Getting Started with Lead Scoring: Pt. 2
Refining your Lead Scoring Approach
Mikhail Opletayev, VP of Software Development, Real Magnet
Earlier this week we published an article that covered the theory behind lead scoring and the early steps you should take in setting up a lead scoring model. We discussed what lead scoring is, why it’s important, and a couple of key questions that your team should discuss before setting up lead scoring in your marketing automation system.
In this post we’ll be taking the next steps: using the data from our existing email campaigns to adjust our point values, and then putting theory into practice by setting up a lead scoring campaign in Real Magnet.
Setting up Lead Scoring Point Values
As we discussed in the first post, the fundamental question that all lead scoring models should begin with is, “what actions do I value most?” Moving backwards from there, the scoring of your prospects’ actions and behaviors is all relative.
There are different strategies, some simple and some very sophisticated for determining the point values to assign to specific actions and behaviors. Instead of just assigning arbitrary point values, here is a practical strategy (incorporating the data you collect from your existing email campaigns) that you could use to get started.
First, take a look at the last few months of your marketing data and estimate your average open rate, your average click rate, and your average conversion rate. The numbers don’t have to be very precise, but try to get as accurate of a picture as you can. If you are struggling with the conversion rate, simply take the number of conversions over the last few months and divide it by the number of promotional emails you sent.
For the purposes of this article let’s assume that my open rate is 22.5%, my click rate is 7.5%, and my conversion is rate is 0.7%.
Next, calculate open-to-conversion ratio dividing open rate by the conversion rate: 22.5% / 0.7% = 32.2. Do the same for the click-to-conversion ratio: 7.5% / 0.7% = 10.7.
What it tells me is that on average, it takes about 32 opens to produce a conversion and it takes about 11 clicks to produce a conversion.
Now we have to assign a point value to a conversion. This number is arbitrary and can be anything. I will use use 100 for this example, but feel free to pick a different number.
The last step is to divide the point value of the conversion by the ratios we calculated:
100 / 32.2 = 3 points for an open
100 / 10.7 = 9 points for a click
You can apply this approach to any other conversion ratio. For instance, we can easily incorporate a landing page into our campaign. Let’s assume that when people click the call-to-action link in the email they go to a landing page first and that this page has a submission rate of 34%.
Our click rate was 7.5% and 34% of these individuals submitted the page.
7.5% * 0.34 = 2.55% of the total population submitted the page
2.55% / 0.7% = 3.64 is our submission-to-conversion ratio
100 / 3.64 = 27 points for a landing page submission
Now that I have my score values, I can configure my Lead Scoring campaign within Real Magnet. My sample campaign looks something like this:
Setting up Thresholds
With basic lead scoring rules in place, let’s talk about how to determine what qualifies as a lead. We touched on this a bit in the previous post. Unfortunately, there is no clear answer here. It really depends on your organizational goals, how many organic leads you naturally receive, and how busy your sales team is.
Ideally, you’d want to find a balance between your sales and marketing teams, where marketing is passing along a healthy stream of qualified leads. To make sure this process is optimized, it’s important to keep a constant dialogue between sales and marketing. If marketing qualified leads (MQLs) are not closing, or sales determines that those leads are not sufficiently qualified, it might be time to go back to the drawing board with your point values and thresholds.
Consider using multiple thresholds, where the highest threshold would lead to a handoff to the sales team, while lower thresholds could be used to enroll leads into various nurturing campaigns.
Back in our demo campaign I’ve assigned a threshold of 20 points to enroll prospects in a lead nurturing campaign and tag them as basic leads. At 35 points I want to send a notification to the sales team with a full description of how the points were accumulated.
There is no right or wrong way to set up lead scoring point values and thresholds, the key is to continually measure and evaluate your results, and then tweak your approach accordingly. Using your existing data, as we outlined above, is a great way to make sure that your lead scoring point values align with your real-world audience behaviors and business goals. This will lead to more meaningful lead scoring data and more reliable, warm leads.
To learn more about lead scoring and get more ideas about setting up a lead scoring model, download our Lead Scoring Guide.