Lead Generation: The Missing Link between Marketing and Sales

By Jeffrey Josephson

According to the NY Times, over 3,200 venture-funded businesses failed in 2023, losing over $27 billion. Over 70% of PE-funded companies failed in 2022, losing an average of just over $1.3M per company in less than 20 months. And over 20% of all start-ups fail within 2 years. Given the resources and expertise available to these businesses, one has to ask: Why is the failure rate so high?

In working with many hundreds of businesses over the last 35+ years, it’s bcome evident, particularly in the last few years, that most of these companies fail because they are ineffective at Marketing and Sales because they’ve adopted a model of Marketing and Sales – one that has been promoted relentlessly by the digital platforms, solution providers, and the Marketing profession itself – that, in most cases, simply cannot work.

In this how-to guide we examine the specific reasons why so many businesses fail to achieve their revenue objectives, and what you can do to succeed: by adopting an approach to Sales and Marketing that has been around, and working effectively, for over a hundred years.

Why Read "Lead Generation"?

If you're in SALES, you'll learn how to:
Stimulate more interest
Uncover more needs
Create more urgency
Establish more rapport
Build more value
Unhook more competition
Overcome more objections
Shorten your sell-cycle
Increase your win rate
Work less and sell more
And overall: Maximize your performance against quota!

If you're in MARKETING, you'll learn how to:
Get more visibility
Stimulate more inquiries
Create more buzz
Beat the algorithms
Grow your subscriber base
Position more effectively
Generate more leads
Generate better leads
Maximize your conversion rate
And overall: Maximize your MROI!

If you're a BDR, you'll learn how to:
Get past gatekeepers and voice mail
Get more return calls
Stimulate more interest
Prevent rejection
Gain more credibility
Uncover more compelling needs
Escalate your contact level
Increase your conversion rate
Eliminate no-shows
Book more appointments
And overall: Minimize your CPL!

If you're a BUSINESS OWNER or INVESTOR, you'll learn how to:
Grow your revenues "on demand"
Maximize your margins
Penetrate new markets
Raise your prices
Steal market share
Increase resells and upsells
Enhance customer satisfaction
Increase profitability
Develop more effective strategies and tactics
Get better performance from your team
Close the gap between "where you are" and "where you want to be"
And overall: Maximize your ROI!

• Language: English
• Publisher: Lulu.com
• Release date: Mar 7, 2024
• ISBN: 9781304565136

Book preview

Lead Generation: The Missing Link between Marketing and Sales

Jeffrey L. Josephson

Copyright

© 2024 by LeadGen.com LLC

All rights reserved. Neither this book nor any portion thereof may be reproduced or used in any manner whatsoever without the express written permission of the author except for the use of brief quotations in a book review or scholarly journal.

Lead Generation: The Missing Link between Marketing and Sales

Fourth Edition

Copyright © 2024

by Jeffrey L. Josephson

All rights reserved.

ISBN: 978-1-304-56513-6

LeadGen.com LLC

1221 N Church Street, Suite 202

Moorestown, NJ 08057

www.LeadGen.com

856-638-0399

[e-mail]

Lead Generation: The Missing Link between Marketing and Sales

Contrary to popular belief, Lead Generation isn’t some magical promotional tactic that you can bolt onto a failing marketing program in the vain hope of salvaging your investment.

And it isn’t some open-ended process that has to take months to work, only to find out that it didn’t.

Rather, Lead Generation is a high-level go-to-market strategy that integrates Marketing and Sales in a way that can enable virtually any business to increase its sales, its market share and its profitability, which it does through the deliberate, reliable, and cost-effective generation of Qualified Sales Leads (QSLs).

By enabling a business to produce Qualified Sales Leads, a Lead Generation strategy can populate a business’s Sales Funnel with opportunities that have a high probability of closing successfully, profitably and relatively quickly. And planned and executed as described in this book, a Lead Generation strategy can therefore ensure profitable sales and market share growth for virtually any business – at the lowest possible cost and risk, with the least amount of waste and effort, and in the shortest amount of time.

Unfortunately, as a methodology for achieving 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, that a company can add to a Marketing or Sales initiative that isn’t generating qualified leads in order to start doing so, even though it’s probably too late. It’s also sometimes viewed as a catch-all for generating junk. And it’s even thought of as just buying a prospect list, as if that can fix a broken marketing program.

But true Lead Generation is actually a comprehensive business growth strategy that incorporates, and bridges the gaps between, the Marketing and Sales functions – improving the effectiveness and efficiency of both. It’s a reliable and time-tested approach describing exactly how revenue growth can be achieved in virtually any market, regardless of how competitive it is. And, most importantly, and for most businesses that use it, it works.

According to the 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 more grim. According to a January 2022 analysis by CB Insights, 70% of all startup tech companies fail – usually around 20 months after first raising financing. And they take with them to the grave an average of $1.3M in total funding.

Reinforcing this trend, the December 12, 2023, edition of The New York Times reported that over 3,200 venture funded businesses failed in 2023, losing over $27 billion in invested capital. And that’s eclipsed by the thousands of zombies that are still running around.

While creative destruction is a feature of capitalism and not a bug, a 70% failure rate in this group would seem to raise a few questions about entrepreneurial insight, if not the vetting processes of the investors and investment management communities. But it’s especially concerning when one considers the reasons cited for failure. Various analysts place the blame differently at the margins, but the primary reasons mentioned tend to fall into a few 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 one 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.

Having worked with many thousands of businesses over the last forty years, and having spoken to many thousands of business owners, investors, and solution providers, it’s evident, particularly in the last few years, that most of these companies fail, not because there’s no need for their products or services. And it’s not because they have a bad business plan. They fail because they are summarily ineffective at Marketing and Sales. And most are ineffective because they’ve bought into a model of Marketing and Sales – one that has been promoted relentlessly by the digital platforms and the Marketing profession itself – that, in most cases, simply cannot work.

So let’s talk about the elephant in the room.

Setting aside the dubious (and self-serving) explanations for the 70% out-of-box failure rate of PE funded companies above, there are a number of observations that can actually begin to help us understand the problem. For example:

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. And the 5-year survival rate for businesses dropped to below 50% for the first time.

Given these observations, the question one needs 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? Of course, this happens to be one of those questions that answers itself. That is, since it’s the job of the Sales and Marketing departments to generate revenues, their failure to effectively do their jobs 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?

Arguably, they are that bad – at least insofar as generating profitable revenues are concerned. But it turns out that it’s not entirely their fault. We know this because we know, at a detailed level, what almost every one of the companies in our survey has been doing with respect to their Sales and Marketing programs. And it’s not a pretty picture.

Welcome to the New Marketing Matrix

The problem, it turns out, starts with Google, Amazon, Facebook and LinkedIn, along with Twitter (X), YouTube, Instagram, TikTok, SalesForce and most of the other platforms, too. But we need to go back in time to get some context and some perspective before we issue the indictment.

That is, the historical advantage to businesses, in the 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 gated media access. Every business would now 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 though, 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 veritable galaxy of potential vendors and Web sites.

The problem was, of course, that weak anti-trust laws and Section 230, as well as natural selection, allowed Google to dominate the search market. (And, at some point, perhaps some AI platform will do the same.) 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 guessing what would make Google and the other platforms happy, and enable businesses to obtain a position on the first page of search results, to the point where today Search Engine Optimization (SEO), inbound marketing, content 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 demand.

You’re Trying to Play a Game You Can’t Win

The problem is that, for most businesses, none of this works. And the reason starts with 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 online (so they can generate leads) will effectively get none. While it makes you wonder why Google's search results are paginated instead of scrollable, a study by SEMrush in 2022 showed that fewer than 0.6% of sites make it to page 1 for their desired markets because of how Google wires the game.

Even worse is if the potential buyer doesn't know they have a need, as in the case of an innovative solution. What are they supposed to even search on? At least in the days of print you 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 of some algorithm.

But businesses today are forced to play the game, and then they fail.

A similar thing happens with Facebook and the consumer market, and LinkedIn for business. Facebook, of course, dominates the traffic on the Web insofar as personal use is concerned, and LinkedIn for business. And so companies spend billions of dollars on 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) ever get a positive ROI on it. As a fallback offering, these sites are more than happy to sell you their users' data, which businesses are free 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 platform companies rake in each year does little to help the companies who spend it, many of whom slowly and quietly go out of business.

And then there's Amazon, the retail assassin, who exploits businesses with a 40% commission, and the enablement of questionable reviews that skew results such that a business seeking a profit has little chance of thriving. And just as with Google and Facebook, Amazon’s business model encourages their vendors 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 – again – die in a race to the bottom.

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 prices to marginal cost because of competition; a problem that’s made worse by the limited number of platforms, and the existing platforms’ attempts to hinder their own competitors.

For some 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 stuff). And anyone who says otherwise is usually selling you a bill-of-goods. A guarantee is 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. That 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 so-called games that Marketing vendors play to rip customers off are endless. Do you want to get a page #1 rank on Google? It's easy - as long as you define your geographic market small enough (to the point where you can’t gain market share). 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 look for easy answers when it comes to Marketing because that’s what everyone promises, and they buy into solutions that make no sense and that can never work. And then they fail.

Welcome to the new Marketing Matrix.

Your Employees May Be in On It

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, branding and content marketing. But are they willing to be accountable for sales? Of course 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 actually a way to do it.

But did you ever wonder about why turnover among marketing professionals is almost 50% per year? Maybe they know something you don’t.

And your salespeople are no better. When you hired them, they 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 finally, 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 most Marketing programs are designed to avoid any meaningful 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 people see that they're not going to make their numbers, their resumes will be back on the street. But don't worry. It's not you. It's them. Oh, but it's your money.

What’s Really Going On

The reality today is that the platforms and the Marketing industry have created a game that gives you the illusion of control, and the dream 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 are 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, 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.

The shortcomings of today’s digital Marketing and Sales model, which starts by separating Marketing from Sales, 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 a so-called lead generation 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 architecture as today’s conventional wisdom, and 2) the current channel/platform problem isn’t going away without effective antitrust enforcement.

The solution, if yours is like most businesses that we talk to, is that you’re going to have to rebuild your entire go-to-market strategy, from the ground up, based on the Lead Generation paradigm as described in this book.

Because it’s the only thing that really works.

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 and profitably. 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 approaches to Marketing starts with goal setting. 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 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 sales 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 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 latest.

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 something to be a Sales Qualified Lead (SQL) back into the Marketing process. And it enables virtually any qualification criteria to be effectively incorporated. As a result, instead of blaming failure on the organizational gap between Marketing and Sales, or resorting to finger-pointing when the company doesn't make its numbers, an effective 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 is based on the concept of the Sales Funnel, as described by Miller and Heiman in their book Strategic Selling, and shown below in Figure 1. According to this time-tested approach, there pre-exist in any given market suspects who are above the funnel. 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 ideally with still more work some of these ultimately become customers.

Funnel.png

Figure 1 - Sales Funnel

In brief, what creates accountability in the process, according to the Lead Generation concept, 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, as shown in Figure 2, below. The product of these two numbers (PR * PC) creates an Expected Value (EV), which is usually forecastable to be realized at some date in the future, and which, when aggregated over all prospects can generate a highly accurate monthly revenue forecast for the company. And it is this common forecast that the Lead Generation strategy – which should control both the Marketing and Sales functions – can be held accountable. And it’s what makes a Lead Generation strategy unique, powerful, self-correcting and effective.

Figure 2 - The Sales Funnel/Forecast

As potent a tool for creating accountability as this linkage of the Marketing program to the Sales Forecast (in the Sales Funnel) is, because the Lead Generation paradigm also allows flexibility with regard to the ownership of any given lead at any given time, 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.

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Figure 3 - Dynamic Ownership of Sales Leads

This is illustrated in Figure 3, above. At the beginning of the month, for example, the Sales team might work on anything that moves. But at the end of the month, 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, accounts JKL, MNO, PQR and STU might be neglected towards the end of the month; while under the Lead Generation paradigm, ownership of responsibility for moving them through the Sell Cycle would switch explicitly to Marketing. Neglect and waiting are not options.

The Lead Generation approach, supported by an appropriate CRM, can easily ensure that opportunities aren’t neglected or delayed because of limited resources, changing priorities, or time pressures. And 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.

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 ratcheting lead ownership rules, have difficulty accommodating such contingencies, no less enabling joint accountability for revenue, the Lead Generation model encourages it. This is why 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 in a moment. 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. As described above therefore, Lead Generation is a hybrid marketing/sales strategy based on accountability for revenue. It is not a promotional technique. Rather, it represents an approach to managing Marketing and Sales to achieve a revenue result, and it is not a particular tactic, or even a particular phase in the Sell Cycle.

While this model of Lead Generation has been around (albeit neglected) for decades, it has become increasingly important since the advent of the Internet. That is, traditionally Marketing (using techniques such as advertising, print, direct mail, telemarketing, and PR, for example) has been employed for creating awareness, branding, educating the market and, especially, generating leads (or opportunities to sell). And at least in this latter role, advertising, email marketing, and these other promotional programs have typically resulted in the production of two distinct categories of outcome: (1) actual leads, and (2) waste or, more accurately, a negative Return on Marketing Investment.

The concept of waste in marketing was immortalized in the quote attributed to John Wanamaker who said, Half the money I spend on advertising is wasted; the trouble is, I just don't know which half. With the exponential increase in the number of media, channels, platforms, and technologies enabled by the Internet, some of which have been found to be extraordinarily ineffective by their users, many companies have discovered that they can waste virtually their entire marketing budget, resulting in historically high business failure rates. This happens, ironically, even though many of those technologies enable improved tracking and attribution.

This increase in the proportion of waste has led some practitioners to differentiate between a Marketing Qualified Lead (MQL) and a Sales Qualified Lead (SQL). Whether an MQL equates to waste is not subject to debate. MQLs are the very definition of waste.