Lead scoring is a way of quantifying the sales-readiness of leads (prospects) in your marketing system.
It’s a number, which increases based on prospect actions with an explicit goal to qualify prospects so you can reach out when they’re ready to buy.
Lead scoring helps increase revenue by segmenting prospects and prioritizing follow-ups.
It kicks off a process of lead nurturing, which is crucial for reducing the time to purchase, thus increasing sales efficiency.
The basic purpose of scoring leads: based on prospect actions, define who’s ready to talk, and focus marketing efforts on them until they become customers.
Lead Scoring Model
Lead scoring is not a new concept, it’s been around for years (since the 1990s).
Today there are many lead-scoring models available and each company needs to design one that best fits its business goals.
There are two main types of lead scoring models: quantitative and qualitative.
Qualitative Model
The qualitative model comes from asking sales or marketing if the prospect is ready to talk or not.
It’s subjective and can be gamed by sales staff, so it’s usually only used in small companies with few reps.
Quantitative Model
Quantitative models are based on numbers that come from the prospect actions and lead scores those chances of a deal being closed within a specific time frame (usually 3 months, 6 months, 1 year).
Qualitative lead scoring models assign a score (1-5) to each prospect based on subjective statements from the sales rep (“prospect is good”, “prospect needs follow-up” etc.)
The quantitative lead scoring model uses historical data about prospects to quantify the conversion rates.
The conversion rate indicates how many leads became customers in a specified period of time (usually 3 months, 6 months, or 1 year).
Lead Scoring vs. Conversion Rate
The difference between lead scoring and conversion rate is that the score can be assigned to prospects before orders are created.
That makes it possible to segment your leads by scoring and focus marketing efforts on best-performing prospects.
Lead Scoring Best Practices
Best practices for scoring leads include:
Use the historical data about leads.
Qualitative models might be gamed by sales or marketing staff and are prone to inaccuracies.
By using historical data about prospect actions, you can avoid subjective lead scoring.
Calculate a score based on how many qualified prospects you have from each source or campaign.
Assign an average score per lead source, campaign, or product.
For each score assign a conversion rate from leads to customers and adjust in real-time based on data about prospects who buy.
Don’t segment your scores by lead source, because it’s not possible to know how well they perform until the deal closes.
Lead Scoring Examples
Here are some good lead scoring models that we’ve used in the past.
1. Step-by-Step Scoring Model
In this model, you have three basic steps: unknown, lead, hot prospect.
Leads and prospects are scored 1, 2, or 3 (if you use a scale of 1 to 5).
Sales reps can assign any score they want but it’s usually based on their gut feeling or some previous experience (if they’ve worked with a certain prospect before).
The score will increase when the lead does something that indicates they’re ready to talk.
2. Lead Conversion Scoring Model
In this model, you have two basic steps: unknown, hot prospect (ready to talk).
Leads are scored 1 or 2.
Scoring can be based on lead source, product, sales cycle stage, and/or campaign that generated the lead.
In this case, “unknown” leads have a 0% chance of buying so they should be removed from your marketing efforts or moved to another sales rep / nurturing campaign.
3. Lead Quality Scoring Model
In this model, leads are scored 0-5 based on the number of positive actions they’ve done and the time frame in which those actions occurred.
In this model “unknown” leads are leads who haven’t done enough positive actions to get a score.
Leads who don’t have an assigned score will be ignored by your sales staff.
Lead Scoring Models for Small Businesses
If you have fewer than 100 leads per month, then the only effective way of lead scoring is using qualitative models.
That’s because small businesses usually don’t have enough historical data about leads to use a quantitative lead scoring model.
Qualitative models are usually not gamed by sales staff and can be adjusted in real-time.
If you generate more leads per month, then you should use at least two lead scoring models: a qualitative scoring model for your best prospects and a quantitative scoring model for your average prospects.
Another benefit of using two lead scoring models is that you can use the qualitative model to put more focus on high-value leads.
You may also consider segmenting your best prospects (qualitative lead scoring) into different sales person accounts and ensure those leads are moved to sales reps who specialize in certain types of deals or industries.
I hope this article was helpful and you got to know what is lead scoring, how it works, various models that you can use, and some best practices for implementing lead scoring.
If this article helped or if you have a comment or question, just let me know via comments and share this guide with your friends or colleagues.
Ali is a digital marketing blogger and author who uses the power of words to inspire and impact others. He has written for leading publications like Business2Community, Inc. Magazine, and Marketing Profs. When not writing, he enjoys spending time with his family.