What is demand generation?

 by Lari Numminen.

Demand generation is a systematic approach popular in B2B sales that involves creating awareness and demand for a company's products or services.

Demand generation is a broad concept, encompassing everything from brand awareness campaigns to nurturing leads and converting them into loyal customers.

Simple definition of demand generation

Demand generation is the process of creating interest and awareness for a company's offerings. It's about educating potential buyers about how your product or service can address key pain points - with the eventual goal of helping ideal customers finding value in your products.

Why is demand generation important? 

Traditionally, lead generation has been the preferred way to drive new revenue growth in B2B products and services. The key challenge for lead generation is that studies have found that only 5% of potential customers are ready to buy at any given moment. 

In contrast, demand generation addresses the needs of the 95% of B2B buyers that are suitable potential customers in the long run. Not only that, demand generation is a less intrusive form of sales, allowing potential buyers to evaluate and compare potential solutions to their problems at their own pace and terms.

Demand generation is a complimentary marketing activity to lead generation. The major difference is that lead generation focuses on the activity of converting contacts to leads and then to customers in a linear way. Demand generation is more focused on supporting the buying journey without a transactional conversion path.

Is demand generation just top-of-funnel marketing?

Demand generation doesn't align exactly with the "top-of-funnel," "middle-of-funnel," and "bottom-of-funnel" view of B2B sales. The reason being is that the core way demand generation is measured doesn't align with the linear sales funnel used in lead generation. 

In top-of-funnel marketing, the assumption is that educating potential buyers leads in a measurable way down to more transactional steps of the buying process. In many B2B sales cases, the buying journey is done by a number of people, is rarely trackable from one activity to another and relies to a large extent on unmeasurable word-of-mouth. So, while demand generation and top-of-funnel marketing may both involve educating potential buyers, they don't measurably align in terms of aim and outcome.

Key elements of demand generation

• Target audience identification. The cornerstone of demand generation is identifying and understanding your ideal target audience. Knowing who your potential customers are, what challenges they face, and how your offerings can solve their problems is essential for crafting impactful marketing strategies.
• Content strategy. Content is the lifeblood of demand generation. A robust content strategy involves creating and distributing valuable, relevant, and consistent content to attract and retain a clearly-defined audience. This strategy should align with your audience’s interests and needs, establishing your brand as a thought leader in your industry.
• Branding and storytelling. Demand generation relies on developing the interest of potential customers through original and unique narratives in the places where they like to learn and consume content. This can include events, podcasts and social media.
• Account-based marketing. To some extent, personalized advertisements to educate and inform individual ideal customer personas falls in the realm of demand generation. 
• Buyer enablement. In contrast to sales enablement, buyer enablement is the effort to help a buyer (or buying committee) make educated opinions about different optionsand to find a solution to their unique needs. This can include comparisons of different options, or un-gated product demos or tutorials explaining how a tool can be used to solve specific pain-points.

Using self-reported attribution to measure demand generation

One popular way to measure demand generation is self-reported attribution of any demo requests or contact requests on your website. In practice, this means that you ask high-intent leads in an open-ended way "where they heard about you." The self-reported approach can be very effective to get an understanding of what buyers really consider as the main trigger for demand in a product or service.

Self-reported attribution may differ from conversion tracking data on your website. For example, a website visitor may have come to your website to request a demo by clicking on a branded search term on Google. Your conversion tracking may associate this conversion as "branded search," but the self-reported attribution of the buyer could indicate why they decided to request a demo in the first place. For example, the open-ended question could given an answer like "I heard about this from a friend," or "I read about this in a Gartner report."

Most effective demand generation techniques

Recent research by HockeyStack research looked at over 8000 high-intent buying signals, such as demo requests or contact us form submissions on Mid-market and Enterprise B2B websites.

This is how high-intent buyers assessed the source of demand in products or services:

• 45.3% Search engines
• 19.58% Social media
• 18.11% Word-of-mouth
  ---
• 0.50% Events
• 0.48% Ads
• 0.14% Podcast
• 0.02% Display ads

The key observation here is that search engines remain supreme in influencing demand in the perspective of potential buyers. While social media comes in a good second place, almost half of potential B2B buyers consider search engines as the top trigger for exploring a solution. 

Interestingly, many popular demand generation techniques, such as display advertisements, events and podcasts are not seen as major influencers of demand in buyer's self-reported attribution. While this may not tell the whole truth in terms of brand awareness, there are many outcomes marketers can take from these results. 

FAQs

1. What is the difference between demand generation and lead generation?

   • Demand generation is about creating broad awareness and interest in your products or services, while lead generation is more about converting that interest into actionable leads.

2. How long does it take to see results from demand generation efforts?

   • The timeframe can vary depending on the strategies used and the market dynamics. Typically, it can take from a few weeks to several months to see tangible results.

3. Can demand generation work for any type of business?

   • Yes, demand generation can be tailored to fit businesses of all types and sizes, though the strategies may differ based on the business model and target audience.

4. How important is content in demand generation?

   • Content is crucial in demand generation. It helps in educating, informing, and engaging your audience, thereby building interest and trust in your brand.

5. What are some common mistakes to avoid in demand generation?

   • Some common mistakes include not clearly understanding the target audience, neglecting the power of SEO, underutilizing social media, and failing to measure and analyze campaign effectiveness.