Your business – and your cash flow, stability and growth potential – is really only as strong as your customers. Strong businesses help strong businesses: when your customers are in a good position financially, they have the ability to reinvest into you.
That’s why qualifying leads is so important. When your sales team are looking for new customers to sell to, it’s about more than looking at who might need your business. Making sure that potential customers have the revenue and stability to pay your business on time and continue your relationship long-term is key.
But what should you be looking for when it comes to lead scoring? Knowing a lead and building up a good rapport with the company is one thing, but do you really know what you’re getting into based on those relationships?
In short, no: you won’t know what a lead might be like to work with until you’ve looked below the surface. And when you’re qualifying leads, you need the right information to make smart decisions. So, let’s talk about the criteria you should use in lead scoring.
1. Company size and industry
Have you heard the expression “there’s a lid for every pot”? While that usually refers to romantic relationships, it has its place sales world, too. When you think about the products, services and tools your company provides, you need to think about the types of businesses that would benefit from them. Large, enterprise companies often have bigger budgets – but they also have more complex structures and different needs. Meanwhile, a smaller company could have a smaller budget, but they may also be able to make decisions much more quickly. When you understand the size of the business and what that means for them, your sales team can better prioritize leads that match your target customer profile.
And it’s not just about the size of the company; it’s about the industry it operates in, too. Different industries have different challenges, regulations, pressures and needs. For example, a company in a heavily-regulated industry won’t necessarily be able to work with just any other business. Your company may need to be accredited or otherwise approved before your sales team can even attempt to sell to them. Things like seasonality could factor into lead scoring: if an industry has a low season where they don’t have the bandwidth to invest in new products, your sales team need to know about that and reach out when things pick up again.
When you deeply understand the types of companies you’re trying to work with, you can understand exactly what you bring to the table. And from there, you can score leads based on how well your business aligns with those points.
2. Company revenue
This is a pretty simple concept: the more revenue a business has coming in, the more buying power it has. When a company has a healthy flow of revenue, they’re less likely to pay you back late or turn into bad debt for your business. In short, your sales team should want to target companies with strong revenue.
Keep in mind that strong revenue doesn’t have to mean the biggest, highest numbers. Of course it would be great if everyone could land contracts with billion-dollar companies, but that isn’t always where your sales team is focusing their attention. When you’re considering a lead’s revenue, you should be looking for consistency. Can you spot any major dips or patterns that don’t align with what you know about the company? If their projected income is lower than you would think, for example, it could mean that they’re overleveraged and dealing with too much debt.
Integrating revenue into lead scoring means your sales teams can prioritize leads. Imagine two potential leads are sitting in front of a member of your sales team. On paper, they could look extremely similar. But by looking at their revenue, you can see that company A hasn’t done as well as projected last quarter, whereas company B’s revenue is strong. Which of the two do you think are more likely to convert? Probably the company with the money to spend, right?
3. BANT – Budget, Authority, Need, Timeline
I know, I know – if there’s one thing sales is known for, it’s acronyms. But BANT is a classic for a reason. It stands for:
- Budget: Does the company actually have the money to spend on a contract with your business? How much are they able to pay?
- Authority: Who makes the final call? You may be speaking to people who have influence in the company, but they still might need to take it up the ladder. Would you be better off speaking with people higher up that ladder?
- Need: You think that your company is necessary for everyone, of course, but what problem does it solve for your customers? Does the lead you’re looking at currently face that problem? And how much – and how quickly – do they want it solved?
- Timeline: A prospect could be interested in your company, but that doesn’t mean they’re looking to close a deal in the next month – or even the next year. When are they planning on sealing the deal?
It’s a quick and easy way to get a gut-check on a lead. If a company needs your business, wants to start working with you in the near future and has the budget to back them up, they’re about as close to a perfect lead as it gets.
4. Company credit score
A deep dive into a company’s business credit report is one of the best things you can do to score a lead. And while we’ll get to some of the other valuable information you can glean from a business credit report in a minute, one of the first things sales teams are likely to look at is a company’s credit score.
As long as your business credit report provider uses a universal credit scoring system, you’ll be able to compare domestic and international businesses against the same system. That way, no matter where your customers operate, you can quickly check their credit scores and get a sense of their overall financial health. When a company’s credit score is good, they’re more likely to pay you back on time and much less likely to turn into a bad-debt problem for your business.
Using a business credit score gives you a glance into how a business operates. A low-risk business is likely to pay you back on time and continue to have the resources to work with you long-term. Often, low-risk companies are also more established. While that’s not always a guarantee – we see established businesses file for bankruptcy all the time – it's a good signal that the company knows what it’s doing. A bad credit score, indicating a high-risk business, on the other hand, is a red flag you shouldn’t ignore. Things like missed payments, adverse media attention, legal filings and other signs of financial problems will reflect in a company's credit score: so you shouldn’t ignore it.
5. Payment history
Credit scores are important, but they don’t paint the full picture. When sales teams are looking for more in-depth information to score leads, payment history can unlock much more. Factors like Days Beyond Terms (DBT) can pick up on trends that credit scores haven’t caught up with yet. Finding out how late, on average, a company is in paying their bills can be a clear indication of things like cash flow and liquidity issues.
Understanding a company’s payment history doesn’t just help you score leads. It’s also how finance teams determine terms. A company with a strong payment history are stable enough for better terms and larger deals. Potential customers who appear to be struggling or over-leveraged, on the other hand, will likely need stricter terms or more payment upfront. When sales teams are able to identify which leads require which terms, they’re much more likely to get the finance team on board with the deal.
Payment history also gives you a peek into a company’s internal processes. Consistent, reliable payments mean the company has an effective system and stable cash flow, which can lead to healthier long-term customer relationships. Meanwhile, erratic payment behavior can lead to a similarly erratic relationship.
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About the Author
Bill James, Director, Customer Strategy, Creditsafe
With over 15 years of experience in finance, risk management and data analytics, Bill James brings a high level of expertise and industry trust to his role. Before joining Creditsafe in 2021, he served as Area Vice President at Dun & Bradstreet. Bill is widely recognized for his authoritative insights into enterprise risk strategies and is a frequent, trusted speaker at major industry events. His development of tools like the DSO calculator further demonstrates his applied experience and leadership in driving financial performance improvements.
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