What Actually Is Demand Generation?
Demand generation is, simply put, data-driven marketing efforts that are focused on creating awareness and interest (demand) in a company’s products or services.
A very common misconception (which is understandable) is to think that demand generation is solely about creating demand for a product or service. While it is definitely a very important aspect of demand generation, in truth demand generation is much more than that.
Demand generation, instead, should cover the whole phases from the buyer’s journey and sales cycle, while optimizing conversions at every step of the journey.
With that being said, demand generation is more about driving long-term engagement rather than short-term demand creation efforts, and a typical demand generation strategy should cover the following series of touchpoints:
- Raise awareness both on the customer’s end (being aware of your solution) and on your end (being aware of the customer’s challenges)
- Establishing credibility and positioning your brand as a credible source of information for their challenges
- Generate leads
- Convince leads to purchase your solution
- Maintain positive relationships to maintain brand loyalty and encourage advocacy
Understanding the long-term aspect of demand generation is very important when planning, implementing and monitoring demand generation. Demand generation is not an instant, short-term fix to increase sales and profits, but rather is a long-term and gradual approach to building valuable relationships with customers.
With that being said, in practice demand generation would consist of various different marketing tactics and channels from inbound marketing, social media marketing (both organic and paid), email newsletters, webinars, and more.
Simply put, the ideal demand generation is about being always available for your prospects and customers, whatever they are doing so your brand can stay top-of-mind as their trusted solution.
Why Demand Generation Is Important for Startups?
While demand generation is very important for any business of various sizes and stages, demand generation is especially crucial for any startup.
Why? Simply put, demand generation is about generating more revenue, and revenue is especially important for startups that often struggle with limited capital and room for growth. By having more revenue, for instance, startups can convince more investors and secure more funding, which can help the business to grow even further.
Demand generation focuses on ensuring that the business’s marketing strategy is effective and relevant. Demand generation would enable the business to access more opportunities by focusing on the whole states of the buyer’s journey, effectively aligning the company’s efforts with the customer’s pain points and needs.
A fully integrated demand generation strategy can help your startup business to understand exactly what your customers are doing at each stage of the buyer’s journey, which can provide valuable insights into the effectiveness of your current strategy.
Ultimately, demand generation can help startups in improving the effectiveness of each touchpoint, allowing all touchpoints to contribute better in generating more revenue.
Three Main Elements of Demand Generation
As discussed, demand generation should cover all touchpoints in the buyer’s journey from the moment a prospect becomes aware of your existence until they’ve made a purchase and even once they’re retained as a loyal customer.
With that being said, demand generation can be divided into three different elements that can be thought of as phases:
- Lead generation
We can define a “lead” as any person who has shown any interest in our brand/product/service that has submitted their contact information to our business. For example, someone who has submitted their email address and signed up to our email newsletter is a lead or a prospect.
So, lead generation is an effort of gaining the interest of these potential prospects and convincing them to submit their contact information (mainly email addresses). Once the email address has been captured in a marketing database, we can then start a lead nurture campaign to guide them through the buyer’s journey until they are finally ready for purchase.
- Demand capture
Demand capture is active marketing efforts (i.e. advertising) that actively target people who are interested in your product or service. For example, let’s say you are a restaurant in New York, and your restaurant is listed as the top result on Google Maps in New York. When potential customer types “restaurant in New York”, they’ll stumble upon your listing and click on it, and in this case, your Google Map listing did not actually generate the demand but capture the demand of potential customers already looking for restaurants.
There are various channels we can use in demand capture efforts from content marketing and SEO to various advertising options to influencer marketing, among others.
- Pipeline acceleration
Pipeline acceleration efforts, as the name suggests, would speed up how prospects move through the buyer’s journey.
There are various techniques we can use here, from email marketing to highly targeted content and other techniques according to their current position in the buyer’s journey, but the basic principle is to maintain positive engagement and nurture their interest level until they are ready for purchase.
In turn, these three elements of demand generation can be put into practice in four main demand generation methods, which we will discuss in the next section.
Four Key Demand Generation Methods
Based on the three elements above, demand generation can be broken down into four manageable methods: brand awareness, inbound marketing, sales enablement, and customer retention.
We’ll discuss them one by one below.
- Brand awareness
Obviously, you can’t generate interests and demands if people don’t know who you are and what products/services you sell. Thus, it’s only obvious that building brand awareness is a core aspect of any demand generation strategy, and should be executed first.
Brand awareness in the context of demand generation can be divided into several steps:
- Branding: building your unique brand identity to differentiate your brand from your competitors. Your branding should also effectively communicate your brand’s values and core messages; how your brand is going to help solve your target customer’s problems. A strong brand can help a lot in ensuring your business stays top-of-mind.
- Identifying your target audience: you won’t be effective in building brand awareness if you don’t know who you are targeting. It’s very important to identify your target audience and understand their behaviors, needs, and pain points so you can tailor your strategy and efforts accordingly.
- Establishing credibility and thought leadership: in this social media age, people will Google any business they are interested in before making a purchase. It’s crucial for your business to strongly establish that you are a credible brand with enough thought leadership in your industry. This is mainly achieved by regularly publishing high-quality and relevant content on various channels (blog posts, social media, podcasts, guest posting, press coverage, etc. )
- PR: you can’t build awareness without public relations. It’s very important to maintain long-term relationships with the press, media, and influencers in developing brand awareness. The goal is to maintain a positive reputation for your brand.
- Brand-building efforts: based on your understanding of your target audience, develop a comprehensive brand-building strategy that can align your brand and offers with your target audience’s needs and pain points.
- Inbound marketing
A very common misconception is to think that inbound marketing is demand generation. However, they are actually not exactly the same.
Instead, we can think of inbound marketing as a part, a very important part that is, of demand generation, but not the other way around.
But, what actually is inbound marketing? How will it apply in a startup environment?
To really understand the concept of inbound marketing, we have to first discuss the counterpart: traditional (or outbound) marketing and its issues.
Traditional marketing efforts like advertising on billboards, TVs, newspapers, and even websites and social media networks are designed to push your messages outwards to reach as many people as possible.
The problem is, these people (your audience) are not actually looking for your ads. They want to watch their favorite TV shows, watch a Youtube video, or read content on a website, so your ads are a nuisance for them. This is why people nowadays are actively using ad-blockers, and even if they are not blocking your ads, we are now trained to ignore advertising, a thing we call banner blindness.
This is where inbound marketing comes in.
Inbound marketing, instead, is about being available for your audience. It is about pulling those who are already looking for information inwards, hence the name inbound marketing.
How does inbound marketing work? Let’s use an illustration to explain this.
Suppose you are a SaaS startup selling an accounting software solution. One of your target audiences is accounting officers in mid-sized companies who often struggle with managing their time.
So, you create content titled “How to Maximize your Productivity as an Accountant”, an informative post with actionable tips (and subtly promoting your product). You also optimize this content using the best SEO strategies.
When searching for information on how to improve their productivity and time management on Google, your target audience stumbled upon your content, consume it, and now they are aware of your existence. Mission accomplish! If you can get them to sign up for your email newsletter, you’ve successfully captured a lead.
So, content marketing and SEO are the two pillars of inbound marketing, and they are especially useful in establishing credibility and thought leadership.
Inbound marketing is effective because you are not disrupting what your target audience is doing.
On the other hand, regularly publishing high-quality, relevant content is the most effective way to establish credibility and thought leadership. Which, as we’ve mentioned above, are also very important aspects of demand generation.
You can use inbound marketing as a lead generation tool by offering lead magnets.
A lead magnet is, simply put, a valuable offer (that is perceived as valuable by your target prospects) that you offer for free, in exchange for contact information (email address).
The typical example is to offer gated content like eBooks, research reports, or white papers that is related to the content the prospect is currently consuming. The reader can only download this gated content once they’ve submitted their email address. For example, if the reader is currently reading a blog post about SEO strategies, then you can offer an ebook offering a more in-depth guide to setup SEO.
However, other forms of lead magnets can also be effective, like discounts, freebies, free webinars, and so on. The basic principle remains the same: the offer must be valuable and relevant for your target prospects.
Once you’ve successfully captured their email addresses, you can then launch a lead nurturing campaign via email marketing to help them progress along their buyer’s journey.
- Sales enablement
Demand generation is not solely about marketing efforts to build awareness and generate leads, but also facilitating the sales team to maximize conversion rate and close the deal.
Sales enablement also helps in ensuring the marketing and sales teams are properly aligned, which is a very common issue, especially in startups.
The basic principles of sales enablement are:
- To convince your target audience that your startup and what you sell is the most viable solution for their problem.
- To make sure it’s as easy as possible to purchase from you.
Quite often, startups put too much focus on the former and not the latter.
Here are some common sales enablement tactics you can try:
- Encouraging positive reviews: social proofs are very important in today’s always-online social media age. People will check your online review before they decide to purchase from you. So, a very important strategy is to encourage existing customers to leave (positive) reviews for your business on your website, Google Maps listing, social media, and other relevant review platforms.
- Educative content: regularly publishing informative content to educate your target audience about the value of your offers. This can include a well-crafted FAQ section on your website, fact sheets, a comparison between your product and your competitors’ products, and so on.
- Well-trained sales reps: it’s crucial to train your sales reps properly so they can always provide well-thought answers for your prospects to clear their doubts. Make sure sales reps are well-equipped with the best possible answers so they don’t overthink or stumble when answering your prospects’ critical questions.
- Case studies: publishing case studies as your content can also be an effective way to establish credibility while also offering an informative piece of content for your target audience.
- Conversion Rate Optimization (CRO): ensuring your website and platforms are as optimized as possible to encourage conversions, like making sure your site loads fast and mobile-friendly, providing a seamless checkout experience, and others.
4. Optimizing Customer Retention
Last but not least, another core fundamental of demand generation is managing customer retention.
It’s crucial to remember that demand generation is not only about acquiring new customers but also about keeping your existing customers happy so they’ll make repeat purchases and you can maximize their lifetime value.
In fact, in some cases retaining existing customers can be more valuable than acquiring brand new customers.
The key in keeping your customers happy is to always deliver your promises (and over-deliver whenever possible) so you can delight them at every step of their buyer’s journey. Also, even if you are a product-focused startup, remember to also focus on providing excellent customer service to maximize their experience with your brand.
Here are some ideas you can use in optimizing customer retention:
- Customer appreciation: the most basic, but arguably most important thing in managing retention is to show your appreciation. This can include sending a thank you and welcome email right after they’ve made a purchase, exclusive offers for loyal customers, and special events, among others.
- Email marketing: email marketing is a great way to cultivate customer retention. You can regularly send emails offering tips and informative content on how they can get more value out of the purchased products/services, and you can also send emails to promote your content or even the launch of new products.
- Excellent customer support: use a support ticketing system so you can effectively manage customer inquiries, and at the same time clients can easily submit their questions and inquiries to you. Also, employ customer service excellence in any interactions with prospects and existing customers.
- Up-sells and cross-sells: look for upselling and cross-selling opportunities you can leverage. If you are using a recurring-revenue model (i.e. subscription-based product), then you should also always be on the lookout for opportunities to offer renewals. You should have a team devoted to finding and leveraging these opportunities so they can help customers in figuring out their needs, especially when renewals are coming up.
- Listen to feedback: demand generation should be a two-way communication, and you should also listen to your customer’s feedback. Use this feedback as valuable insights into how you can improve your product and service. Monitor how people are experiencing your product at every step of the journey, then use the data to deliver better products and services in the future.
- Encourage advocacy: the ultimate objective of demand generation is to have your satisfied customers promote your product/service to their peers (referral), so you’ll get a sustainable source of new demands. In practice, you can run a referral/affiliate marketing campaign to incentivize existing customers when they refer your product/service to others, for example by offering commissions or discounts.
Developing a Demand Generation Campaign for Startups
As discussed, demand generation should be an all-encompassing campaign covering all steps of the buyer’s journey.
Thus, it can be difficult to find out where to start when planning and developing a demand generation campaign.
In general, however, we can develop a demand generation campaign by focusing on five key steps:
- Identifying goals
Yes, the goal of a demand generation campaign might be quite obvious: generating more demands and ultimately revenue.
However, we should also be more specific when defining our objectives: how much increase in revenue are you targeting? For example, if you are targeting an increase of $100,000 in a year, we can reverse-engineer this number so we can identify:
- How many new customers should be acquired? (while accounting the average customer lifetime value)
- How many existing customers should be retained?
- How many leads should be generated? More specifically, how many sales-qualified leads (SQLs) and marketing-qualified leads (MQLs)?
Ultimately by figuring out these objectives, you can also identify what types of marketing campaigns you’ll need to achieve these goals, as well as the marketing budget you should allocate.
- Identifying your target audience
As discussed, your demand generation won’t be effective if you don’t know who you are targeting and how to engage them.
You should develop a buyer persona for your startup, which can also help with your whole marketing campaign. Identify your target audience’s needs, pain points, and objectives, and the more details you can include in your buyer persona, the better.
- Content planning
As discussed above, a huge part of demand generation is about optimizing your content. The content you’re going to develop for your inbound marketing campaign would be the most important, but you should also plan for other stages of the buyer’s journey. In general:
- Content designed for top-of-funnel stages should focus on being informative and establishing thought-leadership/credibility
- Mid-funnel content should focus on educating prospects about the problems they are facing and help them in solving these challenges. You can also offer lead magnet content like ebooks, research reports, and whitepapers at this stage.
- Bottom-of-funnel content should focus on delivering information about your product/service including case studies, testimonials, free-trial offers, and more. The goal is to convince them that your solution is the best choice.
- Planning marketing channels
Here you are going to plan what types of marketing channels you are going to use.
While this might vary depending on your industry and other factors, you should use a variety of different marketing channels in your demand generation efforts: email, social media, advertising, and even offline events.
Again, your marketing channels and campaigns should also change based on the stage of the funnel.
- Monitoring and evaluation
Since demand generation is a long-term and highly complicated project for your startup, it’s crucial to continuously measure all elements of it.
Based on the objectives you’ve identified above, you should define KPIs to track whether the demand generation efforts are on their way to achieving your objectives. Use various analytics tools to track various metrics like customer acquisition cost, cost per channel, number of leads generated, and so on.
While startup demand generation might seem complicated at first, ultimately it is about offering something valuable for your prospects and establishing your position as a credible brand and the thought leader in your niche.
The key to success here is how well you understand your target audience and how you can deliver value to them.