B2B Demand Generation Funnel: Definition & Best Practices [2024]

Creating a B2B demand generation funnel for your business is the most important operation, as this can make or break your business.

A perfect demand generation funnel will:

Make your audience aware of your product.
Persuade them to consider your product.
Convert prospects into buyers.
Retain customers.

In this article, we will explain what a demand generation funnel is, its stages, how to create one, and the challenges you might face when creating one.

TL;DR

Every business, no matter the industry, will only be profitable when its demand generation is profitable. Doing demand generation for your business is not optional; it's mandatory.
Converting a prospect into a buyer is an art; you need to get the prospect down the funnel, from making them aware of your product to telling them how it solves their problems so they buy from you.
You should track metrics, such as sales qualified leads and cost per acquisition, to determine whether your demand generation is effective.

What Is a Demand Generation Funnel?

A demand generation funnel is a strategic process that guides potential buyers through stages of awareness, interest, consideration, and decision.

The funnel focuses on creating demand by educating and nurturing prospects at every stage so that they are well-informed and engaged at all times.

Demand generation is so effective that B2B marketing leaders worldwide spend a significant chunk of their marketing activity budget on it.

Time to clear the air.

Some people might confuse demand generation with lead generation, but both are a little different.

The major difference between demand and lead generation lies in their objective and approach.

Demand generation focuses more on building awareness, interest, and long-term relationships with your audience. This awareness might then convert into prospects showing interest in your product and wanting to buy.

Lead generation is more about capturing potential customers' contact information to move them directly into the sales pipeline. It is more of a short-term conversion.

Here’s a table that compares demand generation with lead generation:

👀 Note: In SaaS, you do demand generation for an audience that’s still figuring out the solution for their problem or for an audience that doesn’t even know they face the problem you’re solving. However, you do lead generation for prospects who already know the answer to their problem; they are just finding the right software that can solve the issue.

Types of Demand Generation

There are three major ways you can do demand generation:

1. Inbound Demand Generation

Inbound demand generation focuses on bringing in customers via value-driven resources that align with potential customers’ needs. It focuses on driving high-intent leads, pipelines, and revenue by putting buyer preferences at the forefront.

When we say value-driven resources, we mean:

Blogging
Search engine optimization
Social media content
Webinars
Ebooks

And more such content.

2. Outbound Demand Generation

Outbound demand generation is comparatively a more proactive approach, where you or your team reaches out to potential buyers. You can use techniques like email marketing, cold calling, paid ads, and direct mail to reach out.

3. Account-Based Marketing (ABM)

ABM is a highly personalized demand-generation tactic where marketing and sales teams get together to target high-value accounts. The ABM campaigns are specifically designed for individuals or small groups that are tailored to a very specific pain point.

What are the Stages of a Demand Generation Funnel

There are four stages of any demand generation funnel:

1. Awareness

At the awareness stage, there is a high chance your potential customers might not know you or your product. They might not even know that they have a problem you’re trying to solve.

So, the primary goal at this stage is to increase visibility and make your target audience aware of your existence.

Objective: Get your target audience’s attention so you can introduce your product.
Strategies: Leverage content marketing (blogs, videos, infographics), social media marketing, and advertising campaigns.
Outcome: Generate interest and attract visitors who might eventually become leads.

2. Consideration

In the consideration stage, your audience is aware of the problem they face and is actively looking for solutions. They evaluate multiple options based on features, pricing, pros, and cons. One of the solutions they evaluate might be yours.

Your demand generation efforts at this stage are intended to nurture these prospects by equipping them with valuable information that positions your brand as the best solution for their problem.

Objective: Educate prospects about your product so they know it’s the best solution to their problem.
Strategies: Offer in-depth content like whitepapers, webinars, case studies, and email marketing.
Outcome: Move prospects closer to a purchasing decision.

3. Conversion

At this stage, your prospects are ready to choose a solution. If you’ve nailed the first two stages of demand generation, you will be good here.

The efforts will tip the scales in your favor by explaining to prospects how your product is the perfect solution and better than your competitors.

Objective: Convert a prospect into a buyer.
Strategies: Provide free trials, demos, personalized support, testimonials, and competitive pricing offers.
Outcome: Acquire new customers.

4. Retention

The retention stage is all about keeping your existing customers engaged and satisfied so they don’t leave you and go looking for another solution.

In demand generation, retaining customers is more important than acquiring new ones because loyal customers often become brand advocates.

Objectives: Maintain and build long-term relationships with existing customers.
Strategies: Implement loyalty programs, offer exceptional customer service, send personalized follow-ups, and provide updates and upgrades.
Outcome: Increased customer lifetime value, repeat purchases, and word-of-mouth referrals.

How to Create an Effective Demand Generation Funnel?

There are five steps that will help you transform a prospect into a buyer in your demand generation funnel.

Step 1. Define Clear Objectives and Key Performance Indicators (KPIs)

The first thing you want to do as a business is shortlist a bunch of smart, measurable goals for your demand generation efforts. For this, you must know what demand generation metrics and KPIs to track and analyze.

Best Practices to Follow

Ensure that the goals you set are Specific, Measurable, Achievable, Relevant, and Time-bound [SMART]. Example – Increase qualified leads by 30% in the next quarter.
Your demand generation objectives, such as revenue targets, must be aligned with your business goals.
Compare your KPIs against industrial benchmarks.

Step 2. Understand Your Audience and Develop Buyer Personas

Next, conduct thorough research to know what your target audience needs for your product. You also must create a buyer persona that represents your ideal customers.

The persona will guide your content creation and marketing strategies so that they resonate with your audience.

Best Practices to Follow

Conduct a thorough market research by leveraging surveys, interviews, and analytics. This will help you gather data on customer demographics and behavior.
In your buyer persona, include information like age, job title, pain points, goals, and buying habits.
Always segment your audience. Divide them into distinct groups based on characteristics or behaviors – whatever’s best for your business.

Step 3. Create Value-Driven Content That Aligns with Buyer’s Journey

Content creation plays a major role in how buyers perceive your product. If you’re not able to hook your audience with content (text, image, or video), it's tough for your sales team to convince them to buy from you.

Craft high-quality content that serves your audience irrespective of their stage in the buyer’s journey.

Best Practices to Follow

Use data analytics to determine which platforms your target audience is active on the most and create content to engage your audience there.
Keep your brand voice and messaging uniform across all channels you create content on so you can build trust and be a leader in your industry.

Step 4. Implement Multi-Channel Marketing Strategies to Distribute Content

Content distribution can help boost engagement with half the efforts you put into content creation.

ReferralRock conducted a survey that interviewed marketers worldwide. 46% of these marketers accepted that repurposing content to different channels generated more leads.

Source

Many marketers just stop after publishing content on one channel. Don’t be that person.

Here’s what your approach should look like:

Publish a blog post.

⬇️

Share that as an email newsletter.

⬇️

Repurpose the blog post into short-form content for social media.

⬇️

Create a webinar around the topic.

Best Practices to Follow

Leverage data analytics to determine which platforms your target audience uses the most.
Streamline content distribution and analysis with automation software. Analyze the effectiveness of email campaigns, social media posts, blog posts, and ad campaigns.
Use a mix of paid ads and organic content to maximize your ROI.

Step 5. Nurture Leads and Convince Prospects

Getting leads interested in your product is one thing, but keeping them hooked until they make a purchase is a whole other story.

Lead nurturing is often a time-consuming and difficult process, but it is also a crucial one.

In this step, you must engage your prospects via personalized communication and marketing. You must:

Keep them hooked with content related to your business and product.
Send them target emails to grab their attention.
Talk to them and build long-term relationships.

Best Practices to Follow

Keep your brand voice and messaging consistent throughout the nurturing process across all channels.
Craft a content calendar so as to interact with your prospects consistently and keep them engaged.

Warmly is a tool that can help you nurture your leads and successfully move them down the funnel from consideration to conversion.

It’s a revenue orchestration platform that identifies website visitors, detects their buying intent across channels, and helps convert them via automated, semi-automated, and human-operated functionalities.

You can nurture leads with Warmly via outbound outreach. Here’s how:

See which leads are more active and engage well with your content to try to push them down the funnel first.
Integrate your CRM with Warmly and monitor your leads' job changes to send them personalized emails and LinkedIn messages.
Get notified the moment a prospect clicks through an outbound email and arrives on the site. Chat with them on the site, and when the time's right, transition to video.

What are the Best Demand Generation Tools in 2024?

There are a lot of demand-generation tools. If you go on a hunt, it’s no surprise that you might be overwhelmed with the sea of options you get.

So here are the top three tools we recommend you try to see if they’re right for your business.

1. Warmly

Warmly helps teams see a buyer's journey from start to end and automate engagement with the right prospects at the right time and in the right context. The software gives you access to best-in-class enrichment and intent data to power your automation.

Features

With Warmly, you can identify 15% of contacts and 65% of companies that visit your website. Sync this data back to your CRM to power the rest of your GTM motion.
Get details about the companies ready to buy from you and start nurturing them to convert such companies into buyers via Warmly’s Bombora integration.
Our tool allows you to monitor your prospects’ job changes and send them personalized messages based on their designation.
Warmly integrates with tools like LinkedIn, email, and chat platforms to automate personalized communication across channels. This ensures every prospect interaction is timely and relevant.
By leveraging AI, Warmly orchestrates automated workflows based on buyer intent data. This feature lets you convert high-intent visitors into qualified leads by triggering actions when key decision-makers show interest in your site.

Pricing

Warmly offers a free plan that lets you reveal 500 people and companies on your website every month.

Apart from the free plan, it also offers three paid plans to choose from:

The Startup plan lets you reveal up to 10,000 visitors per month (excluding bot traffic). It also offers 1,000 Orchestrator Credits and 5,000 AI chat credits per month. The startup plan is best for small-scale businesses that want to test the waters with Warmly. The plan will cost you $700 per month.

Next in line is the Business plan that lets you reveal website visitors in the range of 10,000 to 100,000. Perfect for mid-sized businesses, the pricing of the plan changes with the number of users you want to track.

It gives you access to all the features you get with the Startup plan, plus you get a dedicated customer support manager. The plan will cost you anywhere between $1,440 - $1,740 per month.

The last plan Warmly offers is the Enterprise plan, which gives you access to features like advanced Al personalization, customer RevOps buildouts, customer integrations, and more.

👀 Note: All plans are billed annually.

2. Pipedrive

With Pipedrive, you can track your sales pipeline, optimize leads, manage deals with AI, and automate the entire demand generation process.

The software is an old player in the industry and is trusted by 100,000+ companies worldwide.

Features

Offers a dashboard where you can visualize your sales process. It lets you add deals, their value, win probability, and expected close date.
Lets you automate every step in your sales process, from scheduling sales calls to sending them automated emails and follow-ups.
Allows your sales team to communicate directly with website visitors, providing instant assistance and capturing contact information.

Pricing

Pipedrive gives you a 14-day free trial with every paid plan it offers:

Essential: $14 per seat per month.
Advanced: $29 per seat per month.
Professional: $59 per seat per month.
Power: $69 per seat per month.
Enterprise: $99 per seat per month.

3. Leadpages

Leadpages is a lead generation platform designed to create high-converting landing pages, pop-ups, and alert bars to capture leads effectively.

It aims to help businesses grow their demand-generation efforts.

Features

Comes with an easy-to-use drag-and-drop interface that you can use to design high-converting pages optimized for capturing leads.
Allows you to test several page variations to maximize conversions.
Connect with tools like Mailchimp, HubSpot, and Salesforce for lead nurturing.

Pricing

Leadpages offers a risk-free trial for 14 days, after which you must upgrade to one of the paid plans it offers:

Standard: $49 per month.
Pro: $99 per month.
Conversion: $697 per month.

How to Measure Demand Generation Success?

Tracking KPIs and metrics is a must to measure the success of your demand generation. Here are the top demand generation metrics and KPIs to measure to know your strategy’s success.

1. Sales Qualified Leads (SQL)

A sales-qualified lead (SQL) is a prospect who has been vetted and deemed ready to engage in a direct sales conversion with you. They have successfully progressed through the marketing phase and have a clear intent to make a purchase decision.

SQLs are not just interested in your product; they are now ready to have a more focused conversation about how it meets their needs and solves the pain points they face.

You must track SQLs because:

SQLs show a clear intent to buy, and focusing on them shortens your sales cycle.
Your sales teams can focus on prospects who have already gone through the marketing funnel and are now in the decision-making stage.

To calculate SQLs, it's essential to have a clear handoff process between marketing and sales.

The criteria for SQLs should be well-defined, based on both lead scoring and the explicit actions prospects have taken to signal their readiness to buy.

2. Cost Per Acquisition (CPA)

Cost per acquisition helps you measure the total cost of acquisition from a particular campaign or channel.

It mostly tells you how much money you need to spend to acquire a single customer or to complete a desired action (filling out a form, signing up for a free trial, or making a purchase).

Tracking CPA is important for understanding which campaigns or channels get you profitable customers. By tracking CPA, you can:

Better allocate your marketing budget to the most cost-effective channels.
Optimize campaigns with high CPA.
Measure channel effectiveness.

To calculate CPA, use this simple formula:

Common Mistakes to Avoid In The Demand Generation Funnel

It's not rare for your sales and marketing teams to make mistakes when crafting a demand generation funnel. But rectifying them on time matters the most. Here are some common mistakes to avoid when designing your demand generation funnel.

1. Getting Your Target Audience Wrong

Choosing the wrong target audience could significantly negatively impact your demand generation funnel.

Focusing on the wrong audience leads to wasted resources, low engagement, and ineffective messaging.

Isn’t it obvious? 🤷

A misaligned target audience will, of course, have low conversion rates as you won’t have many MQLs and SQLs.

To avoid this, invest time in buyer personas and market research, ensuring your messaging aligns with the pain points and needs of your true potential customers.

2. Poor Lead Qualification

Source

If you aren’t able to qualify leads the right way, it can be bad for your sales team as they will be overwhelmed with prospects who aren’t ready to buy from you or, even worse, not even looking for the product you’re trying to sell.

Refine your lead scoring criteria and align it with your target audience to ensure only high-quality leads progress through the funnel.

This helps optimize resources, improve sales efficiency, and enhance the overall effectiveness of your demand generation strategy.

3. Ignoring Lead Nurturing

Most businesses make the common mistake of not nurturing leads after the initial engagement. Lead nurturing is essential for building trust and guiding prospects toward a purchase decision.

Without it, potential customers will lose interest, drift away, or be swayed by competitors.

To avoid this, implement multi-touch nurturing campaigns through personalized content, follow-ups, and consistent communication to keep your brand at the forefront of their decision-making journey.

Wrapping Up

We hope that after reading the guide, you have understood what a B2B demand generation funnel is and how to create one that gets you millions of dollars in revenue.

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.

Warmly Product Walkthrough