Build a Lead Scoring Model For Your SaaS Company
Evaluate leads behaviors to determine how sales-ready they are and boost your conversion rate
If your sales reps reach out to every person who signs up for your software trial, they are probably burning precious resources talking to prospects who will never convert into actual paying customers. Not all incoming leads are equal by default. You want your sales team to focus time and energy on prospects with the clear need, intent and budget to buy your solution.
For this reason, it is critical to have a system installed to identify leads that are worth pursuing. Implementing a solid lead ranking methodology increases your chances of converting prospects into customers and simultaneously ensures that the sales resources you invest will actually pay off.
Lead scoring is a method assigning value to different customer characteristics and behaviors to determine how sales reads, prioritizes and converts them. Let us have a look at how to build a lead scoring model for your SaaS business.
Why is lead scoring essential for SaaS companies?
Lead scoring is a system used to evaluate the potential of a prospect converting into a paying customer. Incoming leads are assigned “points” based on their customer profile and behavior in order to determine the quality of a prospect.
In a lead scoring program, prospects’ information and actions are rated according to how well they match your ideal customer profile (ICP).
It is a great strategy to align sales and marketing teams around common metrics and lead evaluation criteria. On the marketing side, it helps determine whether a lead is ready to be handed to the sales team or still needs to be nurtured. On the other hand, it allows sales reps to identify leads that require immediate attention. Even better, it provides a valid entry point or reason to call based on the particular behavior exposed during the lead scoring process.
In a nutshell, lead scoring allows sales and marketing teams to prioritize leads to pursue, by examining their potential to become high-value customers.
Building a lead scoring model for SaaS businesses
There is no plug & play lead scoring program, because your business is unique and so are your ideal prospects. Points are assigned to different profiles and behavioral criteria based on your ICP.
Here is our recommended methodology to build a personalized lead scoring model for your SaaS business. Throughout the years we were allowed to deploy and prove that methodology with multiple customers from our portfolio:
1. Identify the attributes that really matter
The first step to creating your lead scoring model is identifying the prospect characteristics considered critical to your business. There are 3 main categories of customer attributes to look into, alongside negative criteria to eliminate out-of-target prospects.
These are information collected about prospects when they fill out a webform. This type of data is shared intentionally by the customer, for instance when downloading a whitepaper or signing up for your free trial.
Explicit data examples: emails address, company name, lead name.
Implicit data is deduced from the explicit data described above. You can enrich lead information through research on Google, social media (mainly LinkedIn) or using specific software. For example, inferring the company size and location from the company name. Both explicit and implicit information is demographic data.
Implicit data examples: company size, job title, location.
Behavioral -or engagement- criteria, are used to determine a prospect’s interest in your software based on its actions. It focuses on the lead’s interactions with your website, software, emails or any other traceable behavioral footprints. This is essential data to determine the lead’s stage within your individual sales cycle.
Behavioral data examples: downloads from your website, trial sign-ups, pricing page visits, software feature usage, chat interaction.
Negative, or disqualifying criteria are used to eliminate spam or leads that are not in your target corridor by default. Negative criteria will decrease a lead’s score taking into account undesired behavior or demographic data that does not match your ICP. For instance, if you’re selling B2B only, you might want to rule out Gmail addresses.
Negative criteria examples: personal email address, insufficient company size, unsubscribed from the email list.
2. Determine the attributes’ values
Once you have identified the crucial attributes that matter for your business, you must decide and agree on their value. For each criterion, you need to assign a value in points reflecting its importance.
Bear in mind that this scoring system is relative. We recommend keeping the scoring system simple and assigning 5, 10, or 15 points regarding criteria that are significant, important, or essential for a prospective customer.
The more time commitment an action requires, the more points you should assign to it. For instance, attending a webinar shows more prospect commitment than clicking a link in an email.
Here is an example for scoring a lead:
Signed up for a trial (+15 points)
Company over 100 employees (+10 points)
View pricing page (+5 points)
Job title: CTO (+10 points)
Unsubscribed from the newsletter (-5 points)
View career page (-10 points)
Never used the trial (-15 points)
3. Define scoring thresholds
Your lead scoring model is now ready to be put into practice. Once you start ranking your leads, the last step is determining when a lead is ready to be transferred from marketing to sales. Both teams must agree on a lead score indicating that a prospect is ready to be touched to enter into conversations. Until reaching this point in the process the leads remain with marketing, which should continue to nurture leads until they qualify.
The score will often indicate the lead’s stage in the buying cycle. Each threshold should indicate the next action to take for marketing or sales, in order to move the prospect into your sales funnel.
Here’s an example:
Lead score is 75 and above: Decision stage / Hot lead → Trigger notification to the sales team
Lead score is between 50 and 75: Consideration stage / Warm lead → Launch nurturing campaign
Lead score is below 50: Awareness or interest stage / Cold lead → Low priority
Final words on the lead scoring system
Lead scoring models evaluate the likeliness of a prospect to become a paying customer. The higher the score, the better the chances that a prospect will subscribe to your software. Test your model in real-life scenarios, refine it with the data collected and keep the conversation flowing between your marketing and sales teams. You might not get your lead scoring perfect on the first attempt, but by considering the different parameters and evolving over time, you will get to an adequate level of decency.
For SaaS businesses, a lead scoring system is essential to identify trial users worth your sales time, but also identify existing customers that are ready for an upgrade.
We would love to help you implement a solid lead scoring system and feed your pipeline with prospects having high chances of conversion. Reach out to our team to discuss your current setup.