What is lead scoring?
Lead scoring is the umbrella term for a range of models that attempt to provide a quantitative way to identify and categorize leads based on their likelihood of converting to a sale.
Lead scoring usually contains the same basic building blocks: first the marketing or sales team comes up with a list of qualifying questions, then collects the answers to these questions about the leads they have in their lead pool, and finally they apply some sort of numerical value to each answer. The sum or a weighted-average calculation of these measures ideally determines how the lead compares to other potential sales opportunities and hopefully identifies the highest potential leads, saving time and increasing sales conversion rates for the team.
Scoring… on what criteria?
Determining the judging criteria is the most significant challenge marketers face when trying to implement lead scoring. In my experience, it’s easy to default to demographic traits such as the location of the lead, the size of the company, and other easy-to-determine factors that may superficially play a role in determining the likelihood of a sale.
However I recently came across the work of Dr. Jamie Monat, a professor at Worcester Polytechnic Institute who proposed a very compelling theory on how to develop a list of qualifying questions for a better lead scoring model.
Dr. Monat suggests that there are eight major criteria that determine a customer’s purchase decision, and that any lead scoring model should focus on qualifiers that align with all eight of these purchase decision indicators. For example, one purchase decision indicator is “perception of risk.” Lead qualifiers that might help indicate a buyer’s perception of risk include “familiarity with the vendor,” possibly through previous transactions, or source, where a word of mouth referral, or referral from a trusted industry source indicates lower perceived risk in the sale.
So what are the eight buying criteria and what are some examples of how might these be manifested as lead characteristics for a lead scoring model?
- Prospect’s perception of his company’s need and desire (Example lead characteristic: Has the lead tried alternative solutions?)
- Prospect’s perception of his company’s urgency (Example lead characteristic: Is there a budget and timeline for this purchase?)
- Prospect’s ability to purchase (Example lead characteristic: Are we speaking to the decision maker?)
- Prospect’s perception of risk/trust and confidence in the vendor (Example lead characteristic: Have they purchased from us before?)
- Availability to prospect of a better deal (Example lead characteristic: Are there other companies competing for this deal?)
- Prospect’s perception of value (Example lead characteristic: Has the customer attempted to calculate the cost savings/cost benefit of our solution?)
- Prospect’s perception of quality (Example lead characteristic: What was the lead source/were they referred by a trusted source?)
- Prospect’s perception of service (Example lead characteristic: What was the lead source/were they referred by a trusted source?)
The questions asked of leads, either in web forms or over the phone, should try to create a list of lead characteristics that match key buying criteria, rather than simply provide demographic information.
From Criteria to Score
How marketers chose to score the criteria is less critical than what they are scoring (i.e. the qualifying criteria) but one simple application of a lead scoring model is a +1 when the trait is “positive,” -1 when it is negative and 0 when the information isn’t available. More advanced algorithms may be possible as a company determines which factors are most important to their customers but even this simple -1/0/+1 method can help sales teams prioritize their most important sales opportunities.
As a data-driven marketer who has spent many years trying to understand, improve upon and utilize lead scoring models, I found Dr. Monat’s theory incredibly relevant and a strong basis for improving lead scores. How can you turn the eight buying criteria into lead characteristics in your company?
Thanks to the work by Dr. Jamie Monat of Worchester Polytechnic Institute. Parts of this article were taken from a final paper I wrote for the Harvard Business School Business Marketing and Sales course November, 2015. Photo Credit: Matt McGee cc. This article was cross posted on LinkedIn.