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Lead Scoring 2.0: Measuring Prospect Behavior

24 June 2009

Last month, I spoke to a group of Silicon Valley Chief Sales Officers about Sales 2.0.  After my presentation, I invited the attendees to share some of their approaches to reinventing the way they are selling, given changes in customer preferences, the market and economy.  Bill Binch, VP of Sales and Customer Success at Marketo, had a lot to offer.  He is the first to admit that some of his practices are non-traditional, or in his words “edgy”, perhaps the ultimate of compliments to members of Generation Y.  I asked him these questions:

Anneke: For context, tell us a little about your sales organization and how it is structured. Who do you sell to, what is your average sales price and average sales cycle, etc?
Bill:  We use several Sales 2.0 concepts at Marketo. We’ve expanded the standard sales cycle into what we call the “Revenue Cycle,” which means we measure the combined sales AND marketing cycles to learn how our customers want to buy. By measuring from their first interaction, we understand how our prospects behave and how they want to be sold to, and deliver them timely, content-specific information based on their interests and activities.  The result is that marketing provides the sales team with a nurtured, sales-ready leads, complete with their demographics, activities, and behaviors.  Which is really what Marketo as a company is about – we help companies convert, nurture, and prioritize their leads, resulting in better alignment between sales and marketing and higher revenues. So we currently have Enterprise (field) reps who call on accounts with revenue greater than $500 million as well as Territory (inside) reps who are geographically organized that sell to the VP of Marketing and VP of Sales.   Our typical Revenue Cycle runs about 100 days from identification to close with an annual subscription price of $40,000.

Anneke: You mention lead nurturing several times, which is a key concept in a Sales 2.0, marketing and sales aligned company in which measurement, tracking, and accountability are part of the sales culture.   How do you distinguish between leads that your tele-qualification team calls and leads you simply nurture using Marketo.  In other words, how do you determine who gets a follow-up call and when?

Bill: All leads are nurtured in Marketo, prior receiving a call from a tele-qualifcation rep.  Leads are ranked by a score, according to best practices which are published on our web site, and once they reach a certain score, they go to tele-qualificiation for follow up.  If tele-qualification determines a prospect to be “sales -ready,” that prospect is referred to sales. If  prospects are not “sales-ready”, they are put into a new nurture program based on their needs and purchase timeframe.

Anneke:  Tell me more about your innovative approach to scoring marketing-generated sales opportunities according to how likely prospects are to buy.
Bill: The 2.0 process requires the marketing team to provide greater detail and insight for their sales team — what influenced and drove the lead to your site, did they look at your pricing page, your videos, download whitepapers?  Who is your prospect, what company are they from, what size company, what industry, what is their title and role?  What assets are influencing the prospect to select your product and what is their propensity to buy?  By having a closed loop process, we can measure what is influencing our customers, what programs are helping reinforce our message, and what does a typical buyer profile look like.  We can then adjust our messaging and marketing spend to focus on the best sources and processes for gaining new customers.

Anneke: How does this lead scoring system compare to traditional approaches to prioritizing opportunities?
Bill: The 1.0 process was to qualify leads as A, B, or C leads, or at best case a static numeric basis.  In the 2.0 world,  sales reps need to understand the demographics, behaviors, and activities of their prospect.  They need to understand their urgency level.   These can be delivered as individual scores that move up or down dynamically — if a prospect is very active, their urgency is greater and and the sales rep should be alerted to react.  It is the combination of activity level -which shows readiness to engage – and demographic fit that determines the best qualified leads.

Anneke: What is the difference in the results you’ve seen since implementing the new approach?
Bill: The big result is in productivity – our sales team sells.  Instead of burning time researching, prospecting, and back office work, they are focused on engaging with qualified leads that want to speak with them.  By using Marketo and our tele-qualification team, we are able to keep the sales team highly utilized and the majority of their time is customer facing.  The “Revenue Cycle” process has yielded us over 200 customers since launching the product in March 2008.
Anneke: What are some of your biggest selling challenges today and how are you addressing them?
Bill: In the mid 90’s, many companies didn’t have CRM (Customer Relationship Management applications) and didn’t think they had a need, yet today it’s hard to imagine any company not using CRM to run their sales business.  The marketing side is similar – it’s been under-served and not optimized as well as it could be.  So our challenge is redefining how sales AND marketing can work more closely together to have a greater impact on revenues.   SaaS (Software as a Service) has been an enabling paradigm to get software into the marketer’s hands, but similar to what Siebel Systems (now Oracle) and salesforce.com experienced, we need more than technology.  We need to educate customers on new best practices and strategies to help solve today’s sales and marketing challenges.  So we’ve focused on hiring people with that DNA in their background, and that skill has really helped fuel our growth.

Anneke: Are you implementing or testing Sales 2.0 strategies, practices, or technologies in addition to your own product?
Bill: Yes, there are many great technologies out there that are helping us.  We use Zuora for integrated order configuration, order entry, and billing, which is critical in a subscription business.  Adobe is an electronic signature tool integrated to salesforce.com, which speeds up the contract process and reduces redlines and legal changes.  And we use Jigsaw and Tippit for research and industry expertise.
Anneke: And what are the results?
Bill: I think the biggest result is the adoption of the Marketo platform by our customers.  There had been several offerings in this category, but in 3 years we’ve gone from start-up to the 2nd largest player in our space.  Our technology, combined with usability, domain knowledge, and execution has put us on the trajectory to be the leader in the next 18 months.   Customers have been wanting a product that is usable today but also offered the sophistication and growth path for the future, and we’re uniquely positioned to provide that solution.
Anneke: Your web site describes Marketo as “marketing automation that helps B2B marketing and sales drive revenue and improve accountability”.  Can you give me some examples of results your customers are seeing?
Bill: A recent example is a manufacturer who within 30 days of starting with us, launched a campaign that yielded 500% improvement of their click through rates.  A 5X improvement is going to fill the funnel with more opportunities, which will lead to more at-bats for their sales reps.  And that’s just the first 30 days!  We have another customer, Plexus Systems who saw pretty tremendous results, which they documented on their VP of Marketing’s blog. Their results include better understanding of their buyer, better sales productivity and prioritization, and of course more leads, more deals, more revenue.

What lead scoring system do you use?  How has it helped your sales productivity and results?