Jon Miller

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Demand Generation Success Center

Demand generation is the function of a marketing department that creates demand for your product or service. This is much more than lead generation, as it also includes the conversations and activities that occur prior to the lead being passed to sales.

Unlike traditional programs that throw any lead over the wall to sales, demand generation involves:

  • Qualifying and prioritizing prospects.
  • Nurturing a steady crop of qualified leads that want to engage with sales.
  • Aligning marketing with sales.
  • Measuring and optimizing the results over time.

What are the differences between lead generation and demand generation? Both are crucial processes to sales and marketing. Lead generation, however, focuses on the “top of the funnel,” driving awareness and leads through inbound and content marketing. Lead generation includes events, blogs, webinars, and other ways of providing content that draws in potential customers.

Demand generation, on the other hand, can be seen as more technical, focusing on lead nurturing, scoring, and measuring Return on Investment (ROI) for analysis.

The Marketing Department = Relationship Builders

As marketing has grown more technology-centric over the last 10 to 15 years, the skills you need to be successful have evolved. In the past, a customer only had a sales representative to talk to, so it made sense for marketers to pass every lead immediately to the sales department. Today, however, is a different story. Analytical, left-brained thinking and writing/communication skills are the two most important assets for cutting-edge marketers.

We live in an age of “information abundance,” where potential customers have access to countless online independent sources such as blogs, review sites, social media, and other networks to gather whatever information they need. In fact, Forrest reports that between 65% and 90% of the buyer’s process is complete by the time they actually want to talk to a salesperson. That fact indicates truly deep changes in how we must market to companies. It means the marketing department is now the relationship department – they’re in charge of the relationship with buyers who are researching the company on their own.

Using Content Marketing to Create Demand

One of the most important ways to create and foster those relationships is by driving awareness and leads through inbound and content marketing.

Effective content marketing is imperative to demand generation because it helps create product demand. In the early stages, free and easily accessible content (including both enjoyable and educational thought leadership) builds brand awareness and increases Search Engine Optimization (SEO). Promotional channels include email campaigns, events, and social media.

Middle stage content includes tools that help buyers find you when they are looking for solutions. This middle stage content plays a critical role in lead nurturing, as it often acts as a sales rep’s proxy when a person is not yet sales ready. In general, all content must be relevant to its audience. If you’re not relevant, people will opt out – if not literally, emotionally.

Content affects demand generation in three important ways:

  1. Lead Generation
  2. Lead Nurturing
  3. Lead Scoring

The key to making your content work is knowing your customers. Know what kinds of questions they ask and what answers they are looking for.

“It isn't about creating a viral sensation, it is about making money. You need to remember that you have to strategically think about, plan, and create content across a variety of media types to make it as simple as possible for your next customer to find you, be turned on about your product, and then buy something. There are no silver bullets, and if you don't take the time to integrate your content marketing into all of your other efforts, the chances for success are much lower.”

C.C. Chapman (@cc_chapman), Author & Speaker

Creating high quality content, however, is not enough. You want your audience to consume that content, and for that content to gather information about your prospects.

“Think of content marketing as a conversation starter – but one that's focused on your customers' needs and opportunities. Once a new prospect engages with content that's relevant to their business or lifestyle, you have a perfect opening to help that prospect understand how you can help them meet their needs.”

- Tonia Ries (@tonia_ries), Founder and CEO, Modern Media

Paid Programs

Paid programs are a way to get your message out to new audiences, often by offering content in exchange for a lead registration. Paid programs can also take the form of events.  What measurements do you use to ensure that your programs are driving business? If you’re spending money to bring in new targets, you want a return on your investment.

One of the best ways to determine cost-effectiveness is by determining the “percent new” of any given program. If 90% of the folks engaged in a program are new targets, that will make the program more cost-effective when it comes to driving new names. If only 10% are actually new and the others are in your database, the program still may be worthwhile for lead nurturing, but it won’t drive “top of funnel” brand awareness.

Marketo secret sauce 21 08It takes great time and effort to drive programs, as not all of our targets turn into opportunities in the same way, or at the same rate. Companies most successful at this type of lead generation essentially “clone” and reuse programs, updating key points and parameters. This practice of “pre-built” program templates allows a company to institute dozens of programs within the same month, thereby increasing the company’s visibility.

Social Media and Lead Generation

Social media, while definitely a tool for lead generation, is not typically a place to generate new sales opportunities. Social media in marketing is a place for nurturing existing relationships.

Jason Keath (@socialfresh), the CEO and Founder of Social Fresh, offers the following best practices:

Use Social Ads

“Social advertising is the secret weapon for any demand generation effort. Social ads give marketers access to more customer targeting data than they have ever had. Ever.”

Social Ads Mean Better Content

“One of the biggest transformations to demand generation in the last few years is the violent merging of content and ads. Paying Facebook or Twitter to put your content in the stream [...] drives more successful results while also pushing marketers to create higher quality content.”

Social Networks Aren't Easy

“You cannot just feed your fans the latest viral videos and funny memes. And you can't go the other way and feature only your company culture or product features. You have to teach them, inspire them, and make them laugh. But you have to do it in a relevant way.”

Lead Nurturing: Treating Customers Like Royalty

Lead nurturing is about maintaining an ongoing conversation with your prospects. In this case, the conversation advances via the marketing assets you use, as well as the way in which your company communicates with prospects.

“Treat your customers who paid money – as well as your information customers – like royalty,” advises Brian Massey, co-founder of Conversion Sciences, a conversion rate optimization company. Here are his tips for nurturing your prospects and customers:

1. Make them experts at solving the problems they have.

2. Wow them with your helpfulness or entertainment value.

3. Invite them to "buy" more.

4. If they aren't in your sweet spot, encourage them to leave your list.

5. Treat them like adults. Don't be afraid to be controversial.

When you decide to treat nurtured leads and customers this way, you turn from inward-facing to outward-facing. This is the most powerful way to approach your online business.

- Brian Massey (@bmassey)

Once the customer (who is already between 60% and 95% finished with the process) is ready to buy, how do you earn their business? At Marketo, only 2% of contacts are ready to be customers the month they begin interacting with the company. It takes an average of four months of lead nurturing to become an actual sales opportunity, which means that about 80% of the leads passed from marketing to sales are “slow leads” (meaning they have been in the database at least one month). By nurturing these leads, Marketo has gleaned 50% more marketing qualified leads at 33% lower cost per lead.

The basic principles of good lead nurturing are predicated on marketing and sales alignment at every stage of what we call a single Revenue Cycle. In today’s web-centric world, where buyers are reluctant to engage with sales until much later in the decision making process, there are three areas where sales and marketing must work closely together:

  • Defining sales-ready leads with mutually agreed-upon lead scoring values
  • Communicating appropriately with customers and in a timely fashion
  • Identifying the lead profile and history with the most value to sales, especially for recycled leads

As we wrote about in the Definitive Guide to Lead Nurturing, companies that excel at lead nurturing see the following benefits:

  • Reduction – to as low as 25% – of the number of marketing-generated leads ignored by sales
  • Reduction – up to 6 percentage points – of “no decisions” 
  • Reduction – of up to 10% – of ramp-up time for new reps
  • Increase – up to 9% – in sales representatives who make quota
  • Increase – of up to 7 percentage points – in win rates on marketing-generated leads

Additionally, anecdotal evidence suggests that nurtured prospects buy more, require less discounting, and have shorter sales cycles than prospects who were not nurtured.

Lead Scoring: Aligning Marketing with Sales

In demand generation, marketing doesn’t only generate new names that may be interested in your organization’s product or service. Marketing also performs triage on those leads, either manually or via a defined business process that identifies leads who are ready for sales’ attention. This assessment may be based on the actions they took to become a lead, the demographics of the lead, or their behavior after the lead is created. This sales ready lead is then passed to the sales department to continue the lead lifecycle process.

Lead scoring is the process of ranking a lead’s level of interest and sales readiness according to a methodology agreed upon by both marketing and sales. Lead scoring means that though fewer leads may be passed to sales, they are of higher quality because of how they have been vetted.

This process is essential to demand generation because, on average, only 25% of new leads are sales ready. Therefore, you need a way to find the hot leads and pass them to sales before a competitor moves in or they go cold. Additionally, a 10% increase in lead quality results in a 40% increase in sales productivity.

Lead scoring is based on whether a person or company is, in fact, part of your target market, as well as the person or company’s interest in your product or service. Like in any good relationship, to make a connection, you need both sides of the equation. Lead scoring also examines where this lead is in the buying stage – is this person interested, and are they ready to make a purchase in a timely fashion?

score demographic secret sauce

After the lead becomes primed for an actual sale, marketing must make the “hand-off” to sales. Keep in mind that wherever two or more departments share ownership and responsibility, conditions are ripe for problems. This is especially true between marketing and sales.

The secret to a truly high-performance revenue engine is the effective use of Sales Development Representatives (SDRs). These individuals have one exclusive focus: to review, contact, and qualify marketing-generated leads and deliver them to sales account execs. SDRs pass the baton from marketing to sales with faster lead response times, a more “human touch,” and improved revenue cycle analytics.

“Lead scoring programs should not lose sight of the goal by overcomplicating the lead scoring model,” advises Adam Q. Holden-Bache, CEO/Managing Director at Mass Transmit. “Including scoring for too many insignificant actions, or over-scoring actions that do not result in lead progression towards purchase, can undermine the success of the program.”

To identify the most effective metrics, he recommends reviewing the leads that are closed by the sales team. What patterns can you establish? What commonalities can you identify from those sales? How can you take that information and use it to generate new prospects? By addressing those problem areas, Adam (@AdamHoldenBache) notes that marketers should expect to find more leads becoming sales ready simply due to a higher quality lead nurturing process.

Once a high lead score is assessed based on these measures, the lead is passed along. Marketo then uses a service level agreement for its Sales Development Reps (SDRs) to ensure that there is “no lead left behind.” An SDR is notified of a lead and is expected to follow up within a day. If that does not happen, the SDR receives a notification. The next day, if there still is no follow-up with the prospective buyer, the notification gets copied to the SDR’s boss. Each step, determined by an internal chart, was created within Marketo to determine that follow-up from sales happens within seven days to achieve optimal results.

Measuring and Optimizing Results: Return on Investment

Marketing impact can be measured. When those in marketing use the right metrics and show that they are having an impact on revenue, it earns the department a seat at the revenue table, which is essential for the advancement of reliability and credibility. To gain that ground, marketing people have to use metrics that executives care about: Return on Investment (ROI).

It helps to frame the ROI from demand generation differently: rather than talking about it as spending, discuss marketing as an investment. When you say, “We’re a department that you should invest in, and that you should expect a return from,” you place yourself in a more powerful position.

Measuring that return on all programs, however, can be difficult. For example, seven interactions between the company and the potential buyer are needed to convert a cold lead into a sale, and there are multiple influencers in each account. Marketo uses an opportunity influence analyzer to track all the interactions with various players.

“If you as a marketer can create trust in your marketing forecasts, that becomes a tool the sales department and CEO can use to help to plan the business. We don’t hire the next sales rep unless there’s enough marketing pipeline forecasts for them to work on. When a marketer can do that, you are truly a key part of the marketing team and that is critical.”

- Jon Miller (@jonmiller), VP Marketing & Co-Founder, Marketo

“As a marketing professional, I need to have direct access to all the points of contact made with a prospect so I can measure ROI. Using social media, traditional banner ads, and email blasts, it's tricky to set up the funnels to track what influences our sales, but it's not impossible. Spending the time to get it set up correctly is an investment that will solve the problem of finding out which marketing channels really do perform.”

- Casey Stanton (@TechGuysWhoGetM), Account Executive, Tech Guys Who Get Marketing

Measuring ROI for all marketing programs can be accomplished effectively by creating high quality content for customers in various stages, focusing on demand generation as well as lead generation, effectively categorizing potential buyers, and treating them like royalty. In these ways, marketing can, indeed, play a large role in – and also forecast – future sales.

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