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Six Reasons Lead Scoring May Not Work for You

Posted by Doug Davidoff

Oct 2, 2015 3:05:34 PM

lead-scoringThere seems to be increased interest surrounding how to effectively apply lead scoring to an effective demand generation process. It could be caused by the recent enhancement that HubSpot announced, bringing predictive lead scoring to the enterprise version of their marketing automation platform.

Of course another reason could be that the promise of lead scoring is just so compelling. And when you add the word predictive to the mix, who wouldn’t be excited about it. The possibility of automating a lead review process to tell you who is ready to buy, who isn’t ready (but will be one day) and who will never buy is about a powerful a proposition as you’ll ever see in demand generation.

But there are two critical questions that must be addressed before one gets ahead of themselves:

  • Does lead scoring actually work?
  • Will it work for me?

Unfortunately, the answer to both questions is rarely.

To be clear, I’m talking about a formal lead scoring process, where specific points are assigned (in an automated fashion) based upon explicit actions taken by a lead and implicit characteristics of the lead to determine the likelihood of a lead being ready to buy.

Before I share the reasons that, despite the promises made by technology providers, lead scoring rarely works, let me share where it does work. If all of the following attributes apply, lead scoring can be of great value to you:

  • High volume
  • Highly predictable and repetitive sales process (for the entire demand generation process)
  • Your product/service addresses an existing line item for your prospects
  • The prospects in your market regularly purchase your product/service and have sufficient expertise
  • Your capacity to sell more of your product/service is severely restricted
  • The volume of leads you are currently getting significantly outpaces your ability to manage them

If your situation doesn’t meet all six attributes, there are several reasons that lead scoring is not an initiative you should pursue.

1. You don’t have enough leads

I’ve worked with thousands of small and mid-market companies in my career, and it’s rare that I meet one where their problem is that they’re getting too many leads. A 2013 study identified generating leads as the number one challenge for B2B marketers.

Lead scoring is designed to reduce the number of leads that you are actively managing/pursuing. So until you’re consistently generating 125% or more of the lead volume you can manage, you shouldn’t even consider lead scoring.

2. You don’t know enough to make scoring work

One of the biggest mistakes made with any type of automation is automating before you know enough. Variance destroys automation efforts. Lead scoring is a form of an algorithm. Algorithms work when something is always true, not when it’s usually true. If you want lead scoring to work for you, you must have hundreds (or more likely thousands) of instances and datasets to analyze.

The reality is that most forms of lead scoring are really just unnecessarily complicated lead triage or ideal client profile (ICP) exercises. If your scoring system is built primarily around titles or what’s downloaded, it’s really not doing anything particularly valuable. The reality is that the automated nature of the process probably means you’re missing more opportunities than you are preventing wasting time on.

3. You’d be better off hiring another SDR

The first two points are the primary logical reasons not to do lead scoring. This is the primary business reason not to lead score. The core value proposition of lead scoring is that it reduces the number of leads that need to be actively managed, thus enabling you to manage your capacity better.

But, why manage capacity when you can easily add to it. The added revenue opportunities created by adding sales development reps (SDRs) provides far greater economic value than scoring does.

4. You’ll risk greater commoditization

When you start treating prospects like a commodity, don’t be surprised when your prospects start treating you as one as well. At Imagine for example, I can never be certain who will be sales ready or who won’t be. Most clients we work with don’t even know that what we do is possible.

So much of the qualification criteria are mindset based that we can’t treat every prospect by a mathematical formula. Plus, the benefits of an SDR connecting with a lead and asking a direct question of a prospect that changes their mindset is simply not an experience that can be replicated in any other medium.

5. You’ll learn the wrong things

All too often lead scoring confuses correlation with causality. For example if you do an attribution analysis (a crucial piece of lead scoring) you may learn that 72% of your customers downloaded a particular whitepaper before they became a customer. That however does not mean that the whitepaper had any causal effect on the purchase decision. However, lead scoring will treat it that way.

This can be very damaging to your growth efforts. Consider the overemphasis on closing in sales. If I were to do an attribution analysis of the sales process, I’d quickly learn that 98%+ of customers bought after being asked to buy.

Learning that, I conclude that asking people to buy is really important. So I may then start teaching my salespeople to ask earlier in the process (to shorten the sales cycle) and to ask more often (to increase win rates). Before you know it you’d have salespeople creating little to no value and jumping right to “the close.” (Oh wait, that’s already happened, hasn’t it?)

6. It’s not aligned with how buyers actually engage to buy most things

As I advise my clients often, customers buy for their reasons and in their way, not yours. In the growth efforts we conduct for ourselves and our clients, we often see that the initial conversation begins with someone who would not score well. Often they’re too low in the organization or even in a part of the organization that’s not directly involved with purchasing decisions. The vast majority of lead scoring systems would eliminate these. However, the initiation of a conversation with these people regularly leads to gaining valuable insights and introductions to the right people.

A Better Way

Don’t mistake my feelings about lead scoring with a belief that all leads should be treated the same. Leads should be assessed and slotted based upon key indicators. We recommend taking a lead triage approach. This combines some light automation (called it scoring lite) with a human element, matched with a clear service level agreement outlining how leads of various classifications should be treated.

I’m a big fan of attribution analysis and data analytics to continually refine your lead management function. You can learn more about our lead triage approach in our ebook How to Effectively Manage Inbound Leads.

Free Download: How to Effectively Manage Inbound Leads