The Hidden Elements of Effective Lead-Scoring: Profitability, Movement, and Velocity

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[Ed. note: This post is the 4th in a series of guest-post exchanges between Fathom and Right On Interactive, a marketing automation company that emphasizes lifecycle marketing “that helps organizations win, keep and grow business.” Troy Burk is Right On Interactive’s CEO and founder.]

Lead-scoring (or customer-scoring) can yield tremendous results for companies. There are lots of theories, practices and approaches to this, and I often hear someone has “perfected the ideal model.”

As with most metrics and measurements in marketing, the best lead-scoring metrics are your own and not what the industry is doing. Every company is different, and lead-scoring should not fall into the one-size-fits-all approach. Measure where you are today and work to improve against your current benchmark.

According to TeleSmart.com, 80% of the average salesperson’s day is spent on non-revenue generating activities, including not knowing where to find good prospects or recognizing them once they find them. Lead-scoring is intended to help organizations know where to spend their time and resources, and easily identify who is ready to buy, who is at risk of leaving, and who might not be worth engaging.

To create a three-dimensional lead scoring model, or 3-D scoring, the first step is to determine who is the ideal profile (profile score). This can be based on a handful of different criteria and attributes:

  1. 80/20. The majority of your revenue comes from 20% of your customer base. Look at the 20%, what do they have in common? This would be an important consideration for companies that are looking to expand their market share and drive consistency with their client base.
  2. Profitability. Which customers are your most profitable, yielding the highest margin? NOTE: This can be different than the 80/20.
  3. Movement or Lifecycle Stage Conversion. Who is converting from a prospect to a customer (or between other stages)? This model is based on the movers—the people that convert.
  4. Velocity. If your organization is looking for quick wins and faster revenue, it makes sense to consider the customers that move the fastest based on stage duration (time).
  5. NTBT (Not Today, But Tomorrow). This isn’t about where you are today, but rather, where you want to be tomorrow. Perhaps you sell to small business, but really want to sell upstream—scoring would need to be adjusted to the new target.

Depending on which of the 5 approaches (or a combination of the 5) is most important to you, the actual profile scoring models will be different for your business. So again, the first step in creating a three-dimensional lead-scoring model starts with profile scoring—and this starts with first understanding which metric(s) are most important for your business (today, profit, conversions, speed, or future).

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Photo courtesy of Julie Rybarczyk via Flickr.

About Troy Burk

Troy Burk is the CEO and founder of Right On Interactive, a lifecycle marketing automation software company that helps organizations win, keep, and grow business by building engagement throughout the lifecycle of every prospect and customer. He is a recognized thought leader and speaker on the topics of lifecycle marketing, marketing automation, lead scoring and nurturing, and email marketing. Troy earned his bachelor’s degree from Ball State University. He lives in Indianapolis with his wife and three children where he serves on the Greater Indianapolis Chamber of Commerce’s Membership Marketing Committee and is involved with youth sports.

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