Thursday, August 26, 2010

Lead Scoring Has Drastically Changed – How do You Measure up?

With my son Matthew turning one this week, I’m feeling a bit nostalgic. I dug up and started contributing to a personal online journal that I hadn’t touched since 2004, reviewed pictures from past trips with my wife, and reflected on memories that I’ve had in my first year as a dad. Taking a look back and reliving great times in your life provides perspective and helps explain how things have changed. One year ago I had no clue on how to  change a diaper nor did I realize what a luxury it was to get a full night’s rest.

I’ve come a long way this year - working hard at being a good father and developing a close bond with my son and I couldn’t be happier. I would encourage you to take some time to reflect on changes within your own life and the impact they’ve had on you whether it was a new job, a new home or a new perspective you’ve taken in your life.

I’ve also just passed my five year anniversary at Eloqua where I’m a Regional Manager on the Customer Success Team. I’ve seen many changes both at Eloqua and in the marketing automation industry over this time. In this post, I’m going to focus on how the process of developing a lead scoring program has transformed over the years. But first, let's go back in time to a typical (yet abbreviated and simplified) conversation around lead scoring circa 2005:

B2B marketer: “The sales team thinks the leads we send them are garbage. For them to take marketing seriously, I need to deliver higher quality leads rather than just focusing on quantity. What should we do?”
 
Me: “Implementing an automated lead scoring process should help here but it will depend on the lead management definitions you currently have in place. How do you define what a qualified lead is? Is this something that both marketing and sales agree on?”
 
B2B marketer: “A qualified lead is someone that has a specific challenge that our product can solve, has the budget to pay for our product and has the authority to get the deal done”.
 
Me: “OK, assuming you have worked out the specifics and have buy-in from sales, what are the key online behaviours that would indicate that one lead should be rated higher than the other?
 
B2B marketer: “Well, if the lead has attended an event of ours, let’s rate that higher and if they’ve visited 20+ pages and opened 5 or emails, I would consider that someone our sales team should follow up with”.

Based on these discussions, the marketer would further define her/his requirements and then go and build out the lead scoring program. Hopefully the assumptions made were correct and more qualified leads would be passed to sales. These were also the days of the “big ‘ole forms” on your website where you asked for every piece of BANT question that sales wanted and assumed that the data provided by registrants was accurate. If you found you weren’t getting enough qualified leads, you adjusted your lead scoring program accordingly based on feedback from sales and by reviewing the data.

Hoverboard
The Hover Board
Fast forward to 2010 and in five short years, there are a number of new factors that that must be taken into consideration when designing your lead scoring program. Here are a few items to consider:

The accuracy of data captured has decreased over time


A recent GoogleTechTarget survey has found that almost 50% of the administrators, directors and executives from technology firms interviewed provided inaccurate data on web forms because these people didn’t want to be contacted when they were doing some simple research on a topic of interest. Therefore, a different strategy on how to best capture “explicit criteria” (BANT, job title, size of company) for lead scoring is needed. I'm not discounting the qualification process that can be done by an inside sales or teleprospecting team but an automated lead scoring process can weed out some of the "garbage" and allow these teams to increase the number of sales accepted leads.

Techniques such as progressive profiling where you build the visitor profile over time assists in developing more accurate data to score on. The progressive profiling technique should only ask the required information that a company needs for the specific buyer stage that the web visitor is in. If someone is signing up for a newsletter, only a few details such as a person’s email address and their preferences should be required. Additional information can be slowly obtained in a future campaign such as a multi-touch lead nurturing program. In addition, progressive profiling allows the marketer to record online behaviour that can feed into the scoring process.

Automate your data cleansing process


Broken Telephone
While you try and prevent inaccurate data from making it through the front door of your database, it finds multiple ways to seep in there. This will affect what you can score on as the data is not consistent enough. Let’s take job title as an example. Many of my clients use job title as an indicator for their lead scoring model. They’ve found that there are certain roles within an organization that have the highest probability to generate a sales opportunity. While marketing would prefer to force web visitors to select a specific job role when completing a form for accuracy purposes, sales people want to know the exact title. In addition, when collecting leads across various channels and sources, maintaining consistency is almost impossible.

A solution to this problem is an automated process called the “The Contact Washing Machine”. The goal of this program is to review the data that is fed into it and normalize it. For example, if we take the job title example, a Contact Washing Machine would bucket titles into specific categories as defined by marketing. Database records are updated with this normalized title which can then be used for scoring and other segmentation purposes. A great example of a Contact Washing Machine is provided by Amit Varshneya who is the VP of marketing at Hexaware Technologies.

Scoring should reflect the buyers’ journey and your defined sales/marketing stages


When developing a lead scoring program in the past, points were allotted for downloading certain pieces of content based on how marketing and sales subjectively perceived certain materials to valued by the prospect. Today, the assumptions that are made when building the lead scoring matrix are more firmly based on the buyer’s journey as defined by real data with input from sales, marketing, and third party sources. The 2009 TechTarget Media Consumption Benchmark guide confirmed that IT buyers favoured different online materials as they progressed through the buying process. Here is an example of the different materials that IT buyers review across the different buying stages:


By going through the process of mapping out the content that your buyers accessed at various stages in their evaluation process, it ensures that the actual score and associated ranking of leads is more accurate and provides a better indicator to sales on how to prioritize their follow ups. In fact, in a DemandGen Report survey called Transforming the BtoB Buying Process found that “more than 8 in 10 respondents said the buying process did not follow a traditional path where a budget was established”. Therefore the BANT criteria is not enough to accurately assess leads and may actually prevent sales ready leads from rising to the top.

As a best practice, I now recommend breaking out the explicit lead scoring criteria (job title, lead source, size of company) from the implicit criteria (activity) to provide a more accurate picture for the sales team that they can action on. Therefore, you may have a lead with a low explicit rank of a C (where A is the highest and D is the lowest) but has a high implicit score of 1 (with 1 the highest and 4 the lowest). This combined lead rank of C1 is a lead that sales should prioritize as the explicit information provided may be inaccurate but the implicit criteria or the Digital Body Language demonstrates that this person is definitely interested in your company.

In addition, best in class organizations have tied their sales/marketing funnel to their lead ranking definitions. Therefore, in order for a lead to be considered a marketing qualified lead (or MQL as defined by SiriusDecisions Demand Waterfall), it must attain a certain lead ranking such as A1 or C2. To the right is a good visualization of how an MQL may be defined when using Lead Scoring.

I’ve also included a great video that shows you how this is used in the lead management process:



Here are few examples that I recommend you review to get a better feel for this concept:
  • Terracotta: Lead Scoring A Buyer’s Journey in Open Source. In this example, Terracotta mapped out the different types of behaviours that made up the different stages that a buyer progresses through. They then used this to build their lead scoring matrix and constantly tweak the lead scoring algorithm to get more accurate results.
  • Taleo: Seeding and Cultivating the Taleo Revenue Engine with Lead Nurturing. The VP of Marketing Doug Sechrist stated “We built a matrix that looks at the buyer’s journey and our sales cycle, and based on that, we determined the right content for each touch point.” Besides lead nurturing, the buyer’s journey influenced its lead scoring rankings and determined the stage of the buyer. The case study goes on to outline how Taleo only sends A and B rated leads to inside sales as these are defined as MQLs (marketing qualified leads). 


How marketing is now measured has made lead scoring more palatable


In my lead scoring example from 2005 above, marketers were mainly focused on the quantity of leads at the top of the funnel. There is no question that this is still the case today for a large percentage of B2B organizations but after having gone through a recession in 2009 and slowly working out from its shadow in 2010, marketing needs to do more to justify its budget to the other C level executives. Today’s B2B marketers are looking further down the marketing/sales funnel at metrics such as the number of marketing influenced opportunities, the velocity of deals that move through the sales/marketing funnel, the conversion rates across different stages in the funnel, the number of closed deals, revenue generated and ROI on campaigns. By focusing on higher qualified leads that can help sales reach their goals more quickly and impact these new joint metrics, lead scoring has been an easier concept to sell to marketing and sales organizations.

I don’t have to look any further for an example of this exact transformation than from within my own organization as described by our Senior VP of Worldwide Sales, Alex Shootman, in his post: At The Wheel of the Revenue Machine: But What if I Want to Follow Up on “D” Leads?. It took a shared goal of increasing revenue and a commitment from sales and marketing to work closer together to help make scoring more relevant in the lead management process. And guess what – if you’re reading about this, you can bet that your competitors either have lead scoring in place or are considering it. Don’t wait for them to beat you to the punch.

I’m sure others can add additional points on how lead scoring has progressed over time but this is one of the few chances I get to sleep and I need to take advantage of it while it lasts! Do let me know if you think I’m missing anything. On a final note as I wrap this up I would like to thank my wife, Allie, who has made being a father easy over this past year and has been such a wonderful mother to our son. I would also like to thank all of the Eloquans – past and present, partners, and customers that I’ve had the pleasure of working with over the past five years and plan to continue working with.

Regards,

Chad H.
@chadhorenfeldt

PS – For something fun, check out Juan Eloqua and the Grande Guide to Lead Scoring

5 comments:

Jeff Ogden said...

Kind of a lengthy post, but marketers need to embrace comprehensive lead scoring. New Grande offering is excellent.

I note that your blog was selected as one of the best, as was my
Fearless Competitor blog http:/www.fearlesscompetitor.net.

By the way, I have a Thought Leader interview with Brian Kardon on my site.

Jeff Ogden, the Fearless Competitor
Find New Customers
http://www.findnewcustomers.com

Carly said...

How are these companies verifying the online activity that corresponds with the stages of their buying cycle?

Chad H said...

@jeff - thx for commenting and promoting your blog. Glad you liked the post

@Carly - excellent question and thx for your comment. This is definitely not easy and can take some time and resources. There are two approaches I recommend. The a few approaches. It comes down to examining data (typically from your CRM) from customers that have purchased your products or services. What were the interactions (content accessed) that occurred and when in the buying process? This assumes that you've captured all of these interactions and can relate them to a buying opportunity and closed deal. If you have this data, through your CRM or with the assistance of a marketing automation tool, it's much easier.

As an example, Cognos exported all of the activities that were generated from all the activities (which were generated from Eloqua) and opportunity data from Salesforce.com and examined the results in its own BI tool. You can read more about this in a MarketingSherpa case study (that seems to be open to everyone) in the third point: https://www.marketingsherpa.com/article.php?ident=31187.

An easier approach may include looking at data from a few sample closed deals and interviewing reps and reviewing what activities the contacts from these companies participated in and when. While you may be able to do this with pivot tables in excel, being able to do this true analysis requires the right tools, data, resources and commitment from your organization. I would say that this is the largest barrier.

A third approach is to get a partner that can do this analysis for you (assuming you have the data).

Marketing automation tools like Eloqua have made this whole process easier as we have linked early and late funnel marketing activities to opportunities and provided reports that can easily show this co-relation. In addition, marketers have a more accurate picture of the conversions of contacts through the marketing and sales funnel and can make better decisions on where to focus on.

Laura said...

I agree with people providing false information on forms makes the traditional ways of lead generation almost useless. I read somewhere that the most common name that people use to falsify their information on the web forms is "Mickey Mouse" :-)... Isn't that funny and amazing!

We have seen companies buying leads and doing nothing beyond that! Leads, either bought or generated are not going to get your business! Businesses should focus on streamlining their processes to build a trust! That is the only way to legitimately grow your business.

Thanks,
Laura

Marketing Result said...

I wonder how these companies verify the online activity that corresponds with the stages of their buying cycle? Great blog by the way. Keep it up.

ShareThis

LinkWithin

Related Posts Widget for Blogs by LinkWithin