What Is Demand Generation and Why Does It Matter?

By collapsing demand generation into lead gen, you've mixed up your M&M's
How is this thing called demand generation different than lead gen? And why is that important to understand?

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The term demand generation is often used to describe what we have come to think of as lead generation. And that is creating a great deal of confusion for everyone, from the c-suite to the sales team.

The terms, though related, refer to strategies used at very different stages in the buyer journey. Think of it this way:

  • Demand generation is the flirtation before the date. Its goal is to move the needle from casual curiosity to active interest. Marketing drives your demand. Demand drives your price point.
  • Lead generation is active dating. Its goal is to engage prospects who are actively in market and convince them to seriously consider what you sell. Lead gen is owned jointly by marketing and sales.  How well you do it determines your revenue.
  • Your Sales Pipeline is going steady. Driven entirely by your sales time, the goal is clear. Close deals and win contracts.

What You Lose When You Skip Demand Generation

Because your sales reps are wasting a lot of time on futile sales calls with no hope of closing a deal:

The net result is that all those feel-good KPI’s you’re focused on are misleading you. You’ve got a database filled with people who have a lot of the same characteristics as your ideal customer, except for one. They’re not shopping.

You might as well be trying to find a husband at a convention for happily married men. You might enjoy a bit of fun flirtation, but a diamond ring isn’t likely to be in your future.

Demand Generation Must Come First.

Demand Generation is everything you do to attract the attention of your ideal prospects, engaging their interest in who you are and what you do. You do demand gen every time you educate your prospects about the problems you solve, helping them to realize if and how that problem is impacting them.

Until you accomplish all of these things, there is no lead. Prospects buy solutions to problems. You can only sell to them after they are convinced a problem exists, which means that lead gen is actually the second step.

Without a strong demand generation program, you fill your database with people who have neither the interest nor the the ability to buy from you. Unless you know for certain that there is an opportunity for the lead to invest in your solution within a reasonable time frame, what you have is either a prospect or suspect. You don’t have a lead.

Are You Generating Leads? Or Collecting Suspects?

Your lead generation program should deliver the subset of your ideal prospects who are actively ‘in market’ – meaning that they both acknowledge having the problem you solve and they are committed to solving it at some point within the next 12 months.

Sadly, you’ve been told to follow an outdated playbook that goes something like this:

  1. Pay someone (maybe yourself) to send random cold messages to people who don’t know you, have never heard of you, but look a lot like someone who might possibly need to hire you. Maybe you beef that up with some PPC advertising, or paid LinkedIn outreach.
  2. Use some kind of gated content to extort an email address, a phone number, and if possible, marketing consent from as many people as you can.
  3. Pass all that info to an SDR, who follows up relentlessly to get the individual on a call. At which point, the SDR asks a bunch of irrelevant qualifying questions that do nothing to move the buying process forward but plenty to irritate the prospect.
  4. Pretty soon, your pipeline is filled with opportunities that are stalled somewhere along your sales process. Very little of that is actually closing.
  5. Your sales team is complaining that the leads they’re getting from marketing are garbage.
  6. Marketing shakes their heads and tells you that your sales team needs training.

By collapsing demand generation into lead gen, you’ve mixed up your M&M’s. You’ve got suspects, prospects, and leads all swimming together with no way to tell them apart. All that clutter is clogging up your sales pipeline and getting in the way of closing deals.

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You’ve probably heard the term “demand generation” being thrown around a lot lately. But what does it actually mean? And more importantly, how does it work?

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