What is demand gen? And why is it... in Demand?
What does it even mean and why is it now becoming so popular in B2B SaaS?
Firstly, trying to define what demand generation is, may in fact be the fastest way to start a fight between marketers.
Mainly because of it’s definition (or lack there of).
That being said, in the last month I’ve read 50+ articles, 30+ demand gen job applications and spoken to half a dozen demand gen marketers to help get a more collective view on what it actually is.
Emailing giant Mailchimp defines it as:
“The process of creating interest in a product or service with the goal of creating demand. It's a strategy that encompasses all aspects of marketing, from identifying your target audience to nurturing them through the sales process.”
Amazon says it’s:
“A marketing strategy that looks at consumer need, and the product you’re offering, and then finding the perfect way to bring awareness to that product in a way that will hopefully later translate to promising leads”
UK sales & marketing experts Cognism say:
“It’s about stimulating interest in people who know nothing about you. The most effective demand generation strategies concentrate on the problems that prospects face and then supply solutions.”
So basically, this all suggests demand gen is:
Understanding your buyer.
Understanding your buyer’s problems and needs.
Creating awareness of your product to your buyers.
Stimulating interest in your product from those buyers’ problems.
So that they consider purchasing from you when the time is right.
But… Isn’t this just… brand marketing?
Or content marketing?
Or just good marketing in general?
This is usually where the marketing community gets frustrated.
For many - this is just marketing best practice.
Thankfully I could rely on HubSpot for the real answer:
“If you ask 10 different B2B marketers what "demand generation" means, you’ll get 10 different answers.”
😑 Thanks HubSpot…
The confusion seems to stem from a misalignment between marketers and non-marketers.
Brand marketing tends to be viewed by non-marketers as ‘non-revenue generating activity’ - and since a business’s main goal is to generate revenue, many reject it.
Whilst it may not be revenue generating ‘directly’ - non-marketers are beginning to realise how critical it is for long term growth.
Many non-marketers are rejecting ‘brand’ but are chasing ‘demand’…
But if it’s so broad & conflicting - why do companies now… demand it?…
Well the concept is incredibly valuable.
I.e. if you can create demand for your product, it should be easier to sell, at a higher price, thus making it easier to grow your company, right?
With enough ‘demand’ it should only be a matter of time before we’re a unicorn, right?
Conceptually, yes. Practically, it’s a lot more complicated.
Demand generation isn’t as simple as injecting ‘demand serum’ into your market so your buyers suddenly lose their mind and crave your product.
Demand is not transactional, nor binary.
If it was, then the ‘demand serum’ sellers would be the real unicorns.
It’s more about ‘uncovering’ the demand in your market by creating more awareness on what your product is and why it is so important to people like them.
It’s about educating them on the problem and solution, so they begin to trust you and eventually look at you as the obvious solution.
Yes it’s just ‘good marketing’ - but it’s good marketing that focuses on buyers early with the intent to influence, not convert…
What’s the difference between Demand Gen & Lead Gen?
Demand generation (understandably) often gets confused with lead generation.
But what many companies typically call ‘lead gen’ is actually ‘demand capture’.
I.e. Companies want to quickly scoop up a heap of quality leads who are eager to check out their product, and potentially purchase.
The problem is, less than 3% of your market are ready to buy and 82% of those will choose a brand they already know and trust (i.e. demand gen). (stat source: Forrester)
So with this math in mind, ‘Demand Capture’ (a.k.a. traditional lead gen) alone will typically have a dismal success rate of 0.54% (or 1 in 185)… If you’re lucky!
The key takeaway here is - you can only generate a ‘quality’ lead if there is first demand to capture.
Or else you’ll be stuck capturing leads who don’t understand you, don’t see your value, nor your product’s relevance to them.
For simplicity (and the Market Science definition) we will define this relationship as:
(Real) Lead Generation = Demand Generation + Demand Capture.
So put simply:
Demand gen is marketing to those who AREN’T buying.
Demand capture (a.k.a. lead gen) is marketing to those who ARE buying.
Which is why it’s so important to define specifically who your buyer persona is, what their needs are and what their buying signals are.
So we know when to transition from demand gen to demand capture. (More on that in a future post).
This is also why your product’s positioning and messaging are so critical!
But regardless of the process, the fundamental truth still stands:
Demand capture can only occur where demand exists…
Then why is Demand Gen so popular in B2B now?
Well for years B2B companies have spent a lot of time and money trying to ‘capture demand’.
Heaps of paid ads, outbound emailing, events and SEO focused on pushing people to purchase, or (for sales-led companies) to book a demo.
Which is understandable since that is the ultimate goal, right?
That’s the influx of leads from the market we all want to grow our business, right?
The problem is, companies are now starting to accept what marketers have been ranting about for years…
“less than 3% of B2B markets are ready to buy and 82% of those will chose a brand they trust and have been influenced by previously”
After years of low quality leads, low sales and consequent low growth - attention is now looking back upstream to where the problem is and where investment is better spent.
I.e. getting to them early to make them love you, so they come to you when they’re ready.
Focusing only on demand capture and conversions, can tend not lead to more demand capture and conversions…
Particularly for B2B companies who have more complex products and more complex sales processes.
For ecommerce and simpler B2C buying processes, generating interest to conversion can potentially be done in a matter of minutes.
I.e. Here’s a cool looking hat… It’s $29… want it?
But B2B is very different.
Pushing harder for the conversion when buyers aren’t ready has been proven to lower conversions and lead to more closed lost deals (source: The book JOLT effect. More on that here).
B2B products are about changing an internal process within their business, not selling a product.
This sort of change needs to be de-risked and only considered when the company is ready.
It is extremely hard to force this pre-maturely.
What’s more powerful and more effective, is spending time and money reaching your market, generating interest and trust (i.e. demand) so when the time is right - you become their first choice.
B2B buying cycles rely heavily on timing - timing of budgets, timing of peak pain point, timing of industry trends, etc.
Building a community is a great method of demand gen (more on that here).
So how should we go about Demand Gen?
Well that’s a big question, and one for a future post. But in a nutshell, it means we need to target both buyers and non-buyers to:
Engage.
Educate.
Build trust.
And nurture our audience.
As early as possible!
It means we need to create ways that:
Let your buyers know you exist and what it is that you do (clearly and compellingly).
Help your buyers deeply understand the problem you solve and how it effects their business. The hidden inefficiencies that exist now, and in the long-term.
Help build trust and confidence by showing them your expertise in solving these problems. Helping solve their problem, before your product.
Provide valuable invitations to see examples of how your product can solve these problems. Give them a LEEP (more about the LEEP here).
For example, I previously worked with a company who tried incredibly hard with outbound lead gen (i.e. demand capture only):
Their product was still quite early for their market.
They tried many versions of highly targeted email outreach.
They tried multiple messaging iterations to their ideal customers.
They tried many different tactics to help book meetings.
Ultimately the results were low and exhausting (bad ROI).
So instead we switched it up. We started inviting people to a monthly webinar series where we interviewed people in similar roles to them to share advice:
We started getting much higher engagement rates.
We began to book regular webinars with 150-300 people each session.
We gained heaps of insights about their needs and problems in this space.
We began to see them invite their colleagues and contacts to the sessions.
It is now one of the main entry points for their market.
It now produces regular inbound leads, and a list for targeted outbound for the sales team.
So, if you have demand, and are able to capture quality leads and convert them regularly - then great! You’ve clearly done your go to market and product-market-fit well.
But if you don’t have this - you may need to work on your demand generation.
You may need to start being far more influential to create demand so that you have a chance with the 82% of buyers who choose the product that has pre-influenced them.
That is why the idea of demand gen is now both growing in popularity.
If you are a SaaS company who wants to work on their demand generation strategy - click here to book a quick discovery session with me to see what might work for your buyers!