Demand generation is the entire marketing and sales strategy that you and your business use to move your target audience down the funnel and convert prospects into buyers.
It’s no secret that demand generation is tough. In this process, you have to convince people that your product or service is the best solution to their problems.
There’s no shortcut you can take with demand generation. You have to create a funnel that drives revenue, or your business might die.
TL;DR
Read these pointers if you don’t have the time to read the whole guide:
- Demand generation is a marketing approach that organizations use to create awareness, interest, and desire for their products or services.
- There are three phases of demand generation – awareness, brand activation and engagement, and conversion and optimization.
- Moving a lead down the funnel is an art. You have to capture the interest ⏩ nurture the captured prospects ⏩ convert them into opportunities ⏩ close the deals ⏩ retain and expand.
- To know if your demand generation is working, track KPIs and metrics like the number of opportunities generated, customer acquisition cost, sales pipeline value, and more.
What Is Demand Generation and How Does It Differ from Lead Generation?
Demand generation is a marketing approach that organizations use to create awareness, interest, and desire for their products or services.
It focuses on driving demand by engaging the target audience, educating them via value-based content, and establishing your company as a trusted authority in your market segment.
There are many tactics marketers use to generate demand:
- Content marketing.
- Brand awareness campaigns.
- Lead nurturing.
- Email and ad campaigns.
- Etc.
With demand generation, you can successfully qualify leads, push them to your sales pipeline, and try selling them your product.
However, executing a demand generation strategy accurately requires your sales and marketing teams to work in tandem so that the interest generated is efficiently converted into revenue and long-term relationships.
Difference Between Demand Generation and Lead Generation
Marketers often use demand generation and lead generation interchangeably. But they are not the same thing. Here are the differences you must know about:
1. Both Have Different Purposes
Demand generation is all about creating awareness and interest. It aims to attract a broad audience by positioning your product as the best solution for their pain point.
The primary purpose of demand generation is brand awareness and thought leadership.
Lead generation focuses on getting contact information from prospects who have shown interest in your product.
The purpose of lead generation is to convert these prospects who are aware of your product into buyers.
2. Both Engage Different Types of Audiences
Demand generation focuses on engaging a wider audience, mainly with ungated content (blogs, videos, images, etc.), as it helps build trust and brand authority.
Lead generation starts further down the funnel, often with gated content (white papers, eBooks, etc.), which requires users to provide their contact information to access.
3. Both are Associated with Different Stages in the Demand Generation Funnel
Demand generation takes place at the top of the marketing funnel, where the focus is on generating interest among a broader audience. It’s about educating potential customers and building long-term brand loyalty.
Lead generation happens after interest has been established further down the funnel. It works to capture qualified leads that can be nurtured into making a purchase.
When it comes to running a business, both lead generation and demand generation work in tandem. You can’t move your target audience down the funnel without doing both.
The Three Phases of Demand Generation
In a B2B demand generation funnel, there are three phases that serve as the key stages through which prospects move from initial interest to becoming loyal customers.
1. Awareness
The primary goal of the awareness phase is to increase brand visibility and market presence among your target audience.
At this stage, your prospects might not be aware of your brand and the solution you offer.
The focus in this stage is mostly on educating your target audience about the pain points and sharing content that surrounds your product.
You can do so with multiple content types:
⏩ Blogs.
⏩ Social media posts.
⏩ Videos.
⏩ Thought leadership pieces.
To know if your awareness stage is going as expected, track KPIs and metrics like website traffic, social media engagement, content views, and more.
2. Brand Activation and Engagement
In this phase, the goal is to deepen engagement with your audience who knows about your brand. With deepened knowledge, you can persuade your audience to take some sort of action – downloading gated content, attending a webinar, or anything else.
If you decide to go down the route of content marketing, this phase relies heavily on gated content.
Generally, you might end up using channels like:
⏩ Email marketing.
⏩ Personalized webinars.
⏩ Case studies.
Track KPIs like lead capture, lead engagement, email open rates, and more to measure brand activation and engagement.
3. Conversion and Optimization
This final phase focuses purely on converting leads into paying customers. At this stage, the marketing and sales teams align their efforts to ensure that the prospect is ready to purchase from you.
You can do so by lead scoring, personalized demos, free trials, and retargeting ads.
👀 Note: At this point, your prospect should be fully aware of the brand’s solution and see you as a top contender.
KPIs to track:
📊 Conversion rates: The percentage of leads that take a desired action, like filling out a form or making a purchase.
📊 Deal velocity: The speed at which potential deals move through the sales pipeline, from lead to closed deals.
📊 Customer acquisition cost: The average expense incurred to acquire a new customer, including marketing and sales costs.
📊 Customer lifetime value: The total revenue expected from a customer over the entire duration of their relationship with your business.
The Best Demand Generation Channels You Need to Know
There are many channels you can leverage for demand generation, but here are the three best channels we think can help you the most.
1. Thought Leadership Content
Thought leadership content is used at the top of the funnel in demand generation to build authority and act as a credible source of information for your target audience.
Since demand generation is all about building brand awareness, thought leadership pieces clubbed with the right SEO strategy can go a long way.
With thought leadership content, you can show your target audience that you’re an expert on the topic and really understand what problems they are facing. More importantly, you know how to solve them.
If your content is highly valuable, and your customers resonate with what you have to say, there’s a high chance of your audience converting into a marketing-qualified lead.
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2. Webinars
Webinars help you engage with your audience in real-time, thus increasing the chances of their conversion. By hosting webinars, you can educate your prospects about industry trends, pain points, and specific solutions.
Webinars are also a great way to demonstrate your product live so that prospects can see how effectively your solution solves their pain points. This hands-on experience is a pivotal asset in a buyer’s journey.
Choosing a specific topic for a webinar is super important. To choose a topic, look at what your prospects are talking about on social media channels and forums.
3. Email
‘Email marketing is dead’ – we’ve been hearing this for a decade or so, and still, 50% of marketers say it’s the most effective channel for demand generation 🤷.
This proves that email marketing has never been more alive.
Source
However, you must be careful when doing email marketing. Sending bulk, generic emails might just land your messages in the spam folder, or even worse, Google can block your email ID.
When creating an email campaign, keep these three principles in mind:
✅ Frequency: Start slow and slowly ramp up the number of emails you send out, or you will definitely end up in the spam folder.
✅ Segmentation: Always segment your audience and send each segment a personalized email. This will keep your emails relevant and increase open and click rates.
✅ Call to action: Ensure that every email you send out has a clear call to action at the end. This will simply help you increase conversions.
How Do You Move a Lead Down the Demand Generation Funnel?
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Here are the five steps that help you move a lead down the demand generation funnel:
Step 1: Capturing Interest (Top of Funnel)
This stage is all about attracting and engaging your audience.
When capturing interest, make sure that your messaging addresses the pain points of your audience and, if possible, try introducing your product as the solution.
Tracking metrics like website traffic and content engagement at this stage helps a ton.
Step 2: Nurturing Captured Leads (Mid-Funnel)
After capturing interest, your goal should be to nurture the captured leads by taking engagement a step further. You can nurture leads with lead magnets like eBooks, case studies, webinars, etc.
What’s more, personalize the experience with tailored content and follow-ups to foster trust and build stronger connections.
Track metrics like content downloads, webinar attendance, and email engagement rates.
Step 3: Converting into Opportunities (Bottom of Funnel)
When you’re at this stage, prospects should be qualified and ready to engage with your sales team.
Use targeted strategies like personalized demos, free trials, and retargeting ads to drive conversions. Lead scoring becomes critical to ensure only high-potential leads move forward.
The aim is to transition leads from marketing-qualified to sales-qualified, monitor opportunities, and track KPIs like conversion rates and sales appointments.
Step 4: Closing the Deal (Sales Alignment)
The marketing and sales teams collaborate here to convert qualified leads into paying customers.
Sales teams leverage marketing insights to offer personalized outreach, address objections, and provide final incentives like discounts or exclusive deals.
Step 5: Retaining and Expanding (Post-Sale)
After closing the deal, focus on customer retention and expansion. Nurture customer relationships through onboarding, personalized follow-ups, and customer success initiatives.
Continuously engage clients with product updates, exclusive offers, and value-added content.
You must aim to increase customer lifetime value and generate upsells with KPIs like customer satisfaction, retention rates, and expansion revenue.
Demand Generation Metrics to Track in 2024
1. Number of Opportunities Generated
The number of opportunities generated is a demand generation metric that tracks the total number of sales opportunities you can create in a specific time period.
These opportunities are qualified leads who have shown significant interest in your product and have entered your sales pipeline as prospects.
Why Track the Number of Opportunities Generated?
- Tracking this KPI lets you assess the success of your marketing campaigns and determine whether you need to tweak them to achieve maximum effectiveness.
- Knowing the number of opportunities generation can help you pinpoint which marketing channels or campaigns have brought you the most leads.
Calculating the number of opportunities generated is a simple addition:
2. Customer Acquisition Cost (CAC)
CAC measures the total cost incurred by your business in acquiring new customers. It takes into consideration all the expenses related to marketing and sales efforts aimed at converting prospects into buyers.
These costs can be:
💰 Advertising spend.
💰 Marketing campaigns.
💰 Teams salaries.
💰 Software.
Why Track CAC?
- CAC can help you allocate your budget effectively as you know how much it costs to bring in new customers.
- By comparing CAC to customer lifetime value (CLTV), you can assess the profitability of their customer acquisition strategies. A lower CAC relative to CLTV means a healthy ROI.
Here’s the formula to calculate CAC:
3. Sales Pipeline Value
Sales pipeline value represents the total potential revenue from all active deals and opportunities that are currently in your sales pipeline. The metric quantifies the monetary value of your prospects at different stages of the sales funnel.
Why Track Sales Pipeline Value?
- Tracking sales pipeline value will help your business predict future income based on the potential deals in the pipeline.
- It enables your sales team to prioritize high-value opportunities and allocate resources more effectively.
You can calculate this metric in two different ways. Here are both the formulas for doing so.
Common Mistakes to Avoid in Your Demand Generation Strategy
When creating a demand generation strategy, mistakes are bound to happen. But rectifying them before it’s too late can save you from a big mishap. Here are some common mistakes you must avoid.
1. Over-Focusing on Vanity Metrics
In demand generation, it’s often tempting to fixate on vanity metrics. Numbers like website traffic, social media following, email open rates, etc., might look impressive, but they offer little insight into actual business performance.
Keeping your eye on such metrics all the time might just divert your attention from more important metrics such as conversion rates, customer acquisition cost, customer lifetime value, etc.
To avoid this mistake, prioritize actionable metrics that align with your business objectives so that your demand-generation efforts drive real results.
2. Neglecting Lead Quality
Blindly generating a large number of leads is a bad idea. There’s a difference between a lead and a high-quality lead. So keep in mind that quantity doesn’t guarantee success.
The leads you generate must be qualified enough to resonate with your product and eventually buy it. Poor-quality leads often overwhelm sales teams and reduce their efficiency.
Lead quality is directly related to the quality of your demand generation funnel.
If you create high-quality content that explains to your target audience how to resolve their issues, you will generate high-quality leads that have a higher chance of converting.
3. Misalignment Between Marketing and Sales
When your sales and marketing teams are not on the same page, your demand generation funnel will not work as you want it to.
When both these departments work in silos without a shared goal, you often face issues like:
❌ Inconsistent messaging.
❌ Mishandling of leads.
❌ Losing revenue opportunities.
Maybe your marketing department is generating leads that the sales team deems unqualified. This disconnect hampers both teams' effectiveness and undermines the overall strategy.
To avoid this mistake, ensure that your sales and marketing team collaborate when generating demand for your business.
Establish shared metrics to track, open communication, and join planning sessions.
Best Practices for Scaling Demand Generation
✅ Define clear objectives and KPIs: Set SMART goals for all your demand generation efforts and identify the KPIs that will make or break your business.
✅ Buyer persona and market research: Craft a detailed buyer persona to capture the demographics, behaviors, pain points, and motivations of your ideal customers.
Conduct market research later and analyze customer data to refine your understanding of your target audience.
✅ Create quality and valuable content: For every stage in the demand generation funnel, create high-quality content that educates, informs, and solves your audience's pain points.
✅ Multi-channel marketing: Use a mix of channels, such as email marketing, social media, SEO, and ads, to impact your demand generation efforts.
But don’t get into all the channels at once. Start with a couple of channels and scale as you grow.
✅ Nurture leads through the sales funnel: Craft lead nurturing campaigns that give your prospects relevant information about your brand in every stage of the funnel.
A good practice is to use segmentation to tailor messages to different audience segments based on their interaction.
Boost The Demand of Your Business with Warmly
We hope that this demand generation guide helped you understand how to get started and excel at demand generation. If you want a tool to help you with things like:
- Prioritizing leads to focus on.
- Engaging and nurturing leads with automated campaigns.
- Enable reps to reach out to hot leads straight from your website.
Sign up to Warmly.
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