Customer scoring emerged as a technique in the banking sector used to establish which customers should be granted a loan. However, in recent years its application in marketing has proliferated, turning into the preferred form of customer segmentation to increase customers' economic value.
For some time now data analysis has revolutionised the world of marketing due to its potential for generating knowledge about the customer. Nowadays, practically all companies resort to data analysis and business intelligence to better understand their customers, their buying habits and, consequently, to improve the range of products and services they offer and provide personalised customer experiences adapted to consumers' needs. Along these lines, customer scoring is a form of customer segmentation that focuses on the customer lifetime value to adjust the customer's treatment to their lifetime stage.
What is customer scoring?
Customer scoring is a predictive analytical technique used in the banking industry to predict the probability that a credit or loan will be productive in relation to a specific customer and a specific purpose. In short, in the banking sector it is used to decide which customers can be granted a loan.
However, in the business sector and specifically in marketing, customer scoring is used to classify customers from a commercial perspective that seeks to segment customers in order to increase their commercial performance, although the impact of the technique goes beyond the economic or commercial.
Among other things, customer scoring allows business owners to determine at what point in the customer lifetime value (CLTV) cycle each of their customers is at and, consequently, to adapt sales, marketing and commercial strategies to each stage.
Customer scoring is regarded as a marketing technique since one of the principles of marketing is that you should not treat a customer who has just come into contact with your brand for the first time the same as a customer who is about to complete a purchase or who is already a regular customer.
¿How does customer scoring work?
In a scoring process, the customers in our customer portfolio, whether existing or potential customers, are assigned a score according to various criteria established by the company and commonly linked to the relationship between the company and the customer. Depending on the characteristics of each company, however, the criteria used may vary. For the process to be effective, it is essential that the classification criteria are appropriate and respond to the company's strategic objectives and business needs. In addition, customer scoring can be based on the results of a previous specific data analysis, known as data-driven scoring.
Once the classification criteria have been set, customers are segmented into different thresholds, usually representing the stages of the customer lifecycle. Thus, each threshold can be linked to concrete actions. For example, if the scoring tells us that a potential customer has visited our website more than three times in a week, it is probably appropriate for the marketing team to contact them, as they are clearly interested in one of our products or services.
The ultimate purpose of customer scoring, besides generating knowledge, is to drive actions that culminate in the development of a personalised customer relationship.
Of course, a customer scoring process cannot be carried out without technological support. It is essential to have good marketing automation software that meets the specific requirements of our organisation. To choose the right software, we must consider the size of the company, the amount of customer data we have, our business needs, what we want to achieve, and so on.
What do companies use it for?
As we have already seen, scoring is traditionally used in the banking sector to determine the profitability of a credit in relation to a specific customer. However, beyond the financial area, its possible applications are multiple.
In marketing and the commercial sector, customer scoring is used for multiple purposes related to the generation of knowledge and marketing insights.
For example, it is common to use scoring to qualify customers according to their maturity within the purchasing process to be able to determine whether they are ready to receive an offer or whether they require other prior convincing actions. Scoring also allows us to know the probability of a customer abandoning the purchase process or cutting off their relationship with the company. By knowing this, we can prevent them from leaving the company with the right commercial actions.
In addition, customer scoring allows us to predict the amount of time it takes for a customer to buy something again, thus revealing our customers' purchase frequency and the most effective moment for the sales department to contact them.
Beyond customer maturity, scoring is also applied to predict the chances of new customers having a high lifetime value. That is, identifying those new customers who are most likely to develop a long-term relationship with our brand. With this knowledge in hand, marketers can offer personalised treatment to these customers, ensuring that they receive special attention.
On the other hand, scoring can lead us to discover patterns in our customer portfolio helping us to make better business decisions.
Benefits of customer scoring
Customer scoring helps companies acquire comprehensive knowledge about their customers and identify insights that support the decision-making process.
Thus, scoring can contribute to strategies such as the definition of the target market, the prioritisation of commercial and marketing strategies and actions and, in short, the alignment of business strategies with customer strategies.
A competent scoring strategy is one that involves all or most of the company's departments and is accompanied by action drivers to improve the company-customer relationship, better meet customer needs and deliver better customer experiences.
An effective customer scoring process always has a direct impact on revenue, whether it is through attracting more customers, building loyalty and retention among existing customers, reducing churn or increasing purchases.
Customer scoring by Kale
Kale carries out personalised customer scoring processes adapted to the specific needs of each corporation. Our extensive knowledge of customer strategies and our team of experts in multiple segmentation and marketing automation software allows us to adapt the strategy, methodology and process to the requirements and business objectives of each organisation.
In addition, we offer personalised consultancy before, during and after the process and we are committed to providing constant guidance and support to ensure that the process achieves the expected results and that it continues to function optimally after its implementation.
Due to our multidisciplinary nature, at Kale we carry out combined strategies that can link specific processes such as customer scoring with other types of segmentation and even less related actions such as customer-centric strategies, customer experience optimisation, predictive sales, go-to-market strategies, etc. If you would like to receive a personalised multidisciplinary service, you can consult our service offer.
If you yould like to receive more information or express any doubts, please contact us. We will be happy to talk to you!