What is lead scoring and why is it important in SaaS?

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Sales and Marketing FunnelThe cost of acquiring customers (CAC) and lifetime value (LTV) of the customer are among the most important metrics that SaaS companies have to keep tabs on. Ideally, you want to acquire customers with a higher LTV at a low CAC. Therefore, lead scoring becomes necessary to qualifying leads and ensuring higher ROI from the marketing budget spend. But what exactly is lead scoring and why is it important for your SaaS business to have one?

SaaS companies need to approach online marketing in a more specialized manner. Apart from driving traffic to and generating leads at their website, marketers have the task of qualifying the leads to determine how ready they are to buy to make the sales funnel smoother and increase conversions.

What is Lead Scoring?

The action of qualifying leads to determine where to place them on the sales funnel is referred to as lead scoring. An efficient marketing and sales process enables the marketing department to know which leads to send to the Sales department and which ones need further nurturing at the Marketing department.

Hubspot has an efficient lead scoring system. The company’s email capture forms enable the marketing department to segment leads based on their job title, size of company, location, type of work and so on. When a lead signs up, the marketing department will be able to target him or her with relevant content based on the information provided on the form.

The Importance of Lead Scoring

SaaS businesses need lead scoring and marketing automation to manage their leads in a more effective manner. Lead scoring helps companies in the following:

1. Lead Segmentation

Lead scoring helps the marketing team to segment leads based on the information they provide at the website. When you expand your marketing campaigns, you will end up with a variety of leads from different channels. Each of the leads have various degrees of potential to sign up for your service.

The leads come from different purchasing backgrounds, industries and locations. Being new to your product, they will approach it in their own way. Your challenge will be understand their buying process at any one time and deliver the right message to them. Lead scoring helps to identify, evaluate and sample your leads.

Here is a case study on how Terracotta was able to map and score their prospects to understand their buying stage.

2. Lower Cost-per-Lead (CPL)

Generating large volumes of leads can be tough for SaaS startups. One easy way of getting leads fast is to purchase them from reputable vendors. However, when purchasing leads, you need to watch the cost-per-lead (CPL) to ensure it leads to positive ROI.

Many CPL advertisers are usually concerned of the quality and inconsistency of the leads they receive. The only way to determine the quality of leads purchased is when they hit the call-to-action pages on your site. Based on the actions of the leads, you can score them to determine where they should be placed in the buying process.

3. Prioritize Sales Prospecting

The marketing team is allocated a large chunk of the marketing budget in most SaaS companies. The team has to use its resources efficiently to achieve its goals.

Teams can use lead scoring systems to automatically qualify leads based on the actions they take on your website. This in turn saves precious time that can be used for other sales activities by the sales team.

You should re-visit your lead scoring model as necessary to gauge its effectiveness or tweak according to new developments.

Do you use lead scoring in your company? Please share your thoughts by using the comments box below.

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Posted on March 6, 2013

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