March 17, 2010

Special Report: When to Adopt Lead Scoring, and How to Justify the Investment

SUMMARY: B2B marketers considering a lead scoring and marketing automation solution typically wrestle with two major issues: How do I know if I need it -- and if I do, how can I attain budget for it?

We tapped Emily W. Salus, Sr. Marketing Manager, CollabNet, to answer these questions. She first shared her experience in implementing lead scoring at MarketingSherpa’s 2009 B2B Marketing Summit. In the first installment of a two-part Special Report, she explains how to know when you’re ready to adopt lead scoring and marketing automation, and offers three strategies for justifying the investment.
By Emily W. Salus, Sr. Marketing Manager, CollabNet

With all the technology available to today’s marketers, it’s sometimes hard to know when you need to invest in a new system.

It’s not always immediately obvious that lead scoring or marketing automation is needed, or what advantages it will provide. Implementing a lead scoring or marketing automation solution is a big decision. It will require a lot of planning, investment of time, personnel and money, and a commitment to making changes to many of your processes.

But it can also provide huge benefits to organizations of all sizes, including coming together with the sales team in new ways and being able to truly measure the activity and impact of your marketing efforts.

Lead scoring and marketing automation can be transformational additions to your marketing organization -- and the effects can extend to your whole company. But there are many challenges to making the decision, picking the right solution, and managing expectations.

Knowing if you need a solution comes first, before you can begin selecting a product. This guide will help you decide when to make that investment and how to justify it.

The Basics: What is Lead Scoring and Marketing Automation?

Lead scoring enables you to assign a value (points) to the demographic characteristics (job title, revenue, geography, etc.) and activity (Web visits, email clicks, webinar attendance, collateral download, etc.) of the individuals who engage with your company.

This system lets you sort your leads based on how engaged they are, and shows the changes to their engagement over time. In short, lead scoring can help you distinguish the "just looking" prospect from the sales-ready lead.

Lead scoring is generally part of a larger marketing automation solution. Marketing automation also offers features for designing emails, creating nurture campaigns, sorting and segmenting your database, and reporting on your database and your campaigns. While you might not need all these features right away, as you mature in your use of marketing automation, you'll find more and more of them vital to your marketing strategy.

When Do You Need a Lead Scoring or Marketing Automation Solution?

To assess your need for lead scoring, there are two main questions to ask:
1. Can I sort the wheat from the chaff?
2. Does my current solution scale?

If you can easily identify which leads are deserving of sales outreach and which should remain with marketing for further development, then you don't need lead scoring.

However, if it's hard for you to distinguish between types of leads -- there are too many names entering your database to handle manually, or you have a long sales cycle that involves many touches before a lead is ready for a sales contact -- then automated lead scoring can help.

Similarly, if you have a manual process that can manage your lead flows today, but have aggressive growth targets or other challenges to your scalability, automating the process ahead of that increase can be a huge advantage.

Additionally, if you need to automate much of the way you respond to your leads, then you should investigate marketing automation.

Marketing automation will enable you to:

- Score your leads.

- Build campaigns to nurture your leads based on:
o Activities that trigger automated responses
o Segmentation of your database

- Have a comprehensive view into your overall system:
o What's happening, where and when with your leads
o What you're doing with them
o How they're responding
o Where they're going

- Analyze your campaigns, your leads and their activity.

Justifying the Investment

Having defined a need for lead scoring and/or marketing automation, you'll need to justify the investment.

Marketing automation solutions are generally priced based on the size of your database or the number of users you have. Fees can range from $1,500 per month to upwards of $10,000 per month, depending on your requirements. Set-up fees and support (at varying levels) can be additional, so you’ll need to look into what’s included before you sign the contract.

Answering questions around three main topics will help you create a proposal for your budgeting request. These topics are:
1. Lead quality
2. Manual vs. automated processes
3. Campaign development and management

-> Lead Quality

Increased lead quality is one of the biggest requests marketing receives from sales.

In order to improve lead quality, you need to:
o Determine the definition of a sales-ready lead
o Have processes for improving the quality of the leads once they get into your system
o Be able to track the time and actions it takes for a new lead to become sales ready (and from there, to become a sales opportunity)

Defining the sales-ready lead is critical, whether or not you are implementing marketing automation. Sales and marketing must work together to determine what combination of characteristics and behaviors constitute a sales-ready lead.

This means having a team composed of members of both sales and marketing that develops a picture of a sales-ready lead based on a combination of demographics and activity. While this process can be challenging, the rewards are great, as sales and marketing end up with the same goals.

Once leads are in your system, you need to be able to engage them further and increase their activity with you (instead of your competitors). Analysis around your lead scoring provides you with visibility into:
o The average time a lead spends in each stage of your funnel
o How long your complete marketing sales cycle really is
o Your fall-off ratios

This visibility is incredibly powerful, in that it helps you understand what kind of traffic you need in order to drive to your quarterly sales and marketing goals, and how to spend your budget to drive those leads.

Implementing the processes to increase lead quality will be an ongoing activity, but there are small gains you can make right away. When you implement lead scoring, you'll score at least some of the demographics and past activity of those already in your database. This will give you immediate knowledge of how many leads you have at which stages, and where you need to work first to increase your sales-ready leads.

For example, if the majority of your leads are in the early part of your funnel, with low scores, you'll immediately see that you need to present them with early-stage assets to move them to the next level. If you've got a large number that are, by your definition, nearly sales ready, you can provide them with later-stage assets to encourage them to consider your solution as they make buying decisions.

Using your definition of a sales-ready lead, you'll be able to look at the leads with low, middle and high scores and get feedback from the sales organization about whether the definition looks correct.

If your definition is not on target, you'll need to reassess how you characterize a sales-ready lead. If your definition sound, you'll have made an immediate impact on sales. This can bring the sales and marketing organizations closer and encourage even more collaboration.

It will take some time to get the right reports, but sit down and ask "What do we need to know to make the right strategic decisions?" Then, figure out what information will get you that answer. It's not easy, but even knowing you're moving in the right direction and answering some of the questions can be a huge motivator for all teams.

Tip: Set practical goals for increasing the quality of your leads, particularly if you have a long sales cycle.

One of the hardest things to do is define your funnel:
o What stages exist?
o How many leads do you have at each stage?
o How long does it take a lead to get from stage to stage?

Once you know what your funnel looks like, and how long it takes, you'll know how long it will be before seeing the results of your changes. Emphasize this to the entire team -- sales, marketing and executives -- in order to set expectations. Also, let them know that only by measuring will you be able to make improvements.

-> Manual vs. automated processes

While the human touch is often preferred, there are many screening processes that are simply not scalable. Lead qualification teams can manage only so much traffic, and if this traffic multiplies you might not have the budget to expand your team.

It’s better to put a scalable solution in place early rather than scrambling to implement one once your lead flows become unmanageable.

Lead scoring can help your sales team know which leads to address first, while your marketing team continues to nurture the remainder. Marketing automation enables you to provide "if-then" triggers that send your leads targeted information based on their activity or stage of the funnel.

For example, a lead that downloads your free trial could receive a targeted email explaining how to get the most out of the trial minutes after they complete the download. Those who indicate an interest in ROI calculators or RFP templates could be sent further information on how to choose a solution or a case study about efficiency gains achieved by one of your customers.

Responses to your late-stage emails can be accompanied by alerts to your sales team, indicating that a phone call follow-up is needed. These multichannel, triggered follow-ups can reap huge benefits when you reach a prospect that already has you top of mind.

-> Campaign development

The ability to create targeted, triggered and tested campaigns is a fine art. Campaigns can range from the simple to the extremely complex. If you're not already experienced, starting a basic campaign can be a challenge, but with best practices and your own creativity, you'll quickly be able to see the potential for your own organization.

An example of a simple campaign is the introduction of a new product to your customer database. Think about your customers:
o What are they doing with the product they've already acquired from you?
o How does the new product help them?
o What are the short- and long-term benefits of investing in the new product?
o Is there a case study of a customer who has already seen these benefits?

Answering the questions that your customers are likely to ask will enable you to plan several short emails that take them through the desired steps toward your new product.

A more complex campaign could include separate tracks if the recipient of the email responds to offer A, offer B, or takes no action. Each of these activities might trigger a different follow-up -- and different responses to the follow-up likewise might receive a different next step.

Start with a basic campaign and see how it performs. Does your audience prefer one asset to another? Does one message appeal more?

A/B testing, which many marketing automation solutions provide, can help you both fine tune your messaging and learn what appeals to your audience.

The final justification for investing in a lead scoring/marketing automation solution relies upon your answers to the challenges of lead quality, manual vs. automated systems, and campaign development. If you need more targeted engagement with your leads, with less manual effort, to improve lead quality and customer retention, then marketing automation can be justified in your budget.

Part 2 of this Special Report will examine eight criteria to consider when evaluating lead scoring/marketing automation vendors.

Useful links related to this article

Lead Scoring: 6 Strategies to Partner with Sales to Rank, ID Prospects

Investing in Marketing Automation: The Benefits of Pilot Testing

CollabNet Inc.

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