How to score leads for higher conversion
What is lead scoring?
Lead scoring is a method sales teams use to rank potential customers by assigning values based on their behavior, demographics, and engagement with their business. The process measures the quality of leads brought into the sales funnel and determines the likelihood of converting a sales lead into a customer. It helps sellers decide where to prioritize their sales efforts, so they can pursue the most promising prospects.
Importance of lead scoring in sales
According to the Salesforce State of Sales Report, in an average week, reps spend 9% of their time researching prospects, 8% of their time prospecting, and 8% prioritizing leads and opportunities. Prospecting and lead generation are the foundation of the sales process, a series of steps that a sales rep takes to move a prospect from early-stage research to closing a deal. Yet it can be a challenge for sellers to find the time for these tasks while juggling other sales responsibilities.
Lead scoring can help teams be more productive and efficient with the hours they dedicate to qualifying leads and prospecting. By identifying which ones are high quality, they can convert more sales leads in less time. Lead scoring also benefits sales leadership by providing more accurate predictions of conversions, which helps with planning their sales pipeline and revenue forecasting.
For example, let’s say a sales rep for a medical software company has 100 leads in hospitals and they randomly go after all of them. The process quickly becomes time-consuming. With lead scoring, the same sales rep can rank the hospitals and narrow them down to the best 10 by using criteria to determine the most promising leads. They can then focus on pursuing the leads that will likely convert to a sale rather than wasting time on those that will never pan out.
How to score leads in 4 steps
Easily score your leads with a CRM using AI-powered lead management. You can prioritize the best leads based on the customer profiles that drive the most revenue.
1. Calculate the conversion rate for all leads
The lead-to-customer conversion rate is your baseline for lead scoring. Your CRM can calculate it automatically, or you can use this formula to do it manually:
(Number of leads converted to customers) / (Total number of leads generated) x 100
The percentage is calculated by dividing the number of new customers your team acquires by the number of leads your team generates. So, if you acquire 100 customers out of 200 leads, your lead-to-customer conversion rate is 50%.
2. Define your ideal customer
Choose attributes based on your current customers’ demographics and behavior data — industry, title, or those who watched a company webinar, for instance — to include in your lead scoring model. These are the data points you will use to score. Here are some tips for selecting attributes:
- Consult with your sales team and gather their insights
- Test out attributes to determine the best ones and make changes as needed
- Speak with your marketing team about leads that come via your website or social media
3. Calculate the close rates for each attribute
Determine how many of your qualified leads become customers based on their demographics or behavior attributes. The more likely the attribute or action leads to a conversion, the higher the point value for scoring. For example, a lead who watched a company webinar might be more likely to convert than one who downloads a white paper and would receive more points.
To complete this step, use your CRM’s predictive lead scoring, which usually involves changing a few simple settings in your CRM. You select the data to include, and the system automatically builds a scoring model for each lead segment.
4. Compare close rates for each attribute with the baseline conversion rate
Take the close rates for each attribute or action. Then, using your CRM, compare them with the overall conversion rate you calculated in step one. In your CRM’s dashboard, look for attributes with close rates higher than your overall close rate. Assign points to each of the attributes with high close rates. The higher the close rate, the higher the point value.
For example, let’s say your lead-to-customer conversion rate baseline is 50%. Leads who watch a company webinar (implicit behavioral data) have a 75% close rate and leads with a CTO title (explicit demographic data) have a 65% close rate. Both are higher than your baseline. In this case, your CRM might award 25 points to leads with the “watch a company webinar” attribute and 15 points to leads with the “CTO title” attribute.