Dude, It's Marketing

Why Demand Generation?

While demand generation is not the marketing buzz word it was a couple of years ago, it still must be the cornerstone of your marketing efforts. But, it is also crucial to realize that demand generation has changed significantly with the advent of social media and the decline of some traditional marketing tactics, like tradeshows and direct marketing.

I use demand generation and lead generation interchangeably quite often but I want to highlight the point here that, whatever the term, this is about more than just generating as many leads as possible. Demand generation is about reaching the right prospects, at the right time, with the right message, to turn them into customers.

Demand generation involves creating awareness of your solution, qualifying the leads, sending the sales-ready leads to sales, nurturing the others by building relationships with them until they are ready to buy, while working with sales to move the qualified leads along the funnel until the deal is closed.

A successful demand generation program combines the appropriate marketing tactics (more on this in a subsequent post) with sales tools and online presences that result in increased revenue for your product of service. Demand generation must be measureable, continually optimized and entirely in sync with the sales objectives of your organization.

If this doesn't sound like the marketing you are familiar with then you need to get with the times. While the program and tactics may change, the need in every organization for demand generation never goes away. In good times and bad. As marketing tactics and technologies come and go. Demand generation needs to adapt but always remain focused on the prize of getting more sales for your product.

The Heart of Lead Generation

Without a doubt the sales funnel is at the heart of lead generation. The understanding of how you move leads through the funnel is crucial to any successful marketing campaign and more importantly to the company's ability to sell more products. But before we talk about that process, the first step is for sales and marketing to work together and define the sales funnel for their organizations.

In general, the stages of the sales funnel may include: prospects, leads, qualified leads, serious opportunities, trials or evals, call-to-close phase and closed deals. And while the concept is similar across most sales processes, it's imperative that each stage be clearly defined and agreed upon by all parties so that it can be consistently applied, analyzed and adjusted as appropriate. Above all else, agreement on the stage where marketing passes leads to sales and the definition of these qualified leads is imperative. I'll have more on that in a subsequent post.

Once the stages are defined, then it's important to understand the number of leads from all prospects (10-20%) and the ratio of qualified leads to closed deals (15:1-20:1) so that marketing can generate sufficient leads to meet the revenue requirements for the year. Of equal importance, you need to understand the time it takes to move from one stage to the next (1 to 2 months per stage depending on market maturity).

While everyone would love these ratios and timelines to be smaller and shorter for their industry, I've seen time and time again that these are quite consistent in technology companies and can be even longer when selling to certain verticals. This means it's pointless to use unrealistic ratios or timelines when planning but only adjust them when you have concrete metrics and evidence built by carefully tracking this information in addition to other ROI metrics.

Since I strongly believe the sales funnel is the heart of lead generation there will be several additional posts on this topic. For now, it's important to understand that the concepts mentioned here are more scientific than most traditional marketers would like to admit so you need to accept them and work for improvement rather than ignore the process.