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.
In a recent conversation with an entrepreneurship professor here at HBS, we got into a discussion about how business school students often lack the operational and technical skills needed to be a successful founder.
He asked for my thoughts on the 20 operational skills I thought were most useful to a founder and I came up with the list below, in no particular order. (Note – this is specifically for tech startups)
- Statistics and analytical skills – you don’t need to be a data scientist, but knowing how to interpret which business-critical data, and ask the right questions about it, is essential.
- HTML / CSS – you don’t need to be a developer but you need to understand the basics of how to do things like embed an email form, update text, design an email, etc.
- Understand how databases work – if you understand the fact that the boxes you put your data in can impact functionality in the future, you can have more productive discussions about these potential challenges.
- Project management skills – can you break down a project into a number of small steps, prioritize them and organize the people working on them?
- How digital advertising platforms work (like AdWords, Facebook Ads, etc)– not just the functionality but the concepts behind CPM vs CPC, bidding strategies and reporting
- CRM systems – If your customer database is a Mailchimp list, you probably need to look into a CRM, both for leads and for existing customers.
- SEM – search engines are still a major traffic driver for many businesses. Have a good idea of how they work.
- Networking – and even more importantly, maintaining a network so you have people to call upon for hiring, fundraising and support.
- Financial literacy – in particular an understanding of how cash flows work
- Know how to read a term sheet – If you’re going to be fundraising you should probably have a good idea of what you’re signing before your sign it.
- Version control systems (i.e. git) – You may not be a command-line genius but you should know the basic lingo and understand why version control is so important for your developers and your product.
- Empathy for developers – you don’t *have* to be able to code, but you should have a deep and honest understanding of the problems engineers have to solve, what is challenging for them, their priorities, etc.
- Know where to go for help – if you haven’t heard of Stack Overflow, you’re probably not looking up enough answers for yourself. Beyond technical guides, there are industry-leading blogs on marketing, fundraising or growth hacking, forums and subreddits for entrepreneurs and pretty much endless resources on and offline.
- Eye for design/usability – at the very least you should have someone you trust in this department. It’s not worth having a product fail because the concept was great but no one knew how to use it. This also goes for user tests, focus groups and surveys – usability is key.
- Understand and use feedback channels – whether you’re using an online service, running a focus group or picking up the phone, you need to be able and comfortable getting and interpreting feedback.
- Hiring – recruiting, interviewing and managing new hires as well as experience working with many different types of people will make those first 10 hires more effective.
- Content marketing, and scalable ways to do it – Content marketing, including email, social media, blogs and custom landing pages, can be a critical but time consuming growth channel. Understanding marketing automation tools can save a lot of time and effort.
- How to set up and read analytics platforms – At a minimum, you should be Google Analytics-literate, but understanding other analytics options (such as Kissmetrics, Mixpanel, Flurry, etc) is useful if you feel you’re not getting the answers you need.
- Pitching / the perfect elevator pitch – you should be able to communicate what you are doing, who you are doing it for and why they care in 30 seconds and make it sound convincing. If it takes you over 2 minutes to explain the concept, you may be in trouble.
- How to give and receive feedback – while it’s easy to ask for feedback, it’s not always as easy to listen to it. Practice accepting (and delivering!) the more critical comments as well as the more positive ones.
In general, I think a founder could be summed up as a schizophrenic masochist – someone with a conflictingly broad range of skills who is constantly looking for ways they could fail with an unending belief that they will succeed.
There are of course any number of exceptions to the skills I’ve suggested – what would you add or remove from my list?
I was recently quoted in an article rounding up predictions for mobile in 2014 (20 Mobile Industry Expert Predictions for 2014). There were a lot of comments about mobile commerce, mobile marketing budgets increasing and tracking, but no one else seemed to share my prediction:
Building 23snaps has been an amazing learning experience in so many ways, but none more-so than the wake up call that the vast majority of consumers, across any market, are not tech-savvy millennials who will forgive UI inconveniences for the sake of using the latest technology. At 23snaps, many of our users are using a technology other than email for enjoying family photos for the very first time. That can be hard enough for them on the computer, but add a new smartphone into the mix and suddenly there are a lot of our customers who need, if not hand-holding, some excellent sign-posting to help them figure out what to do next.
I would like to think that I’m not the only one who noticed this trend. As I mentioned in my prediction, iOS 7 was a jarring experience for many users. In fact the AARP, a membership community and non-profit for US over-50s, actively discouraged its members from upgrading to iOS 7 as late as 30 October, 2013 (iOS 7 was released in June). They said:
“The font is very light and may be hard to read for some. The icons appear flat and move quickly across the screen, causing some people to report dizziness.”
If Apple thinks this recommendation from AARP is no big deal, they should check the membership roster. AARP has over 40 million members.
But the bias towards user interface design that favors the tech-savvy is pervasive through the entire industry – and at times this is dramatic enough to confuse even the millennials. Look, for example, at the Facebook ‘Other’ inbox, for most people a hidden repository of lost birthday wishes, invitations and requests.
An enormous audience has access now to technology that should make their lives easier in every way. But instead the applications and services available leave many of them confused and frustrated. In the last few years, the audience of non-digital natives using the latest technology has become the majority but products and services aren’t catering to them, missing out on profit and growth opportunities.
2014 needs to be the year that designers and developers begin considering the experience for someone who doesn’t understand that three horizontal lines means ‘Menu’ or that an eight-pointed star means ‘News Feed,’ or even what a ‘News Feed’ is. There is a balance to be struct between spoonfeeding digital natives, but creating a beautiful, usable product, that signposts the most important elements for those who are discovering them for the first time.
This article was originally posted on LondonLovesBusiness as a summary of my UKTI tech mission to Brazil, researching the market for 23snaps and a local launch in the country. There I shared some of the opportunities, challenges and conclusions I drew from the trip and what international startups can expect when trying to bring their business to Brazil.
On the evening of 10 September, I found myself sitting with the founding members of 10 other UK tech start-ups at Heathrow’s Terminal 5 waiting for a flight to Sao Paulo, Brazil. Our companies ranged from social networks to content delivery networks to ecommerce solutions – but all had one thing in common. They had committed their limited time and resources to travel halfway around the globe to explore growth opportunities in one of the world’s fastest-growing markets. I represented 23snaps, a private social network for families, and hoped to learn more about the consumer appetite for our product and to find launch partners that would help us grow in the Latin American market.
There were shared pre-flight drinks and banter but also a sense of apprehension. Brazil is a tempting market for many businesses, with a consumer market growing exponentially in size, but the challenges that small companies face trying to enter the country act as a strong deterrent.
The 10-day trade mission, dubbed The Great Tech Expedition, was UKTI’s attempt to help one group of British tech start-ups overcome those challenges. The programme was also supported by the Mayor of London as part of the 2012 legacy efforts, as many of the companies participating on the trip hoped to pick up lucrative contracts related to Rio’s Olympic infrastructure and planning. The launch event included a meet-and-greet with Mayor Boris Johnson. It was an ambitious effort on the part of UKTI, but I returned to London with ambivalent feelings towards opportunities in the South American nation.
On the surface, the opportunities in Brazil are numerous. As the hosts of both the 2014 FIFA World Cup and the 2016 summer Olympic Games, the investment in infrastructure and need for goods and services can only increase.
Additionally, the Brazilian consumer market appears to be booming as well. Already the sixth largest economy in the world, over 75 million Brazilians are own smartphones. It’s ranked fifth in the world for number of internet users (over 90 million) and household spend has increased steadily over the last 10 years, including 2.5% growth from Q1 2013 to Q2 2013.
Brazilian companies can’t keep up with consumer demand, leaving room for international businesses to enter the market. Many of the participants on the UKTI trip were hoping to be first to market in their industry in this new, lucrative environment.
But for all of Brazil’s potential, there are significant challenges to foreign companies entering the market – as we discovered shortly after being ushered into the UK Consulate on our first morning in Sao Paulo. A series of seminars, organised by the UKTI and the Consulate’s Office, painted a more realistic picture that left some participants questioning the opportunity cost.
Brazil is still extremely protectionist of its own industry and companies. This manifests itself in significant tariffs on international goods and services. A Brazilian company paying for a service from an international company might expect to pay 40% on top in taxes. International companies looking to move profits out of Brazil into their home country can expect a similar (40%) tax rate on taking funds out of the country. Businesses also must hire a certain number of Brazilian employees for every foreign one and cannot have business operations in Brazil without a full time managing director located there who assumes full, personal responsibility for the company – one example of a complicated business legal system.
This can all be challenging for small companies with limited resources particularly because English is not widely spoken, even in technology or professional industries; a point felt strongly by our Tech Expedition as we attempted to explain advanced digital services in broken Portuguese, sign language and Powerpoint slides to attendees at the Rio Info conference. The conference was the region’s largest technology event and ostensibly the focal point around which UKTI had organised the trip.
Another intriguing point for the tech companies was Brazil’s lack of data protection laws. While the UK companies would of course be bound by EU data protection laws, their Brazilian competitors faced no such restrictions. Personal, medical, educational and online data can be bought, sold, resold and used for marketing purposes without any penalties – and consumers are uneducated about this so are not asking for change.
Finally, infrastructure in Brazil is still extremely dated, particularly outside the state of Sao Paulo which occupies only 3% of the country’s land mass, despite driving 60% of its economy. Across the country poor roads, transport and civil services mean that it can be expensive and difficult to transport goods, services or personnel.
As we learned about the tricky landscape we would need to navigate to begin business operations in Brazil, professional consultants’ cautions were balanced with the vibrant Brazilian world around us. In Sao Paulo, a never ending city of skyscrapers, even cabbies checked directions on their smartphones. In Rio, despite the sea of tents and corrugated metal boxes that made up the shanty town Favelas, the beaches and tourist attractions were packed with tens of thousands of local and international tourists, stimulating the economy.
The tech and start-up scene was booming, at least if the numerous government-backed start-up accelerators were to be believed. Cesar, a self-proclaimed “Brazilian IDEO” had supported 70 projects, funded nine business plans and helped three companies start generating revenue in the last year while Invest Sao Paulo had the backing of the local and federal governments to bring both Brazilian and international businesses into their accelerator program with up to $100,000 of investment – as long as they based themselves in Sao Paulo.
Brazil is a perfect market for 23snaps. It’s family-oriented, social, and there is a huge consumer appetite for new online services and networks. On top of that, there are almost 300 million people living in Brazil and consumer smart phone and internet access is exploding. But we can’t forget that Brazil is still a developing country and there are a couple of challenges we need to overcome, particularly related to financial operations, data protection and infrastructure in the country
Brazil was, for myself and many of The Great Tech Expedition participants, a conundrum – even more so for having visited. Local enthusiasm for the London companies, obvious consumer demands and a European-like attitude towards consumer products was, for many, enough to counter the numerous challenges and increasingly bleak outlook on Brazil from global economists. The final day in Rio, with the iconic Christ statue smiling benevolently down on the British entrepreneurs, was filled with optimistic discussion of a return trip, final signatures on contracts and the opportunities ahead. Yet by the time our plane landed, both the London drizzle and reality of operating in Brazil had cooled the group’s passions. Despite our, and UKTI’s best efforts and desires, there is still a long way to go before small British businesses are up and running effectively in the tempting, challenging and intriguing Brazilian market.
(This article was originally posted on LondonLovesBusiness on 09/10/13)