November 1, 2012
By Judith Aquino,

What's Your Prospect's Score?

When it comes to advertising, all businesses have the same goal: to find out which consumers are more likely to buy their products or services and determine how to best allocate their marketing budgets to reach those customers. Lead scoring, the practice of ranking sales leads to identify the consumers most likely to respond to an ad campaign, is an increasingly popular way to apply predictive analytics to mountains of customer data. To reap the benefits lead scoring offers, though, marketers should be aware of several best practices as well as the pitfalls, experts say.

It is common for businesses to employ strategies and metrics to gauge a customer's lifetime value, notes Raj Agnihotri, an assistant professor of marketing and director of sales research at Ohio University. "The bottom line is not all customers are worth pursuing," Agnihotri says.

Using a mix of demographic information, past purchases, buying behaviors, and other factors that are processed by an algorithm, lead scoring vendors can help companies make informed guesses on which types of consumers are likely or less likely to become customers.

One such vendor is eBureau, based in St. Cloud, Minn. The company scores about 20 million American adults a month for clients such as banks, insurance companies, and educational institutions. Clients submit sales lead data, which eBureau then processes, along with additional publicly available data points about consumers' ages, incomes, occupations, retail histories, and more, to score prospective customers based on how well they match data on previous customers.

Companies can use the scores, which could range from 0 to 99 (with 0 indicating an unprofitable customer), to decide to whom they should advertise. The majority of eBureau's clients, according to founder and CEO Gordy Meyer, are customer-facing companies. As companies continue to search for ways to make sense of their customer data and produce quality leads, Meyer predicts a wider range of businesses, including B2B companies, will use some form of scoring system. "Every industry that is planning to use a scoring system will be using one within two to four years," Meyer maintains.

To get the most from a lead scoring system, keep several things in mind.

"First and foremost, have a clearly defined goal," says Paul McConville, senior vice president of sales and marketing at TargusInfo, a subsidiary of Neustar that also produces lead scores.

"The second step is to ask yourself, 'Once [we] have the information [we] asked for, can [we] do anything differently?'" McConville adds. "If a customer can't clearly articulate what they're trying to do and what they would do differently with the prediction, it's very tough to use predictive analytics."

In addition to trying to predict which types of consumers are worth pursuing, companies are also interested in finding influential social media users. Start-ups such as Klout and Kred offer scoring systems to enable companies to identify active Twitter or Facebook users who could share brand messages or product information within social communities.

In May, Cathay Pacific Airways announced it was opening its San Francisco airport lounge to anyone with a Klout score of 40 or more. Salesforce.com has added a function that lets companies monitor customer Klout scores, and Kred rolled out a Kred for CRM application to make it easier for businesses to use its scoring system.

While scoring systems can provide order and greater insights, companies need to consider other factors to get a complete view of customers, says Curtis Alexander, a marketing strategist for industrial companies. "Marketers also need to look beyond just the customer demographics," Alexander says. "Scoring systems—no matter the type—will never be perfect."