As a publisher you may be thinking, why should I even worry about lead scoring? Lead scoring is for longer sales cycles, where you have to think twice before passing a prospect to a highly-paid sales professional. Circulation marketing is about finding the right tactics for prospects, then converting those prospects en masse to paid subscribers.
This view misses the multi-dimensional nature of direct marketing. Two conversion tactics may yield dissimilar results, with highly varying ROI and gross sales. The chart below shows three scenarios using three different direct marketing tactics…
| Tactic | Direct mail | Telemarketing | |
| Conversion rate | 2% | 5% | 10% |
| Cost per piece | $0.05 | $0.50 | $4.00 |
| Cost per conversion | $2.50 | $10.00 | $40.00 |
| Prospects | 6,000 | 6,000 | 6,000 |
| Conversions | 120 | 300 | 600 |
| Subscription Price | $50 | $50 | $50 |
| Cost | $300 | $3,000 | $24,000 |
| Revenue | $6,000 | $15,000 | $30,000 |
| Profit | $5,700 | $12,000 | $6,000 |
| ROI | $20.00 | $5.00 | $1.25 |
In this example email yields the highest ROI ($6,000 revenue / $300 cost), direct mail the highest profit ($15,000 revenue – $3,000 cost) and telemarketing the highest sales ($50 x 600 conversions). The obvious choice here is direct mail as it yields the highest net profit.
But it feels like a missed opportunity to increase sales, if only you could capture that higher conversion rate on telemarketing. Lead scoring helps you have it both ways. You can profile best-performing prospects by different factors, then use those factors to determine who will receive higher-cost marketing. To illustrate this, assume that prospects with different levels of web activity convert to paid subscribers at varying rates:
| Segment conversion rates | Low activity | Medium activity | High activity |
| 1% | 2% | 5% | |
| Direct mail | 2% | 3% | 10% |
| Telemarketing | 5% | 10% | 30% |
You can approach more active prospects with costlier marketing. Assuming that your segment divides nicely into thirds, you could email low-quality leads, send direct mail to those scored with medium activity and call those with high activity, with the below results:
| Segment | Low activity | Medium activity | High activity |
| Tactic used | Direct mail | Telemarketing | |
| Prospects | 2,000 | 2,000 | 2,000 |
| Cost | $100 | $1,000 | $8,000 |
| Conversions | 20 | 60 | 600 |
| Subscription Price | $50 | $50 | $50 |
| Revenue | $1,000 | $3,000 | $30,000 |
Using this simple strategy, we can add “Mixed” to our list of promotions below:
| Tactic | Direct mail | Telemarketing | Mixed | |
| Conversion rate | 2% | 5% | 10% | |
| Cost per piece | $0.05 | $0.50 | $4.00 | |
| Cost per conversion | $2.50 | $10.00 | $40.00 | |
| Prospects | 6,000 | 6,000 | 6,000 | 6,000 |
| Conversions | 120 | 300 | 600 | 680 |
| Subscription Price | $50 | $50 | $50 | $50 |
| Cost | $300 | $3,000 | $24,000 | $9,100 |
| Revenue | $6,000 | $15,000 | $30,000 | $34,000 |
| Profit | $5,700 | $12,000 | $6,000 | $24,900 |
| ROI | $20.00 | $5.00 | $1.25 | $3.74 |
In this case, email still yields the highest ROI, but a conversion strategy utilizing mixed tactics per varying lead scores maximizes sales and increases our profits from $12,000 (direct mail) to $24,900 (sending email, direct mail or telesales based on lead score).
When a lead stems from a source with poor conversion rates, or has a poor demographic profile, then you would score him low and send campaigns up to a certain cost level where ROI remains acceptable. When another lead comes from a better source or has a “buyer’s” job title, he could receive expensive follow-up efforts like direct mail or telemarketing. Maybe some combination of the two converts at an even higher level, enabling you to conduct multiple, multi-channel follow-ups over an extended period of time.
Incorporating web activity can help you score with better data than even demographic or source. When an identified prospect clicks on a certain piece of content, you can use that click to showcase a related information product. And the more activity a prospect takes, the higher up the chain you can send them so that an expert, expensive sales representative may even get such a great list of prospects that she can make a huge profit, even at higher cost.
Think of lead scoring as a segmentation strategy, but one that breaks out your segments to the most granular level, allowing you to measure how each segment performs according to various tactics. Putting that information together, you can run multidimensional campaigns to prospects based on compiled profiles. If someone clicks on an email, send him another. If he clicks twice, call him. If he expresses some interest, follow up even more.
In addition, as information providers, you may want to expand into corporate sales of information packages. But how do you qualify your thousands of subscribers as corporate leads? By adding subscribers to various nurture tracks, you can send them “meta-information” about your content, gauging their interest by talking about a group subscription. Their activity in that series can then build up a lead score, which you will then use to qualify for a sales follow-up.
Build your lead profile on a combination of demographic profile and recent activity, and then report on the differing response rates of each group across different marketing efforts. Using those results, you can then construct a lead scoring program that will preserve ROI where necessary, but go for profitability when the opportunity presents itself.
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