In today’s very competitive marketplace, generating more demands for products and services can be a major challenge for any business, and this is why demand generation is now a major part of many startup’s business strategies.
Yet, what actually is demand generation? Isn’t it just another name for digital marketing? Should you invest in demand generation as well?
In this guide, we will try to answer those questions, and by the end of this guide, you can start planning and executing your demand generation strategy to grow your business.
Let us begin, however, by discussing the concept of demand generation itself.
What Is Demand Generation?
As the name suggests, startup demand generation is any effort or tactic we use to generate more demands for a business’s products or services. Demand generation can span across the entire product’s marketing cycle from the initial ideation/design process to promoting the product to retaining existing customers to generate referrals.
In practice, however, demand generation is often used to define a data-driven digital marketing effort that generates awareness and product interest through the use of technology. A true demand generation strategy should be comprehensive and holistic, covering all the possible touchpoints of the buyer’s journey: from when a random stranger stumbled upon your brand to a happy, delighted advocate of your brand.
Thus, due to its all-encompassing nature, demand generation can be further broken down into four different parts:
- Awareness generation
- Inbound marketing
- Encouraging conversions
- Managing customer retention
Further below, we will discuss these four different aspects of demand generation, one by one.
- Awareness Generation
Before we can even generate demand for the business, we have to first ensure our target audience is aware of your brand.
This phase will comprise of several different aspects, including:
- Identifying your target audience: a very important first step is to identify your target audience and try to understand as many details about them; their demographics data, their behavior, their needs, their pain points, and any other details that might be relevant.
- Brand building: developing an easily identifiable brand identity that your target audience can relate with. Your brand identity should clearly communicate your brand’s value and purpose, and why your brand is unique when compared to your competitors.
- Establishing credibility: nowadays, people only want to purchase products/services from brands they perceive as trustworthy and credible. It’s important to establish thought leadership before you can generate more awareness. Leveraging a strong social media presence, as well as regularly publishing high-quality, relevant content are common ways to establish thought leadership while also communicating your brand to more
- PR Management: after you’ve established your credibility, you have to maintain a positive public reputation to continuously generate positive brand awareness. A major part of brand building is ensuring your brand is consistently associated with good press rather than negative news.
As we can see, a huge part of brand building in demand generation is about understanding your target audience and figuring out how you can provide value to this audience. By delivering value, you can attract more people to your brand so they can move on into the next phase.
- Inbound Marketing
A very common misconception is to think that inbound marketing is demand generation. However, the more correct concept is that inbound marketing is a part of demand generation.
It is true, however, that inbound marketing plays a very major role in demand generation, so the confusion that inbound marketing is demand generation is somewhat justified.
The term inbound marketing has been a major buzzword for the past decade or so, but there are still many confusions and misconceptions surrounding the concept.
So, what actually is inbound marketing?
To put it simply, inbound marketing is about consistently publishing high-quality and relevant content that can attract more people to our platform (i.e. website), and promoting this content so they can reach as many people as possible.
A major way to promote content on our website, as we know, is SEO. This is why a common way to describe inbound marketing is ‘content marketing+SEO’, which certainly has a grain of truth to it.
The objective of inbound marketing in the scope of demand generation is to attract people to visit your platform with your content, so they can be aware that you are a credible brand with valuable content, and can start introducing your product to them. By establishing your thought leadership through content, you create demands.
In implementing inbound marketing, we can consider several different elements:
- Blogging+SEO: as discussed, this should be the core of your inbound marketing strategy. Startup SEO agency ensures your content is visible to your target audience when they perform a Google search related to what you do. Publishing blog posts about the topics are valuable for your target audience and/or help solve their problems can be a great way to attract visitors to your website.
- Lead generation: an important thing to consider is to use inbound marketing services to generate more leads. After you’ve successfully attracted a visitor to your website, you have to capture their contact information so you can nurture them step by step through the demand generation funnel until they are finally ready to make the purchase.
- Lead magnet: the lead magnet is essentially a valuable thing that you offer for free, in exchange for the prospect’s contact information. After the visitor has been hooked by your inbound content, you offer something they perceive as valuable to capture their email address. Lead magnet is the main method of generating leads via inbound marketing and a very common form is to offer gated content like ebooks, research reports, white papers, videos, that are related to the initial content.
- Lead nurturing: after you’ve successfully captured their contact information, we follow them up mainly with email marketing to educate and nurture them further until they are ready to make the purchase. You can send more valuable content via email marketing, as well as resources like tutorials about your product, etc. depending on their position on the demand generation funnel. The objective of lead nurturing here is to ‘push’ them to the next step of the funnel effectively.
3. Encouraging Conversions
Now what we’ve successfully generated qualified leads and nurtured them until they are ready for a purchase, the next step is to encourage them to make this purchase.
Encouraging conversions is essentially about making it as easy as possible for your prospect to make the purchase, and there are two core aspects to this: technical optimizations, and ensuring your sales and marketing team are working together to close more business.
- Showcase social proofs: social proofs like case studies and positive testimonials are great in providing further proofs to prospects. They will help your prospects in trusting your business as a credible brand while educating them about the tangible results you’ve provided for past clients/customers.
- Conversion Rate Optimization (CRO): technical optimizations on your website to ensure the purchase/conversion process is as seamless as possible. For example, optimizing your page speed, mobile-friendliness, optimizing your checkout process, and so on.
- Fact sheets for sales enablement: if your sales process involves communications with sales reps, then it’s important to empower your sales team with the right information about your product/service. The fact sheets should cover all the important details that might arise during sales calls, including a comparison chart between your product and your important competitors. This is where sales-marketing unification should work together effectively in order to ensure as many conversions as possible.
- Other tools: you might want to prepare tools like discount calculators, estimate/quote templates, and others to ensure your sales process can go as seamlessly as possible. The idea is to optimize all the necessary steps that should happen in your sales process so that both your sales team and your prospect can have a seamless closing process.
4. Managing Customer Retention
Even after your prospect has made the purchase and has converted into paying customers, demand generation doesn’t end there.
While acquiring new business is certainly a very important objective of demand generation, keeping your existing customers happy is also an essential aspect of any demand generation strategy.
In a retention-based business, (i.e. subscription-based business model), maximizing customer retention is important in ensuring sustainability for your business. Yet, even if your business utilizes a one-off sales model, managing customer retention is also important in ensuring advocacy.
Advocacy is the ultimate goal in demand generation: when happy customers recommend your product/service to more people, they are creating new demands for your product service. If you can create a sustainable cycle for this, then essentially you’ve automated your demand generation, A to Z.
Here are some important techniques to consider in managing customer retention:
- Nurturing existing customers: ensure your existing clients/customers are always aware when you are launching new products/services. Also, analyze their past purchases and offer products/services that could improve their experience (cross-sell/up-sell). You can always offer them exclusive discounts and loyalty benefits to encourage repeat purchases.
- Leverage knowledge-base: help your customers to get more value from the product they’ve purchased with knowledge-base type content like how-to guides, FAQs section, and tutorial articles. This type of content allows us to communicate how the client can use our product/service better including best use-cases for different scenarios.
- Customer support: make it as easy and seamless as possible for your existing customers to ask questions and discuss their problems related to the purchased product/service. Also, make sure you have a system in place where you can categorize, catalog, and track the issues as seamlessly as possible. By ensuring they are always heard every time, you can significantly improve customer satisfaction.
- Customer appreciation: there are various methods you can use to show how you appreciate your existing customers, but typically they will involve exclusive offers that only existing customers can access. They don’t have to be very big, even small offers and discounts can go a long way in making them feel appreciated.
- Ask for feedback: gather feedback from existing customers about your product and service, and ask them what kinds of improvements they’d prefer. This has two benefits: first, they’ll feel that they are appreciated and their concerns are being heard. Second, you might get valuable data that you can use in creating, marketing, and selling future products.
You should measure Net Promoter Score (NPS) in this step to identify how happy and loyal your existing customers are, and how likely they are to promote your product to their peers. By identifying happy customers that are likely to advocate your brand, you can also ask them to contribute case studies and testimonials that you can use in the future.
Key Challenges In Demand Generation
Now that we’ve thoroughly discussed the different aspects of demand generation and methods you can use to implement them, here let us discuss some important challenges to demand generation so you can tackle them as you execute your demand generation strategy:
- Identifying Target Leads
As discussed, a major aspect of a successful demand generation strategy is identifying the right prospects to focus your effort on.
Unless you have unlimited time and capital, we must execute demand generation on limited resources, and so we have to make sure these valuable, limited resources are going to the most ideal and qualified prospects to maximize the chance of a conversion.
Yet, identifying qualified leads can be easier said than done, and a mistake in this step can easily lead to failure for the whole demand generation strategy.
- Content creation and promotion
We all know creating high-quality content is a very difficult thing to achieve consistently, but where we publish our content (placement) and how we promote it are also important challenges to tackle.
It’s very important to ensure our content is reaching the right people at the right time to ensure a successful inbound marketing effect in our demand generation strategy.
Without a sound content strategy in place, the whole demand generation effort can be jeopardized.
- Not communicating with your customers enough
Maintaining communication and ensuring you are talking to your audience through relevant, high-quality content is already difficult. However, this challenge can be amplified when you are targeting multiple different personas, each with different behaviors and pain points.
In ensuring a successful demand generation, you have to look at the intent data to identify the behaviors of different target prospects you are trying to reach, and especially figure out how these potential buyers work toward solving their pain points.
Remember, that communications should also work both ways: ask for more feedback, don’t be afraid to take criticisms, and make them feel that they are heard.
- Not collecting and using enough data
Startup demand generation should be a data-driven strategy: it’s very important to know what data to track and how to use this collected data. You have to especially collect enough data about your leads, which will especially help in your content strategy.
On the other hand, you should also monitor data about your strategies’ performances so you can learn from past mistakes and make the necessary improvements for future projects.
- You aren’t converting leads into customers
There are many cases in demand generation where the strategy is sufficiently successful in generating enough leads, but not enough of these leads are converting into actual customers.
This can happen due to several reasons, including:
- Your leads aren’t qualified and/or aren’t properly segmented
- You are not following up adequately
- You are not targeting the right keywords or there’s a mismatch between the search intent for the keyword and your published content
Monitor and Improve Your Demand Generation Strategy
Since demand generation is a long-term effort, then monitoring the progress is really important so we can make the necessary adjustments along the way.
While the exact metrics to monitor might vary depending on your business, here are some important demand generation metrics to monitor:
- Lead Conversion Rate
A very common mistake in monitoring demand generation is to put too much focus on the number of traffic (visitors) generated by the top-of-the-funnel efforts. However, if most of these visitors don’t convert into qualified leads, then demand generation won’t be successful.
Track the number of visitors who turn into leads, and then the number of leads that turn into qualified leads (opportunities). Doing this will give you some insights into the quality of your visitors and leads and whether your inbound marketing efforts are targeting the right people.
- Number of Direct Contact Generated
Track the number of website visitors who call a sales rep, whether to ask questions about your business or request a demo of your product/service. If the number is high, then it is a good indicator that you are generating high-quality leads. This is especially important in B2B startups where the lead you’ve attracted might not have any purchase decision-making power (i.e. they have to ask their boss first).
- Cost Per Lead (CPL)
You can measure Cost Per Lead by dividing your total costs for your marketing efforts by the total number of leads generated from these efforts. CPL can help reveal how much you are spending on a lead by lead basis. This will also tell you how much you should expect to spend on your next campaigns.
Keep CPL in mind when planning new campaigns to create an accurate ROI estimation so you can ensure you don’t spend too much in acquiring leads compared to what you receive in revenue.
- Cost Per Acquisition (CPA)
Similar to CPL, your Cost Per Acquisition (CPA) tells us how much we actually spend on marketing efforts to acquire one paying customer.
You can calculate CPA by dividing the total marketing costs by the total number of paying customers acquired in the period you spent the marketing budget. The idea is to ensure our CPA isn’t higher than our average customer lifetime value (more on this later).
Tracking CPA can significantly help in fine-tuning your demand generation strategy and objectives.
- Customer Lifetime Value (CLV)
Customer Lifetime Value is essentially how much a customer will spend over the length of their relationships with your brand. So, this metric will represent the average potential revenue and profit you can expect to make from a single customer.
As discussed, your CLV should always be lower than your CPA, or else your business isn’t making any profit and won’t grow. CLV also provides some insights into how well you are managing and engaging your customers to maintain retention and to identify opportunities to improve.
- Average Sales Cycle Length
You should measure how long on average does it take for a visitor to convert into a lead and also the time it takes for a lead to convert into customers. Measure the time to conversion for every significant stage of the demand generation funnel. So, you can easily identify if you have a cycle that takes too long and fix any existing bottlenecks.
You can also measure the sales cycle length per channel, to determine which channels should be optimized and which aren’t worth pursuing.
For startups, having a clear demand generation strategy is very important so you can have a comprehensive strategy from start to finish: from how you build awareness to generating leads to converting leads into customers.
The key to a holistic demand generation strategy is a strong understanding of your target prospect and their needs and clearly communicating how your product/service can deliver value for this target audience. The execution for the demand generation strategy, however, will require disciplined tactical decision-making, so we can ensure effectiveness in all stages of the demand generation funnel to optimize resources and maximize ROI.