Guest post by Laura Patterson.
In the words of Viviana Fargo, Operating Partner at venture capital firm Emcap, “one of the biggest reasons that many startups fail: Founders launch companies with great ideas, but with no go-to-market expertise.” Insufficient go-to-market (GTM) expertise has a crippling effect on growth. It drags down demand and lead generation and sales-ready opportunities.
Using a relay race metaphor, this post:
- Provides a definition of, and the purpose of, demand and lead generation
- Explores the relationship between, and the timing of, these two functions
- Identifies four signs that the knowledge baton has been dropped between these two legs of the race, and why Marketing needs to be responsible for both.
“If you wish to converse with me, define your terms.” Voltaire
Lead generation (lead gen) and demand generation (demand gen), perhaps you use these terms interchangeably? They are different. They are related.
Clarifying our terms. Demand gen encompasses the sales, marketing and customer service actions that find, attract, convert, keep, and grow the value of customers. We like David Lewis’, CEO of DemandGen, point of view.
“Demand generation spans the entire buyer’s journey. That includes both generating revenue from acquiring new customers and growing revenue within the installed base.”
Compare this to the definition of lead gen offered by Gartner. Lead generation is the “process of collecting a set of contacts from prospective buyers with a goal to nurture and qualify them as sales opportunities to grow the business.”
Is it a Chicken or an Egg? Lead Gen and Demand Gen: Which Comes First?
Using these definitions, we can glean the relationship and differences between the two. Lead gen is a downstream effort – where the flow ends. The downstream is dependent on the quality of upstream initiatives. In his book, Profitable Growth is Everyone’s Business, Dr. Ram Charan explains that upstream refers to the “strategic process of identifying and fulfilling customer needs.”
Demand gen IS in the upstream and is part of implementing your Go-to-Market (GTM) strategy. Your GTM strategy reflects how you position and differentiate your company, determine pricing and channels, capture the buying journey, launch products, and engage with customers and influence and motivate them to buy your solutions.
Just as there is an optimal sequence of relay runners, there is an optimal sequence of Marketing-owned functions. First comes your GTM strategy. Next comes demand gen. Then comes lead gen, which leads to sales-ready leads. Hold off doing lead gen if you haven’t completed your GTM and demand gen planning. Otherwise, you risk implementing what we call random acts of Marketing. Random acts take energy, time, and money. When your downstream and upstream are not in synch, all of these resources are wasted.
Signs the Lead Gen and Demand Gen Relationship is Out of Kilter
Let’s return to the definition of lead gen and break down its components.
- Collecting a set of contacts. From where do you collect them? You collect them from people who visit and interact on your site by engaging in calls-to-action, such as completing a form or registering for a webinar. You also collect contact information from people who attend events, whether at an in-person tradeshow or a virtual presentation.
- Understanding prospective buyers. This is about who. The companies and the people. You know which companies, the problems they need to solve or opportunities they need to pursue, and you have clarity around roles, profiles and personas.
- Nurturing leads. This is the implementation of your communication strategy. Nurturing entails offering content to prospective buyers at various points in the buying journey. It involves regularly reaching out to sales-worthy contacts (and existing customers) and presenting important information in the format and cadence that supports their journey.
- Qualifying sales opportunities. The operative words here is qualified and sales-ready. Qualification suggests criteria. In the world of lead gen, these criteria serve as the basis for a lead scoring model. The Marketing and Sales teams should create this model together and agree on the thresholds that determine an opportunity is increasing in the likelihood to become a customer. Ideally the model includes both fit and behavior criteria and the gates are connected to the customer buying journey.
Low to no contacts, lack of contacts from your target perspective buyers, high opt outs and low click through rates, no forward movement from the right contacts in the right companies, and opportunities that don’t pass the lead scoring gates are all signs your upstream demand gen components, such as targeting, positioning, messaging, and understanding of the customer buying journey are off the mark.
Too Many Handoffs Increases the Risk of Marketing and Sales Failure
In the relay race, the sequence of activities involves passing a baton from the incoming runner to the outgoing runner, who may have started accelerating 10 meters earlier. Timing is critical. The handover technique (the handoff of the baton from runner to runner) is often a point of failure for teams in the relay race. The more handoffs the greater the risk of poor performance or disqualification. This is why relay teams repeatedly practice the handover. This analogy holds true in business as well.
When Marketing is left outside of the GTM strategy conversation, and someone other than Marketing owns demand gen and then passes these batons to a Marketing organization responsible only for lead gen, there is a high risk of failure. Especially because these handoffs are rarely practiced. You may believe it make sense in an early-stage B2B company or a small business for the CEO, business owner, or Sales lead to provide the demand gen inputs to a Marketing person responsible for lead gen. We encourage you to think otherwise.
Your GTM strategy lays the foundation for your demand gen and lead gen. Three handoffs. GTM to Demand Gen. Demand Gen to Lead Gen. Leads Gen to Sales -Ready Opportunities. Three opportunities for the baton to drop.
Reduce the risk. If you desire long-term sustainable profitable growth, be sure someone in, or working with, your Marketing organization can create your go-to-market strategy and delivering on Demand gen. From the very start.
Laura Patterson is president of VisionEdge Marketing. She has helped executives in 250+ companies grow via customer-centric, data-driven, outcome-based strategies, and is recognized as expert in Marketing Performance Management. In her blog posts, workshops and books, she shares best-practices for each of these strategies. Every blog post contains at least one idea you can put into action right away.