1 Executive Summary
This White Paper is excerpted from the book, “Lead Generation: The Missing Link between Marketing and Sales”, written for business owners and senior management to provide a perspective on the current situation with regard to Sales and Marketing.
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In brief, the analysis describes the concept of “Lead Generation” – not as a specific tactic within Marketing or Sales such as telemarketing or pay-per-click, or between them in the form of “lead qualification”, as are alternatively and colloquially used. It includes appointment-setting, for example, in B2B; but that’s just one piece of the process. Rather, Lead Generation is, and should be, your business’s fundamental go-to-market strategy.
Given this broader scope, Lead Generation can be viewed as encompassing both Marketing and Sales. And among its most critical attributes is that the paradigm ultimately describes how Marketing can be held accountable for Sales. Therefore, when implemented as described below, a Lead Generation strategy can enable a business to achieve superior levels of sales growth, acquire a dominant market share, and maximize its sales profitability.
As originally described in classical Marketing theory, Lead Generation is a hybrid business development strategy that combines the Marketing and Sales functions in such a way as to enable a business to create and manage “Qualified Sales Leads” (QSLs).
As opposed to today’s typical approach that differentiates between so-called “Marketing Qualified Leads” (or MQLs) that have a low probability of closing, and “Sales Qualified Leads” (or SQLs) that are pseudo-objective opportunities, by focusing on generating and managing only “Qualified Sales Leads” (or QSLs) a Lead Generation strategy can enable a company to fill its Sales Funnel with real opportunities that have a high probability of closing successfully, profitably, and relatively quickly.
A Lead Generation strategy can therefore ensure profitable revenue and market share growth for virtually any business – at the lowest possible cost, with the least amount of risk, waste and effort, and in the shortest amount of time.
Sadly, as a strategy for achieving business growth “Lead Generation” is widely misunderstood. And it is wildly mis-applied. For example, Lead Generation is often viewed as a promotional tactic, such as telemarketing or pay-per-click advertising, that a company can somehow bolt onto a failing Marketing or Sales initiative in order to save it, even though it’s probably too late. Or worse, it’s viewed as a catch-all for generating waste or junk. It’s even sometimes used as a synonym for acquiring a list.
But true Lead Generation is an all-encompassing business growth strategy that incorporates, and bridges the gaps between, the Marketing and Sales functions. It is a reliable and time-tested approach describing precisely how revenue and market share growth can be achieved in virtually any market, and for virtually any product or service. And, most importantly, and for most businesses that adopt it, it’s an approach that works, works well, and works consistently.
3 The Problem
According to recent US Bureau of Labor Statistics, approximately 20% of all new businesses fail during their first two years. And over 50% of all businesses fail within the first five years – a trend that has been growing worse over the past decade. More surprising, though, is that the failure rate for technology firms, particularly those receiving external funding, is far worse. According to a January 2022 analysis by CB Insights, more than 70% of all tech startups fail – usually around 20 months after first raising financing, with an average of $1.3M in total funding closed, and lost.
Highlighting this trend, according to the 12/7/23 edition of The New York Times, over 3,200 venture funded businesses failed in 2023, losing over $27 billion in invested capital.
While creative destruction is a feature of capitalism and not a bug, such failure rates in this particular population would seem to raise questions about entrepreneurial insight, if not the vetting capabilities of the investors and investment management communities. But it’s especially concerning when one considers the reasons cited for failure. Analysts often place the blame on individuals on a case basis, but the primary reasons mentioned tend to fall into a few surprising categories:
- Not satisfying a need
- Bad business plan
- Lack of financing
- Bad location
- Inflexibility, and
- Too rapid expansion
But does this really make sense? What Private Equity firm would fund a business that didn’t satisfy a need? Who would fund a venture that had a bad business plan? And who wouldn’t throw good money after good? Or move if they had to? There is obviously something else going on.
And what’s going on is that, when measured by their impact on Sales, most Marketing programs fail, and fail spectacularly.
Having worked with many hundreds of businesses over the last thirty years, and having spoken to many thousands of business owners, investors, and solution providers, it’s evident, particularly in the last decade, that most of these companies fail, not because there’s no need for their products or services, or because they have a bad business plan. They fail because they are summarily ineffective at Marketing and Sales. And most are ineffective because they buy into a model of Marketing and Sales – one that has been promoted enthusiastically by the digital platforms and the Marketing profession itself – that, in most cases, simply cannot work.
So let’s talk about the elephant(s) in the room.
3.1 The Platforms Are in Control
Setting aside the dubious and self-serving explanations for the high failure rate of PE funded companies above, there are a number of data points that can help us understand the broader problem, starting with the impact of the online platforms and media: Google, Amazon, Facebook, and LinkedIn, along with X, YouTube, Instagram, and most of the other platforms. But we need to go back in time to get some context and some perspective before we issue the indictment.
That is, the historical benefit to businesses, in their pursuit of growth, of the Web when it was new was that it could remove barriers-to-visibility such as the traditionally high cost of advertising and media access. Every business would have “a storefront on the Internet”. And “if you build it, they will come”. Building out these websites and getting visibility online were the foundations of Web 1.0, a legitimate enough enterprise from a business perspective, even if it hurt the traditional (especially print) media. After a while however, because of the large number of businesses on the Web, it became necessary for a tool to emerge – Search – that would help buyers navigate the Web and find what they needed from a galaxy of potential vendors, sources, and Web sites.
The problem was, of course, that weak anti-trust enforcement and Section 230, as well as natural selection, allowed Google to dominate the search market. This meant that businesses had to kowtow to Google’s algorithms – software that literally controls people’s perceptions – if they wanted to get visibility and generate leads. Entire industries have since grown up around learning and guessing what would make Google and the other search sites happy, and enable businesses to gain a position on the first page of search results, to the point where today Search Engine Optimization (SEO), inbound marketing, content marketing, email marketing, digital marketing, and the thousands of their technological progeny and enablers constitute a $200B+ industry – all just to break through the clutter and stimulate some demand – which Google often controls.
The problem is that, for most businesses, none of this works. And the reason is limited real estate.
There is, for example, on the first page of Google search results, room for only 10 or 15 organic hits – which means that 95%, or 98% and potentially 100% (in the case of scammed search terms) of the businesses that are seeking visibility (so they can generate leads) online will basically get none. (It makes you wonder why Google’s search results are paginated instead of scrollable. Sure, UX, right?)
But according to SEMrush, fewer than 1% of Websites can maintain a first page ranking for even one year – and those are the winners!
Even worse is if the potential buyer doesn’t know they have a need, as in the case when a business is trying to introduce an innovative solution. What is the user supposed to even search on? At least in the days of print a vendor could buy a quarter page ad in a Trade Journal and know that it was going to get into readers’ hands; while today you could spend ten times as much money and get no visibility or leads whatsoever, simply because it doesn’t fit the algorithm.
And so businesses play the game, and then they fail.
A similar thing happens with Facebook in the consumer market, and LinkedIn for business, as well as the other platforms. Companies spend billions of dollars for ads on these platforms hoping to get an impression, a click, and maybe a sales lead. But given the competition for eyeballs, fewer than 1% of the companies that advertise on these sites (usually only the ones with the most money to spend, which belies the point of the Web) ever get a positive ROI on it. As a fallback, these sites are more than happy to sell you their users’ data, which businesses pay huge sums to exploit using thousands of different tools, most of which are equally ineffective (while being startlingly intrusive). But the tens of billions of dollars that these platforms rake in each year does little to help the advertisers who spend it, many of whom slowly and quietly go out of business.
And then there’s Amazon, the killer of retail, who exploits businesses with a 35% commission, and the enablement of questionable reviews that skew results such that a legitimate business has little chance of thriving in its toxic ecosystem. And, as with Google and Facebook, Amazon’s business model encourages their vendors and advertisers to compete on price, further squeezing margins. Anecdotally, we’ve talked to almost no manufacturers in the last few years who sell on Amazon who are happy with it. And yet it’s the only game in town for many companies, most of whom die in a race to the bottom.
And if you’re a business that sells through VARs, channel partners or retailers, the problem is doubled. Not only do you have to fight to gain visibility in your channel, you may also have to pull through demand from the end user. Good luck with that!
This real estate problem forces advertisers to bid up the cost of visibility on the platforms – at least those that have traffic – while lowering their own prices to marginal costs because of competition; a problem that’s made worse by the limited number of platforms, and the existing platforms’ attempts to hinder their own competition.
For many businesses, the answer is to try telemarketing or direct marketing in order go around the platforms and stimulate demand. There are thousands of call centers to choose from, many of which are more than willing to work on a pay-for-performance or pay-per-lead basis using a semi-literate script reader and a high-speed dialer. But trying to get the attention of a real decision maker by reading a script is a fool’s errand. And just because you’re not paying up-front doesn’t mean it doesn’t cost you anything. Most companies end up regretting the time they wasted, the reputational damage, and the opportunity cost even more than the money they threw away on an unsuccessful campaign.
Even worse than the pay-per-lead scam is the siren song of the “guarantee”. The reality is that there are no meaningful guarantees in Marketing insofar as getting sales results is concerned (as opposed to simply “doing something for the sake of doing something”). It’s usually nothing more than cheap insurance – worthless when you go to make a claim. Ponder this: If you’re only willing to pay for a set appointment, and you refuse to pay just for the effort, what’s to stop the agency from bribing a prospect with $250 for a half hour of their time to listen to your pitch (after which they will NOT buy), and then charging you $500 and pocketing the difference? (Nothing.) And he’ll do it because you can’t incentivize him enough to risk his own business on your promise to pay for the leads.
And if you think that setting “lead qualification criteria” is going to help, and you’re only going to pay for leads that meet it, think again. Your agency is far more experienced in gaming the system than you’ll ever be. And they’ll be happy to take your money until you get tired of receiving bad leads. Ultimately, the sad truth is that just because you have to offer your customers a guarantee doesn’t mean your Marketing vendor can or should. But if you insist on it, as many business owners do, you’re usually signing your own death warrant.
And the games that Marketing vendors play to take advantage of customers are endless. Do you want to get a page #1 rank on Google? It’s easy – as long as you define your market small enough (to the point where you can’t acquire new market share beyond your Google-defined competitive geographic boundary). Do you want to get a better response to your emails? It’s easy – as long as you’re willing to get your domain tagged as a spammer (to the point where you can no longer even email your customers). Do you want to get a higher PPC response? It’s easy – as long as you’re willing and able to outbid your competitor (to the point where you have no margin left).
We hear horror stories like this every day from the companies we talk to, and it’s the main reason they fail: Business owners looking for easy answers when it comes to finding new sales – because that’s what everyone promises. So they’re forced into buying solutions that make no sense, and that can never work, and then failing.
The poster child for this is, of course, the concept of a “Marketing Qualified Lead” or MQL, and it’s cousin the “Sales Qualified Lead” or SQL. Developed originally by the CRM providers as a way to help users manage leads, the MQL has become an end in itself for many Marketing departments.
Whether an MQL equates to “waste” is not subject to debate: MQLs are the very definition of waste. Likewise, to give the Sales department veto power over qualification is to, metaphorically, put the fox in charge of the henhouse. So the whole MQL/SQL concept is nonsensical.
3.2 Your Employees Are Part of the Problem
The staggering amounts of money involved in the shift from old media to new has also resulted in an almost complete co-opting of a generation of Marketing and Sales professionals. That isn’t to say that people aren’t entitled to be transactional with respect to their careers, but the lack of accountability enabled by the current system doesn’t stop at the office door.
- Over 60% of Marketing and Sales Managers interviewed by LeadGen.com in 2021 were no longer with the same companies in 2022. In that same survey (covering about 250 firms), over 75% of the companies did not make their revenue objectives in 2021.
- According to a LinkedIn survey, Marketing positions had an average turnover at 18 months of 60%, while sales positions had an average turnover at 18 months of 55% in 2021. Of note: while the more commonly quoted one-year turnover rates averaged 20-25%; the number jumps significantly, in both categories, after a full year on – which is easily explainable by their failure to make quota.
- And the 5-year survival rate for businesses dropped to below 50% for the first time.
Given these observations, the question to ask is whether the high turnover rate among Sales and Marketing personnel is correlated to the high failure rate. And if it is (which it is), is turnover a cause of the high business failure rate, or is it an effect? Clearly, since it’s the job of the Sales and Marketing departments to generate revenues, their failure to effectively accomplish that task has to be the cause of the business failure. And they’re simply getting out of Dodge before it’s too late.
But then, does it really make sense to blame so many different individuals for the failure of so many different businesses? Can they all be that bad at their jobs?
It turns out that while individuals may be competent with regard to their specific function (e.g. Marketing or Sales), as a team responsible for delivering revenue – because it usually takes a team to achieve a revenue goal – they often are incompetent. And we know this because we know, at a detailed level, what most of the companies in our survey have been doing with respect to their Sales and Marketing programs. And it’s not a pretty picture.
The Sales and Marketing functions together often can’t accomplish their mutual revenue goals.
And by the way, if you (as a business owner) think that hiring a Marketing Director is going to solve the problem, think again. They may know everything there is to know about social media marketing, inbound marketing, email, and content marketing. But are they willing to be accountable for revenue? Generally not. Maybe they’ll say they have no control over what the Sales team does with the leads, and you’ll agree. Or they’ll say that their job is to get traffic, exposure, clicks, hits, and downloads, but not revenue. And you’ll agree to that, too, because you don’t know there’s an alternative, do you?
But did you ever think about why turnover among Marketing professionals is over 60% after 18 months? Maybe they know something you don’t.
And salespeople are typically no better. When you hired them, they probably told you that, if you can just get them in the door, they can close anyone, right? How’s that working out? Or maybe they’re generating their own appointments, but they just can’t close them because of the pandemic, or competition, or pricing, or the war, or the weather.
But don’t worry, you gave them enough of a base to hold on for a while, didn’t you?
So maybe you think that hiring a Chief Revenue Officer (CRO) is going to stop the finger-pointing and solve the accountability problem. But do you really think you’re going to be able to find someone who has enough experience and expertise in both Marketing and Sales in your industry to manage both functions effectively, especially when Marketing is actually designed to avoid real accountability? And how is this not just moving the deck chairs around on the Titanic if they’re still playing the platforms’ game?
One thing you can count on, though: As soon as they see that they’re not going to make their numbers, their resumes will be back on the street.
3.4 What’s Really Going On
The reality today is that the platforms, Marketing professionals and the Marketing industry have created a situation that gives business owners the illusion of control, and of the hope of success. And they’ve enabled all manner of agents – digital marketing vendors, software developers, consultants, list vendors, marketing experts, technologies, and even your own employees – to help you play and keep you in the game. But – in most cases – if you play their game, you can never win. You might get by (unlikely, according to the statistics), but the odds are much higher that you will lose everything. The platforms will simply continue to get richer, as they’re nothing more than “arms dealers” – and your business is simply cannon fodder. The Marketing vendors will move on to their next mark. And your employees will get another job.
Oh, and in case you’re wondering who’s paying for all this, it’s not just business owners. It’s the investors (who are often, of course, also business owners). Exacerbated by the staggering amount of money floating around, it’s why the returns on savings and investments are so poor. And it’s why VC firms who used to require that 35% of their portfolio makes money are now grateful if 5% do. But it’s also one reason why wealth keeps concentrating, as only the wealthiest can tolerate such risk levels.
The shortcomings of today’s Marketing and Sales model, which separates the Marketing and Sales functions, are clear and abundant. And it’s the unequivocal cause of the high failure rates. But it comes down to this: If your company is spending a lot of time and money on Marketing initiatives, and those initiatives are failing to produce enough, or good enough, sales leads; and/or if your company is spending a lot of time and money on Sales programs but they’re failing to generate adequate, profitable revenues; you’re not going to fix it by simply appending another promotional activity onto your current, failing strategy. You’re not going to solve the problem by putting lipstick on a pig (e.g. lead scoring). And AI isn’t going to come to the rescue because: 1) it was trained on the same flawed assumptions as today’s conventional wisdom, and 2) the current channel/platform problem isn’t going away without effective antitrust enforcement.
If yours is like most businesses that we talk to, you’re going to have to rebuild your entire go-to-market strategy, from the ground up, based on the Lead Generation paradigm – the missing link between Marketing and Sales.
Because it’s the only thing that can solve the problem.
4 The Lead Generation Paradigm
Lead Generation, or “LeadGen” for short, is a powerful, hybrid Marketing/Sales strategy tasked with creating Qualified Sales Leads (QSLs), thereby filling your company’s sales funnel with viable sales opportunities that have a high probability of closing successfully, relatively quickly, and profitably.
To be clear, Lead Generation represents a different way of looking at Marketing and Sales. But it’s actually an old paradigm, although – for many businesses – it’s one that may need to be resurrected. This is because, planned and executed properly, a Lead Generation strategy can ensure highly profitable revenue and market share growth for virtually any business, at the lowest possible cost and risk, and in the least amount of time.
What makes Lead Generation different from other strategies for growth is that it starts with analyzing a market opportunity and setting a revenue goal. As opposed to the typical advertising, digital marketing or promotional program that may have a goal of generating exposures, impressions, clicks, downloads, connections, click throughs, traffic, attendance, inquiries, responses, appointments, demos, or some intermediate KPI; or a typical marketing campaign designed to establish a brand identity, position a product vis-à-vis competition, create awareness, or educate the market, for example; the goal of Lead Generation is profitable revenue production – often using the Expected Value of the Sales Funnel as an interim metric.
That is, while traditional approaches to Marketing almost universally demur on the subject of accountability for revenue, the Lead Generation paradigm embraces it. For example, instead of a Marketing department ceding responsibility for the achievement of a revenue goal because there are too many uncontrollable variables involved in moving an opportunity through the Sell Cycle, or because the Marketing department typically has no authority to control Sales resources, or because they lack adequate tools or access to the prospect to influence the close rate, the Lead Generation paradigm offers a simple yet powerful set of tools and techniques that enable both the Marketing and Sales departments to exercise effective control and accountability – from the earliest stages of the Sell Cycle to the last.
Likewise, instead of the Sales organization tolerating the production of Marketing Qualified Leads (MQLs) that will likely never close (or even be worth their time), an effective Lead Generation strategy drives the criteria for a “lead” being a Qualified Sales Lead (QSL) back into the Marketing process, and enables only legitimate qualification criteria to be incorporated. As a result, instead of pandering to the organizational gap between Marketing and Sales, or resorting to finger-pointing when the company doesn’t make its numbers, a properly designed Lead Generation strategy enables and encourages effective collaboration between Marketing and Sales, including the rapid debugging and remediation of failing programs without having to assign blame.
Accountability in Lead Generation starts with the Sales Funnel, as originally described by Miller and Heiman in their book “Strategic Selling”, shown above. According to their time-tested approach, there pre-exist in any given market “suspects” who are “above the funnel” (i.e. not yet in it). This can be an addressable market, a list, a target market, a population, the public, or some other pool of potential buyers. By definition, these potential buyers are initially assumed to be unaware of the vendor’s existence, products or value. But through various marketing, promotional and sales initiatives some of these potential buyers (or prospects) become aware of, and interested in, the vendor’s product – or, at least, they’re identified as worth pursuing by the vendor, making them “C prospects”. Then, following a series of steps in the Sell Cycle, and mirrored by the Buyer’s Journey, some of these become “B prospects”. And with yet more work some of these become “A prospects”. And with still more work some of these ultimately become customers.
In brief, what creates accountability in the process, according to the Lead Generation paradigm, is that every prospect in the Sales Funnel must be assigned a Potential Revenue (PR) and a Probability of Closing (PC) once they’ve been identified or, at the latest, once they’ve been qualified. This can be done collaboratively by Marketing and Sales, or by one or the other department. But assigning a Potential Revenue and a Probability of Closing must be done before it can be considered a QSL, and enter the conversation – even if the Potential Revenue and Probability of Closing are low.
The product of these two figures (PR * PC) then creates an Expected Value (EV) which, when tied to an Expected Close Date, and aggregated over all prospects, can generate a highly accurate monthly revenue forecast for the company.
And it is this common sales forecast that the Lead Generation strategy – which should control both the Marketing and Sales organizations – can be held accountable. And, if managed collaboratively (e.g. during regular sales meetings), it is what makes a Lead Generation strategy unique, powerful, self-correcting and effective.
As potent a tool for creating accountability as this linkage of the Marketing program to the Sales Forecast (in the Sales Funnel) is, since a Lead Generation strategy also allows flexibility with regard to the ownership of any given lead at any given time (which can easily be negotiated during regular sales meetings), it leverages resources, it enhances responsiveness, and it prevents opportunities from falling through the cracks. This reflects the fact that the Sales Funnel has traditionally been used as a time management tool by salespeople. And, as such, it acknowledges that there will be times when the sales team, for example, can’t work on particular leads because of other priorities. And so those leads may have to be nurtured, potentially by the Marketing department or a business development function, or by someone else. But this is an easy problem to manage, using load balancing, if (and only if) everyone is accountable to the same revenue forecast.
This is illustrated in the example above. At the beginning of the month, shown on the left side of the table, the Sales team might work on anything that moves. But at the end of the month shown on the right side, when they have to make quota, they may have to prioritize working only on those accounts that are closest to closing. In the traditional model (e.g. where leads only move one way,) accounts JKL, MNO, PQR and STU might be neglected for a while, thereby increasing the probability that they will fail to close successfully. Under the Lead Generation paradigm however, responsibility for moving opportunities through the Sell Cycle switches explicitly and automatically back to Marketing – because neglect or waiting are not options.
This approach, supported by a conventional CRM, can easily ensure that opportunities like these aren’t neglected or delayed because of limited resources, changing priorities, time pressures or misplaced accountability. Instead, it enables the company to dynamically reassign ownership of leads, and continue to move the ball forward with as many prospects as possible, as quickly as possible, as effectively as possible.
Another feature of this approach is that changing lead qualification criteria, driven by changing market conditions, competition, resource availability or clutter in the media might also require that leads get passed back and forth between Sales and Marketing for clearance, for requalification, or for implementation of specific steps that only one or another group can do. While the traditional “siloed” roles of Marketing and Sales, to say nothing of inflexible or one-way lead ownership rules, have difficulty accommodating such contingencies, no less enabling joint accountability for revenue, the Lead Generation model encourages it. This is why this model of Lead Generation is sometimes thought of as “the missing link between Marketing and Sales”.
We’ll come back to the high-level view of Lead Generation later. But next we need to take a deeper dive into the mechanics of Lead Generation.
Under the Hood
Lead Generation is a strategy for sales growth that utilizes the marketing mix, sales and sales management, information technology, media, third party solution providers and other tactics and activities to ensure the generation of qualified sales leads and the production of profitable sales revenue.
But it is not itself a promotional technique. Rather, it represents an approach to managing Marketing and Sales to achieve a revenue result, and not a particular tactic, or even a particular phase in the Sell Cycle.
Importantly, the Lead Generation model doesn’t differentiate between an MQL and an SQL. Rather, Lead Generation seeks to only generate Qualified Sales Leads (QSLs) or opportunities, defined broadly as:
An expression of interest (typically in B2C) by or an appointment (typically in B2B) with a qualified prospect (i.e. someone who potentially has the ability to buy), who has a qualifying need (i.e. a need that you can fulfill), and who wants to talk with you about how you can help. There may also be attributes of urgency, budget and/or authority that contribute to the definition, depending on the situation.
Unlike the binary MQL/SQL concept, the definition of a Qualified Sales Lead (QSL) in the Lead Generation model implies that there may be a spectrum of qualification criteria, which is another advantage of the approach. That is, what constitutes a Qualified Sales Lead can be an expression of interest, or it can be an appointment, in the Lead Generation model. And, in fact, depending on the situation, it can be something weaker (e.g. an “intent signal”, or even a name on a mailing list,) or it can be something stronger (e.g. a confirmed appointment, a BANT, or even an order).
What constitutes a Qualified Sales Lead, in other words, isn’t static in the Lead Generation paradigm, but rather it can also be dynamic, varying depending on a wide range of circumstances, timing and conditions.
This variability associated with changing lead qualification criteria, as well as the typically variable effectiveness of the sales process, both sensitize the Probability of Closing (PC), and can even impact the Potential Revenue, in the Sales Forecast, making it an important yet flexible management tool.
Obviously, activities that increase the Probability of Closing and/or the Potential Revenue are good, and they should be encouraged; while activities that decrease the Probability of Closing and/or the Potential Revenue are bad, and they should be avoided. But the approach enables these to be more effectively managed. Adding “temperature” (which is sometimes used as a measure of the intensity of the prospect’s willingness to pay, or WTP) to the characterization of a lead can provide additional insights into the funnel, as well, further improving management control and results.
With that as background, we can now explore the Sell Cycle and the Sales Funnel in more detail, which will enable us to understand where Lead Generation fits, and how to use it to achieve success.
Although Miller and Heiman conceptualized the Sales Funnel in 1986, many people and companies have customized it to reflect their own view of the sales process, if not to serve an alternative agenda, over the years. After developing many successful marketing, sales and lead generation programs for hundreds of different companies over the last forty years, we’ve settled on a version that covers most situations, particularly in the B2B space, which also by design aligns with several proven approaches to sales training, as well as with recent developments in understanding the “buyer’s journey”.
While it’s not required to hew to this particular version (the specific steps will typically be slightly different for, say, a B2C campaign), the main thing to note above is that the model effectively ties together three of the most important management tools, when it comes to Sales and Marketing, into one framework: the Sales Funnel, the Sell Cycle, and the Buyer’s Journey. This is because they are, in fact, three views of the same process linked, when managed correctly, to the Sales Forecast discussed earlier. (If you can’t link them, it’s a clue that your process will fail!)
We’ll go into more detail regarding how these concepts fit together shortly, but for now it’s important just to get a picture of the general process so that you can understand how and where the Lead Generation strategy fits in, and how it can be leveraged to ensure success.
For example, referring to the Buyer’s Journey above, suspects typically start out as unaware of the Vendor, and unconcerned with what the Vendor can do for them. Moving from top to bottom through a series of steps, usually driven by an increasing awareness of need, and the value that the Vendor can offer in satisfying that need, the Buyer becomes first weakly interested in the Vendor and their products, and then progressively more strongly interested, until the Buyer decides to evaluate and (ideally, from the Vendor’s perspective) approve the purchase.
Driving the Buyer through this process (usually) is the responsibility of the Vendor who executes a series of steps, known as their Sell Cycle, to identify and target potential Buyers, promotes to them in order to create awareness and stimulate interest, qualify them, magnify the need, create urgency, persuade them to buy, and fulfill their purchasing requirements.
This, however, brings us to a core controversy associated with Lead Generation: As you recall, while some marketers equate Lead Generation to the “promotion” step on this diagram, or they use the term Lead Generation interchangeably with advertising, telemarketing, email, pay-per-click or some other promotional technique, doing so is taxonomically and functionally incorrect – and it’s often intellectually dishonest. This is because the output of a promotional activity is, by definition, a promotion; while the output of a Lead Generation strategy is, by definition, qualified sales leads. And the difference could not be more stark.
For example, when expectations are set for a typical promotional program, while it’s often hoped that there will be some positive impact on revenue, it’s almost never directly held to account. At best, there may be KPIs associated with clicks, hits, views, impressions, responses, downloads, or some other metric. But most often it’s simply the placement or insertion that’s rewarded, with a nod to a KPI. Given that these KPIs don’t typically exist on the Sales Funnel or forecast, there’s no way, in the traditional model, to link the promotional activity to the actual production of revenue. (Putting them on the Sales Funnel would actually make the problem worse.) And therefore, promotion can’t be accountable; and second, or third order, accountability doesn’t count.
And it’s also a – if not the – major reason why many companies fail: the disconnect between Marketing and revenue production, as discussed earlier.
On the other hand, the output of a Marketing initiative within the Lead Generation paradigm is, by definition, a Qualified Sales Lead – something that exists explicitly on the Sales Funnel: as a qualified prospect who has a qualifying need, and who wants to talk to you about how you can help. Unlike a promotional tactic, a Lead Generation strategy is therefore specifically designed – by forcing Marketing to participate in the Funnel Management process – to populate the Sales Funnel with opportunities that have an Expected Value, and if it doesn’t, then it has failed; while a promotional tactic is designed to push out message, and it can easily succeed in that role while failing entirely to drive the production of revenue.
While this direct connection to revenue production that characterizes the Lead Generation strategy obviously differentiates it from promotion, other differences show that it’s more than simply a matter of hobbled attribution, or even how one characterizes the output (see the earlier MQL versus SQL discussion). It is, in fact, the entire process of putting together an effective Lead Generation strategy that differentiates it from simple promotion.
Before we explore that process, it’s important to understand how the generation of qualified sales leads (QSLs) fits into the Sales Funnel, and why the approach is so critical, beyond just the benefit of revenue accountability.
First, it should be obvious that in order to generate a qualified sales lead, an initiative usually has to do more than just make people aware, or push out message. Because you’re trying to stimulate interest, get the prospect to want to engage with you, and take some action to move the sales process forward (i.e. you want to create, at least, a C prospect, if not a B or an A prospect), it’s often necessary to understand and target the prospect’s needs, behaviors, and triggers. And in order to activate those triggers, you may need to reposition your product, brand or company. And you may also need to convert that interest into action, which often requires causing a response, which often means justifying their time, overcoming objections and inertia, and triggering a behavior. And the program will almost certainly need to qualify the leads to make sure that they’re worth the salesperson’s time. These issues, though, illustrate that the main impact zone for Lead Generation in the Sales Funnel can be anywhere in the first four, or even first five, steps of the Sell Cycle, shown below, and not just the first one or two.
In other words, a Lead Generation strategy can, and should: (1) create awareness, (2) stimulate interest, (3) get you in the door, (4) qualify the prospect, and potentially even (5) uncover needs. Anything less leaves money on the table, and – more importantly – is a recipe for failure.
The implications of this impact zone, and the accountability of Lead Generation, allude to a point mentioned before. That is, it’s almost impossible to append some random Lead Generation “tactic” to a failing Marketing program and expect it to fix your sales problem (as shown in the Marketing 2.0 View below), because the assumptions underlying the Marketing program are probably wrong. Likewise, investing in a “lead qualification” effort (as shown in the Marketing 2.0 Repair Mode, below) in order to fix bad leads is simply throwing good money after bad.
Rather, if Lead Generation is strategically supraordinate to both the Marketing process and the Sales process, as shown in the Lead Generation Model above, then you have the best chance at success. Consequently, Marketing programs need to be built from the ground up primarily to generate qualified leads, and not just accede to the limits of the media, or demur on accountability. And Sales programs need to be subordinate to the “big picture”, and not have the opportunity to blame their failure on Marketing, timing, competition, price or workload. Thus the Lead Generation considerations either need to precede the development of the Marketing program, or more practically, the owners of the Marketing program and the Sales program need to subordinate their priorities to it.
The success of this approach has been illustrated in hundreds of cases we’ve worked, and companies we’ve been asked to turn around, particularly since the rise of inbound and digital marketing, where a business may have spent hundreds of thousands of dollars on their Web site, SEO, advertising, case histories, collateral material, sell sheets, sales training, pay-per-click, blog posts, LinkedIn connection requests, banner ads, click funnels, conversion pages, content, emails and even telemarketing efforts, only to generate virtually no Qualified Sales Leads whatsoever. Almost to an instance, these programs were developed not with Lead Generation (or even the Sales Funnel) in mind, but as a set of tasks the company believed they should do, either under the misguided influence of a Marketing professional, an employee, platform or vendor, none of whom would ultimately be accountable for sales. And so when they try to tack on a so-called “Lead Generation tactic” to salvage some ROI, it almost always fails – because the pre-requisites and underlying assumptions were fatally flawed.
And to be clear, accountability itself doesn’t solve the problem, as illustrated by the number of catastrophic failures resulting from pay-per-lead programs, commission-only sales reps, so-called “guarantees”, and back-end deals. “Skin in the game” doesn’t guarantee success; it usually just guarantees that a lot of time will pass before you find out that you’ve missed the market. And then your business goes under.
5 Building an Effective Lead Generation Strategy
Developing an effective Lead Generation strategy can be a complex undertaking – not necessarily conceptually (by making Marketing accountable for revenues), so much as because the components needed to build an effective Lead Generation strategy are often not done, or are done poorly, or are done in the wrong order, when developing a traditional Marketing or Sales program.
As a result, you may not be able to just plug in certain critical components, such as a better positioning, value proposition, media plan, or even the proper features and benefits of your product, if you’ve already built your most of your go-to-market strategy on ones that don’t work. You may have too much invested in collateral material, documentation, training, channels and sales decks, for example, and it can be expensive and unpopular to change – even if staying with what you have means failure. (Of course, many marketers, and even many salespeople, are more than willing to fail as long as the job market remains strong.)
Building an effective Lead Generation strategy, though, almost always has to go back to the basics: an identification of the market you want to go after, the specific needs you want to satisfy, and the products and/or services you can sell to differentially satisfy them. Assuming that a reasonable business case (accounting for things like willingness-to-pay, competition, addressable market size, fulfillment cost, etc.,) either formal or informal, can be made for the initiative, the next step is to put together the following:
- Your Pre-requisites, or the foundation or story on which your Lead Generation strategy will be built,
- The Core Components, or the “intellectual assets” out of which your messaging will be constructed, and
- Your Storefront, or your presence on the relevant and available media.
We won’t go into detail here about how to develop each pre-requisite for a Lead Generation strategy, as that’re covered elsewhere. And different strategies may have slightly different requirements. But the foundation on which an effective Lead Generation strategy can be built generally consist of the following pre-requisites:
- Case histories – actual cases, if available, or prospective cases, if not, for your products in use
- Needs analysis – detailed descriptions of the relevant needs, pains, problems, and unmet goals of potential buyers.
- Applications analysis – descriptions of how the product is, will be, or can be used to solve the needs.
- Economic value to the customer (EVC) analysis derived from the applications of the product or service.
- Competitive analysis – Identifying you competitors, and their strengths and weaknesses.
These different documents and analyses enable you to begin to answer some key questions from the prospect’s perspective (which is the only one that matters) such as: (1) Why someone should talk to you, (2) Why someone should meet with you, and (3) Why someone should buy from you. If you can’t answer these questions in a compelling way (persuasive to a disinterested third party) based on these analyses, then the program is very likely to fail.
These pre-requisites enable you to then develop the Core Components of your Lead Generation strategy, which are typically:
- Statements of value proposition
- Positioning statements
- Targeting criteria
- Available media and channels
- Initial benefit statements
- Screening criteria and questions
- Probing questions
- Objections and rebuttals
- Concrete steps in the buyer’s journey
Although some of these Core Components may seem relevant only to a cold calling program or an email campaign, or perhaps to a retail role, it turns out that they apply to any kind of Marketing or Sales campaign that needs to generate qualified sales leads, including digital marketing, content marketing, advertising, networking, SEO, social media or PR, to name just a few. The reasons why should be obvious because of the integration with Sales. But you need to create them all, regardless of the specific promotional strategy you’re planning on using, if you want to be successful.
Finally you need to establish your Storefront, using these Core Components, in order to get in the game. That is, fifty years ago all you needed was a listing in the Yellow Pages, or maybe a sign over the door or a business card, if you wanted to “exist” as a business. Today you need, at least, some of the following to be in the market.
- Web site
- Google Business Listing
- Facebook business page
- LinkedIn Company page
- Social media presence
- Amazon shop
- Email platform
To be clear, building out your storefront does not mean you will get any sales whatsoever – contrary to what the platforms and the marketing profession will tell you – as there are billions of Web sites that get no traffic, millions of Facebook, LinkedIn and Google business listings that generate zero revenue, and billions of social media posts that don’t go viral. Having a presence on the available platforms, even if done well, is just the entry fee. It doesn’t get you on any of the rides.
For that, you need to pay extra.
That is, to get in the game today you need to create your Pre-requisites, you need to build your Campaign Components, and you need to establish your Storefront. Only then can you start promoting your product or business. And while you may be able to do a lot of this preparatory work in your head, without this documented foundation your chances of success will be severely limited. Because only after you’ve built those elements does your “spend” begin to have an impact – with a higher spend generally being more impactful than a lower one. Regardless, without the proper foundation, the spend is usually a waste.
It should be easy to see how you can build an effective B2B cold calling program from these pieces. But if you’re building a Web site, it still needs to answer the question of why someone should buy from you. It needs to show what “needs” the product satisfies. It needs to explain who should buy. And it needs to handle objections. And the same holds for white papers, advertisements, blog posts, emails, social media, trade show booths, Amazon listings, and more. A strategy developed using the Lead Generation paradigm, however, can handle this easily.
Another issue with which companies wrestle is lead conversion. Many programs are designed either without consideration for how leads are going to actually make it into and through the funnel, or how engagement with the prospect is going to be caused (or caused often enough) and qualified affirmatively. And so they fail. In most cases the company will scramble to improve a low conversion rate by trying to tweak a page, a form, a process, a call-to-action (CTA) or some other content. But that also often fails – usually because conversion was an afterthought, tacked onto a marketing strategy or tactic that was flawed to begin with.
In the Lead Generation model however, the conversion problem is solved up-front when you develop the pre-requisites, usually when you’re conducting your Needs analysis (which includes analyzing response triggers and behaviors). Therefore, it can easily be built directly into the strategy, and into its supporting tactics. Much like building a traditional DM/DR campaign, the response triggers and processes are designed in from the beginning, so you don’t have to try to fix something later that can’t be fixed. This results in only qualified leads entering the funnel (instead of trying to fix them later) which is, of course, the entire point of the process.
The same holds for creating urgency, or dealing with the postponement objection in the sales process. If the Economic Value to the Customer analysis was done properly in planning the program, then urgency is created by the mere passage of time and the accumulating cost of doing nothing.
The final consideration for this overview is how the Lead Generation paradigm addresses both failure and success in the remaining phases of the Sell Cycle, i.e. when the lead is in the hands of the Sales team. Lead Generation can identify the decision process and decision criteria up front, so they don’t become barriers later. And regarding the failure of a lead to make it through the funnel, the Lead Generation methodology is designed so that leads can be passed back for requalification, regeneration or resurrection, if needed. And since everyone is working off the same sales funnel, it’s easy – done by simply changing the ownership of the lead, and kicking it back.
Not surprisingly, the Lead Generation model also enables you to know exactly where the process went off the rails, and why – even if it’s due to competition. And therefore, you can usually work backwards in the process, starting from where you recognized the failure, to correct a wrong assumption or other core element; and then move forward successfully.
Likewise, when a prospect becomes a customer, the Lead Generation process can easily be adapted to enable resells and upsells, treating the customer like a prospect again, and validating the cyclical nature of the Sell Cycle.
Contrary to popular opinion in the Marketing industry, Lead Generation is not some tactic you can add to a failing Marketing program in order to save it. Rather, Lead Generation is a fundamental business growth strategy that incorporates, and bridges the gaps between, the Marketing and Sales functions. It represents a different, but reliable and time-proven, paradigm about how business growth is achieved. And, most importantly, and for most businesses who adopt it, it works.