ringless voicemail drops or text messages. Or it could be more social media and blog content, or demos.
DNN Corp reports that using lead scoring and multi-channel marketing led to double and triple digit increases in website visitors, clicks, high quality leads, and conversions.
Creating additional revenue streams from D level leads
Too often D level leads are just buried, or hammered in the wrong way. Data has value, even if it isn’t on our ideal immediate sales prospects. Some organizations may be able to share or sell this data to others who it is a fit for, and recapitalize to put money into generating more A leads. Or it could be a matter of adding on new services to groom those D leads to becoming A leads. For example; providing credit repair to unqualified leads if you are a mortgage company. Then being able to capitalize on that relationship, and graduate them to sales once their credit is improved.
Then there is the ongoing, compounding benefit of adding all of these factors together.
The big question is; can you afford not to score your leads?