Lead Scoring for e-Learning Marketers

As a marketer in e-learning you may be thinking, why should I 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. Education marketing is about finding the right tactics for prospects, then converting those prospects en masse to students.

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              Email        Direct mail   Call from a counselor
Conversion rate 1% 2% 4%
Cost per piece $0.10 $1.00 $30.00
Cost per conversion $10.00 $50.00 $750.00
Prospects 6,000 6,000 6,000
Conversions 60 120 240
Curriculum price $1,000 $1,000 $1,000
Cost $600 $6,000 $180,000
Revenue $60,000 $120,000 $240,000
Profit $59,400 $114,000 $60,000
ROI $100.00 $20.00 $1.33

In this example email yields the highest ROI ($60,000 revenue / $600 cost), direct mail the highest profit ($120,000 revenue – $6,000 cost) and counselor calls (mimicking a high-cost sales person) the highest sales ($1,000 x 240 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 counselor calls. 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 students at varying rates:

Segment conversion rates   Low activity   Medium activity   High activity
Email 0.5% 1% 2%
Direct mail 1% 2% 5%
Counselor Call 2% 4% 10%

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 Email Direct mail Counselor call
Prospects 2,000 2,000 2,000
Cost $200 $2,000 $60,000
Conversions 10 40 200
Curriculum price $1,000 $1,000 $1,000
Revenue $10,000 $40,000 $200,000

Using this simple strategy, we can add “Mixed” to our list of promotions below:

Tactic              Email        Direct mail   Counselor call              Mixed
Conversion rate 1% 2% 4%
Cost per piece $0.10 $1.00 $30.00
Cost per conversion $10.00 $50.00 $750.00
Prospects 6,000 6,000 6,000 6,000
Conversions 60 120 240 250
Subscription Price $1,000 $1,000 $1,000 $1,000
Cost $600 $6,000 $180,000 $62,200
Revenue $60,000 $120,000 $240,000 $250,000
Profit $59,400 $114,000 $60,000 $187,800
ROI $100.00 $20.00 $1.33 $4.02

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 $114,000 (direct mail) to $187,800 (using email, direct mail or counselor calls 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 her 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 typical “student’s” profile, she 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 like an enrollment form or a specific course demo, you can use that click to showcase a content. And the more activity a prospect takes, the higher up the chain you can send them so that an expert, expensive educational advisor 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 education providers, you may want to expand into group curriculum sales. But how do you qualify your thousands of potential students as group leads? By adding prospects to various nurture tracks, you can send them “meta-information” about your curriculum, gauging their interest by talking about a group rate possibilities. 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.