Why can lead scoring increase your revenue by +50%?

Lead scoring is one of the most under-rated tools in B2B business teams.. While the B2C sector has been integrating scoring for decades (especially in banking and insurance), most B2B companies see lead scoring as a secondary element. Many of them focus on lead generation at At the expense of conversion. I consider this to be a major mistake and I will explain to you why.

What is lead scoring?

In practice, scoring aims to distinguish a lead with a high probability of converting a lead with a low probability of conversion. The aim is to focus efforts On the most popular leads likely to convert.

How does it work?

We will soon write a detailed article on how to build a lead scoring. But in summary, we must list the discriminating variables that you want to take into account in your scoring. They can be broken down into 2 categories:

• Demographics : size of the company, industry...
• Behavioral : opening an email, clicking on a link...

Then, using your Common sense and in-depth analyses, you will assign weights to each of these variables to form the score. Once the weights are set, you will get a score, from which you can create segments.

1) A good lead scoring = 📈 Sales

Now let's dive into a numerical explanation.
Kano has three lead categories (A, B and C) with the following characteristics:

a) Cases where Kano did not set up lead scoring

In the absence of the use of lead scoring at Kano, and by distributing leads in a randomized to its salespeople, here is what would happen: Statistically, the company would assign a third of the leads to each category. The revenue generated would then be:

So Kano will generate 127k€ in Turnover.
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b) Case where Kano has set up a lead scoring

If Kano sets up an effective lead scoring system to distinguish and classify its leads, it is logical that it should choose to distribute only Category A leads, because they are the ones that present the most high earnings expectancy. This expected gain is determined by multiplying the probability of conversion by ARPA. So, category leads A Represent 200€, while those in category C are only worth 60€.

If Kano adopts this strategy, it will generate a turnover of 200k€ That is an increase of 57% of its turnover compared to a situation without using lead scoring.

So here is the first reason why scoring is one of the levers for increase your income.
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2) An objective marketing performance indicator

If you've ever worked in a B2B company, you've probably witnessed theEternal debate Who opposes Marketing and Sales teams. To caricature the situation, in case of non-achievement of objectives, salespeople point the finger at the quality of leads provided by marketing, while the latter highlights the performance of salespeople. In short, everyone passes the ball to each other and it is often difficult to discern the truth (Spoiler alert: it's rarely black or white 😉).

Why does this problem persist, even when setting a goal of lead generation for the marketing department? Let's look at it first The formula for turnover :

The problem is that we often assume that the marketing Doesn't haveinfluences What on theThe number of leads, while he has everything Just as much impact on the other two components.

As we mentioned earlier at Kano, there are three types of leads, each with very different earnings expectations:
Lead A = 200€
Lead B = 120€
Lead C = 60€

It is precisely this quality component that is often overlooked by marketing teams.

If the Marketing team opts for a focused approach On the quantity At detriment to quality, it will be statistically improbable for the sales team to achieve their goals.

Let's take our previous example again and assume that thesales target be fixed to 120k€.
If marketing generates 3000 category C leads, Expectation of earnings The total will then be 60k€. The sales team will have to offsetting this low quality of leads is by generating more Pipeline herself, or in enhancing the conversion of these leads in a significant way. Conversely, if the marketing team only sends category A leads, theExpected total earnings will be €200k.
If, in this scenario, the revenue generated is less than the target, then the problem is likely to come from the sales team's performance.

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4) A stronger marketing velocity

a) The Sales Cycle Challenge

As many of you know, as soon as a lead is generated, the sales cycle can extend over a variable period. For the most businesses transactional, it may take A few days, but for complex sales, it can stretch over months, or even years, especially for very Large Accounts (Force Sales Enterprises to you! 😅) However, the Marketing department cannot affordWait for months even years before interrupting a advertising campaign that generates leads from low quality.
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b) The Crucial Contribution of Scoring

You could ask me, “Okay, but what is the link with scoring?” It's simple: if your scoring is correctly developed, the marketing department can rely onAverage earnings expectancy To take faster decisions and allocate your budget in an optimal way.

Case in point: Kano in action

‍At Kano, once a lead is created, it flows on average 2 months before concluding a contract. The Kano Marketing team is testing a new acquisition campaign on Google Ads. Without lead scoring, you would have to Wait 2 months to get a quantitative assessment of the quality of the leads generated And of turnover potential which would result from it. So, if this campaign generates low quality leads, marketing could only interrupt this campaign Too late, generating a unnecessary budget expenditure.

c) Optimizing the Budget and Maximizing the Results

On the other hand, by exploiting the established scoring, Marketing would be in a position to manage and reallocate your budget based on data at the same time Quantitative and qualitative. The result? Kano could reduce its Customer Acquisition Cost (CAC) and generate more revenue with the same budget.

If you're still not convinced that creating lead scoring is the next big change in your Sales and Marketing team, here's one last reason to spend some time on it.
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5) Give your salespeople the same “chances” (or not)

One of the main areas of friction in Sales teams is equity between your salespeople. This is often the subject of debate within teams. In my opinion, this is a problem, simply because it disfocuses them from their objective: to sell.

But it's also a problem because if You don't know The quality of accounts that you distribute to your salespeople, it will be much more complicated to compare your salespeople with each other.

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Comparing cabbages and carrots

The lack of information on the quality of the accounts assigned to each salesperson makes it difficult to compare their respective performances.

💡 If, by accident, Romain is only given category A leads, while Franck is assigned category C leads, it is normal for Romain to generate a higher turnover. However, these figures alone are not enough to conclude that Romain is a better salesman than Franck.

The subject is not so much equality as simply knowing what you are doing

It is important to note that distributing the same quality of leads to all salespeople is not not always the only viable option. There are a lot of reasons why an unequal distribution may be justified. Here are two examples:

• You might want to entrust the most promising leads to your most experienced salespeople to maximize potential gains.
• You may have different goals for each salesperson.

However, not monitoring the quality of the leads awarded to your teams is a significant error. That would be like evaluating the performance of two drivers without taking into account that one is driving a Ferrari and the other a Kangoo.

Conclusion

Lead scoring is proving to be a powerful multi-faceted tool:

1- It allowsincrease your turnover by targeting the most promising leads.
2- It promotesalignment of your Marketing and Sales teams by setting up concrete goals.
3- It contributes to reduce your customer acquisition cost (CAC) by allowing marketing to optimize the allocation of its budget.
4- It offers the possibility of compare your sales representatives with full knowledge of the facts.

If you are having difficulties in setting up and deploying this scoring system, we are here to help you!

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