What is Demand Generation?

Demand Generation: Marketing Buzzword or Successful Strategy?

What is demand generation? Whether you’re a marketer or a business owner, you need to know about this important term. Why? Demand generation marketing tactics can positively impact your brand awareness and customer loyalty, ultimately resulting in more sales for your business. 

Demand generation can also help you break free of the “marketing qualified lead (MQL) hamster wheel” that many companies are stuck in. MQL lead targets keep growing and teams do whatever they can to drive more leads, regardless of quality or buying intent. Demand generation tactics break this hamster wheel, creating real demand in the marketplace so buyers see that they should purchase your solution.

So, how can you incorporate demand generation into your organization? Let’s explore how simple strategies can take your business to the next level.

What is Demand Generation?

Demand generation refers to two different strategies: creating demand and capturing demand. But, what does that mean? Let’s dive in.

Strategy 1: Creating Demand

“Creating demand is moving the 95%-99% of the market that is not ready to buy,” says Chris Spellman, Sr. Demand Generation Manager at SPHERE Technology Solutions. “Examples of demand generation tactics are paid social advertising (not direct response), live virtual events, podcasts, organic social posts, PR, etc.” 

Essentially, creating demand means educating the public about a particular problem they have. Using the above tactics, you explain the importance of solving their issue. Then, you’ll explain how your business can help, which results in more sales for your organization.

It’s important to note that demand generation isn’t about forcing demand or tricking people into buying something they don’t need. It’s about providing the right information to the right people at the right time, letting them decide if and when they act on your suggestions.

Strategy 2: Capturing Demand

As mentioned above, creating interest in outside markets is about 95%-99% of the demand generation strategy. So, what about the 5%-1% that’s ready to buy and actively looking for a solution? “Capturing demand is also about moving those who are looking to buy to want to talk to sales,” Spellman continues. “Review sites, retargeting, conversion rate optimization, and — in some cases — Google paid search for high-intent keywords are some examples of how to do this.”

How Does Demand Generation Differ from Other Types of Marketing?

While demand generation might seem similar to other types of marketing, it’s wildly different. We’ll call out two different types of marketing specifically: inbound marketing and lead generation.

“Inbound marketing is a broad term used for any kind of marketing that’s not ‘outbound’ or driven by sales reaching out to prospective customers,” Spellman says. “It could be used to refer to demand generation or it could actually be used to mean the third kind of marketing: lead generation.

“Lead generation is the attempt to drive as many “leads” as possible, even if they are very low quality and rarely become customers. Tactics such as content syndication, eBook downloads, and direct response paid social (trying to get people to download an eBook for example) are common ways to do this kind of marketing. It has very low ROI but gives the illusion of lots of production,” Spellman concludes.

In short, demand generation is the best way to drive higher quality leads. By educating consumers about certain topics relating to your product, they begin to trust your brand. And consumers are more likely to buy from a trusted source.

It’s also important to note that demand generation transcends the traditional “funnel method” widely used in the marketing space. A traditional funnel looks something like this:

Photo credit: SimpliLearn

You may also know these stages as “awareness, consideration, and conversion.” As you can see from the graphic, the traditional funnel features tactics that are tacked onto specific stages. Blog posts are associated with awareness, whereas email is more associated with consideration. As leads get to the bottom of the funnel, they’re more likely to convert. 

The demand generation strategy transcends this funnel. “It focuses instead on creating demand in those who are out-of-market and converting the demand of those in market so they become high-intent leads and customers,” says Spellman.

Demand generation encompasses the awareness and consideration phases, essentially combining them into one step. Once you’ve created demand through content, strategy, events, and other tactics, they become a lead. From there, they converse with sales who are trained to close the deal.

Who Uses Demand Generation?

Demand generation is best for B2B businesses that are targeting enterprise buyers. These concepts are intended for B2C scenarios or B2B scenarios with a low average contract value. For example, if your target audience is only spending $10 per month with your business, this is not the right avenue for you.

What are the Most Common Demand Generation Tactics?

When creating a marketing plan with demand generation in mind, Spellman sticks to a few time-tested strategies. “Tactics such as live virtual events that are recorded, which would feed a podcast, paid and organic social media, YouTube, and even blog posts get the company’s point of view in front of a smaller live audience then a much larger audience through effective distribution. Producing engaging success stories (case studies) and testimonials is also important and has a high ROI. Be sure they show quantifiable impact though and are not fluffy.”

Though these strategies work, it’s important to note that all companies will have different needs when it comes to marketing. “The best place to start is to study the concepts of contemporary demand generation and put together a strategy based on those concepts,” Spellman says. “I’ve greatly benefited from being a member of The Vault from Refine Labs and I’d recommend companies take a look at these resources when building out their strategies. There are also many marketing thought leaders on LinkedIn and podcasts for whom marketers at any stage of their careers can learn.”

How Do You Know If Demand Generation is Working?

Once you’ve put a strategy in place, how do you know if it’s working? Spellman says how you measure will determine what your targets are and whether you’re successful.

“Most companies are overly reliant on software-based attribution,” he says. “This is all click-based and only measures when the prospect clicks. This is valuable data, but misses a large part of the picture. That’s why ‘self-reported attribution’ is so valuable to layer on top of software-based attribution. We are in the age of what some are calling, ‘Dark Social,’ meaning that many buying decisions are happening in Slack communities, via word of mouth, on social platforms (without clicks off the platform), via DMs, etc.

“Self-reported attribution is achieved simply by putting a required ‘how did you hear about us?’ field on high-intent forms,” Spellman continues. “This will tell you what the lead sources are, coming directly from the prospects’ mouths. The data can then be sorted to pull out trends based on keywords within the responses. This is a good way to measure demand creation.”

Start Driving Sales Today

If you’re a marketer or B2B business owner, it’s time to look into demand generation. Applying these simple tactics can help you increase your ROI and your overall bottom line. If you’re looking to break away from the prominent “MQL hamster wheel,” this is your solution.

About the Author

Jessica Kusisto is a Copywriter who is obsessed with learning everything she can about marketing. By day, she works for NgageContent — a totally rad inbound marketing agency. By night, you can find her writing for SMB Catapult, reading, or relaxing with some trashy reality TV.

About Chris Spellman

Chris Spellman is a Sr. Demand Generation Manager at SPHERE Technology Solutions. You can learn more about him here. Also, check out his dystopian fiction novels here.