It’s all about time, patience and quality over quantity
It’s no secret that B2B buyer behavior is changing. They’re increasingly turning to online channels during the buying process, spending just 17% of their time meeting with sales (Gartner). That’s why companies are evolving lead generation tactics to focus on a more holistic demand generation approach.
Demand generation activities place more emphasis on providing value before the sales pitch to build trust with prospects. Building that trust now won’t generate an immediate sale, but the payoff comes down the road once they’re ready to buy.
This is a big shift in mindset for organizations that have been laser-focused on chasing leads. We often see companies make three common mistakes when it comes to demand generation. Let’s dive into what they are so you can learn how to avoid them.
Mistake #1: Not building out the demand generation engine because the company is so focused on chasing leads.
Old habits die hard. Many companies are so focused on chasing leads that they miss a more important question: just how valuable are the leads they’re pursuing?
Research shows that only 10%-15% of leads will ever convert (Belkins). So if you’re only chasing leads, then you’re missing out on an opportunity to connect with a much larger audience of potential buyers. They may not be ready to purchase your product right now, but you can’t afford to ignore them. Because if you build brand awareness with those buyers today, they’ll be more likely to come into your pipeline when they’re looking to buy.
This doesn’t mean that you need to sacrifice lead generation in favor of demand generation. It just means that your lead generation activities should become part of a broader demand generation strategy. One that aims to reach prospects at all stages of the buying journey – not just those who became a qualified lead.
Mistake #2: Not giving demand generation programs enough time to get traction.
Chasing leads is a short-term game, but building demand takes time. So moving from a lead-generation mindset to a demand-generation one requires patience.
“You can’t build a following and generate brand loyalty and affinity overnight,” says Deanna Shimota, Founder and President, GrowthMode Marketing. “For companies with declining sales or stalled growth, it can be tempting to turn back to chasing leads. But playing the long game is really a matter of prioritizing lead quality over lead quantity.”
Let’s take a look at two scenarios that illustrate the difference between lead quantity and lead quality.
|Scenario 1: Focus on lead quantity
An HR technology company recently launched a new product that’s driving aggressive growth goals for the business in 2023. But sales have been slower than expected, and the sales team is under pressure to improve results quickly. So the marketing team builds a lead generation campaign to drive increased leads. They identify the leads that have interacted with content from the campaign and pass them off to sales for follow-up.
But the sales cycle is slow. Many deals stall or fall out of the pipeline and the win rate is low. Why? Because many of these “warm” leads from marketing aren’t in-market yet. They just wanted to read some good content that helps them do their job better. Sales has spent a lot of time chasing these leads, trying to convince them that now is the time to buy. But their efforts are ignored because the buyer simply isn’t ready yet.
|Scenario 2: Focus on lead quality
An HR technology company recently launched a new product that’s driving aggressive growth goals for the business in 2023. But sales have been slower than expected, and the sales team is under pressure to improve results quickly. So the marketing team builds a demand generation strategy to drive brand awareness and nurture a relationship with potential buyers at each stage of their journey.
Marketing tracks several touchpoints with different types of content that indicate which prospects have likely moved into a decision-making stage. They identify these leads for sales follow-up, and the company sees a much higher win rate. Why? Because sales focused their efforts only on those leads that were most likely to convert. And the lead-scoring process didn’t just evaluate who looked at content, but at whether they were ready to buy.
This is how an effective demand generation strategy can boost lead generation efforts – not with more leads, but with the right leads. And getting the right leads takes a bit more time. Because you’re following prospects along their buying journey rather than trying to force a sale before they’re ready. The beauty of this approach is that sales can now focus their time on the leads that really matter. So it’s worth the marketing team’s extra time and effort with lead nurturing.
Mistake #3: Reluctance to invest in important marketing tactics because they cannot be easily measured with traditional metrics.
Because demand generation is a long-term strategy, companies need to re-think their approach to marketing measurement. Clicks and conversions are still important, but those metrics won’t reveal the lift you’re getting from your demand generation efforts. The reason for this is that most traditional lead generation metrics are tied solely to sales.
But once you’re focused on generating demand, there are lots of activities driving engagement with potential buyers that won’t be represented in sales-driven data. For example, it can be difficult to determine that a podcast is the reason someone entered your sales pipeline. Someone can listen to the podcast without registering for it, so you can’t track who engaged with this content. But it can have a major influence on getting people to raise their hand and enter your sales pipeline.
Here are some key metrics you can evaluate to look beyond short-term revenue gains and understand the real value your demand generation activities are driving as part of a broader marketing strategy.
- Number of meetings or opportunities generated
- Average deal size
- Sales pipeline value
- Customer acquisition cost
- Cost per lead
- Customer lifetime value
- Average sales cycle length
You won’t see immediate changes in these metrics just because you’ve implemented a demand generation program. But over time, a successful demand generation strategy will absolutely drive results. You’ll see lower customer acquisition costs, decreased sales cycle time and increased deal size and pipeline value.
Companies often have good intentions when it comes to demand generation. But when short-term revenue pressures hit, it’s easy to fall into old habits and start chasing leads again. The immediacy of a growing pipeline is indeed a tempting solution. But we believe lead quality trumps lead quantity every time, and that brands who focus on providing value up-front will always have the upper hand.
Here at GrowthMode Marketing, we’re experts at helping our clients drive growth with high-impact demand generation tools and strategies. And we can help you too! Contact us today to learn more.