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Customer Segmentation and Lead Qualification

Algorithm Development
3 MIN READ

Our Client

Founded in 2010 by senior technology leaders, our client is the fastest growing startup in the digital marketing space, meeting the enormous demand for creation of online awareness and persuasion across generations and channels. Responding to the needs of their customers, they developed new ways to identify and engage their customers’ users across platforms and devices.

However, the digital nature of their product gives our clients a broad target market that spams various industries and company sizes. This yields an array of customers and prospects too diverse for traditional sales tiers & segmentations. One of the main challenges was the constant influx of multiple & varied leads which was causing confusion that led to off-target messaging and pricing. Moreover, our client was wasting vast amounts of time and money following the wrong leads across an unnecessarily long sales cycle.

Our client needed a way to classify into one of their customer types and assess the potential value of each prospect early on.

What we did

Aja Data Lab took the responsibility of developing a data-driven approach to identifying, classifying, and qualifying top- and mid-funnel leads for our client. To achieve that, Aja Data Lab first analyzed all the available data and developed a state-of-the-art customer segmentation algorithm based on the machine learning concept of clustering.

After clearly identifying and classifying customers and prospects, a lead qualification algorithm was developed to rank prospects based on their similarity with current, high-spend customers.

Both models take into account characteristics as diverse as industry, employee count, job openings, revenue, technographic data (technologies used), web and social presence, technology vendors, patents, trademarks, among others.

After running through both models, all incoming leads ended up in one of 5 categories.

No. of Leads % of total Closing Probability (%)
Tier 1 94 12 88
Tier 2 158 20 68
Tier 3 197 25 43
Tier 4 133 17 26
Tier 5 205 26 9
Total 787 100

The above table shows how only 12% of the leads that came in that quarter fell on Tier 1, the tier with the maximum probability of converting into customers. Focusing only on Tier 1 and Tier 2 leads, allowed our client to focus their sales efforts and perfect their pitch while attending 32% of their leads.

Outcomes

The combination of customer segmentation and lead qualification models to identify, classify, and qualify prospects allowed our client to filter out low-potential, Tier 4 & 5, leads and focus on high-potential, Tier 1 & 2, to maximize closing rate and value. As per outcome, right away our client reported a 2X increase in the number of meetings scheduled by the sales team at the top of the funnel.

At the end of the quarter, the sales numbers showed an increase in the overall closing rate of 33% as compared to the previous quarter, which is attributed to the predictive lead nurturing process. The increase in closing rate was accompanied by a disproportionate increase in revenue, 44%, which confirms that the Tiers are also a proxy for high customer-value, on top of closing probability.