Advertising

Demand Generation: What Is It And How Does It Work?

Demand Generation: What Is It And How Does It Work?

11 Min Read

If you work in marketing, you’ve probably heard the phrase “demand generation.” But what does demand generation mean, and why is it important? How do you use demand generation successfully?

Read on to discover everything you need to know about this critical element for the success of your marketing strategy.

What Is Demand Generation?

Demand generation is the strategic process of creating authority and awareness for your brand, fostering consumer desire for your products.

Its goal is to produce reliable, high-quality leads by alerting prospects to issues they may not realize they have, such as the importance of proper nutrition for health when selling supplements. Once you’ve captured your audience’s attention and made them consider how to improve their nutritional profile, you’ve generated demand and can begin targeting your strategy more effectively.

Demand Generation vs. Lead Generation

Demand generation is the bigger-picture start of the process, involving the creation of awareness and excitement around your brand. It involves exciting your existing audience base and also potentially reaching out to new ones.

Lead generation is the ultimate and likely more concrete act of converting prospects’ attention to actionable leads by collecting tangible information.

Learn More: Demand Generation vs Lead Generation

Demand Generation vs. Growth Marketing

Growth marketing involves experimenting with various strategies across the entire customer journey to optimize and scale business growth by retaining existing customers and attracting new ones.

Again, demand generation focuses on creating awareness and interest in a product or service to drive customer acquisition by focusing on the top of the funnel rather than the entire sales funnel.

Learn More: Demand Generation vs Growth Marketing

Benefits of Demand Generation Marketing

Demand generation marketing is very important for a business looking to grow its customer base and increase its footprint. Some of its key benefits include:

  • Lead Quality: Demand generation focuses on attracting high-quality leads that are more likely to convert. It’s about reaching prospects who genuinely need your product or service, not just increasing the number of leads.
  • Brand Awareness: Demand generation can significantly boost brand visibility and recognition. This ensures that potential customers are more likely to think of your business when they’re ready to make a purchase.
  • Revenue Growth: A successful demand generation strategy drives more sales by effectively moving prospects through the sales funnel. This contributes to overall bottom-line growth.
  • Marketing and Sales Alignment: Demand generation fosters collaboration between sales and marketing teams, ensuring they work together towards the shared goal of driving revenue.
  • Predictable Revenue Stream: With a well-planned demand generation strategy, businesses can create a more predictable and steady stream of leads, aiding in business planning and forecasting.

How Does Demand Generation Work?

We know that demand generation is a multifaceted, data-driven marketing strategy designed to create awareness and interest in a company’s products or services. Its main goal is to build and nurture key prospect and customer relationships for the long term. But how does it work?

The entire demand gen process can be broken down into five easy steps.

Step 1: Identifying the Target Audience

The first step is to determine who your ideal customers are and what they need. This involves segmenting the audience based on various characteristics, like demographics, behaviors, and needs.

Step 2: Creating Engaging Content

Once the target audience is identified, marketers create and distribute content tailored to their needs and interests. This could range from blog posts and whitepapers to webinars and events, with the aim to educate and engage potential customers.

Step 3: Generating and Nurturing Leads

The next step involves using marketing campaigns to generate leads and then nurture them through the sales funnel. Effective lead nurturing strategies ensure that potential customers remain interested and engaged until they’re ready to make a purchase.

Step 4: Qualifying and Scoring Leads

Not all leads are created equal, so marketers use lead scoring and qualification methods to prioritize those most likely to convert. This step helps sales teams focus their efforts on the highest-value prospects.

Step 5: Measuring and Analyzing Results

Finally, marketers use various metrics and demand generation tools to measure the success of their campaigns. This step is essential to understand what’s working, and what’s not, and make data-driven decisions for future strategies.

B2C vs. B2B Demand Gen: How Are They Different?

B2C and B2B demand generation differ primarily in their target audiences; consumers are individuals or families, while businesses are larger entities requiring the attention of entire teams.

Consumers (B2C demand gen) are open to discovering new products through browsing or watching TV, often making spontaneous purchases that align with their personal goals.

In contrast, businesses (B2B demand gen) evaluate products based on how well they align with their long-term plans and productivity goals.

Consequently, messaging for businesses should be professional with data-driven content, whereas messaging for consumers should emphasize authenticity and reliability, often using user-generated content.

Where Does Inbound Marketing Fit In?

Inbound marketing is an approach to marketing that emphasizes welcoming your customers and creating experiences that delight them and keep them engaged, as opposed to taking a more generalized crop-dusting sort of approach to marketing, which could lead to plenty of people getting information or offers they don’t want. 

The simple idea behind inbound marketing is that once you attract the right customers for your business, you can keep them engaged and informed on how your business’s products can help ease their pain points, and make them ongoing stakeholders in your business’s success. Making them feel like valued partners is a constant goal of inbound marketing, which aims to increase trust between customer and business, and lead to ongoing, meaningful relationships.

Inbound marketing is a component of demand generation, although not its only aspect.

Demand Generation Channels

Demand generation utilizes various channels to attract and engage potential customers. Here are the top demand generation channels to consider:

  • Content Marketing: Creating valuable content like blog posts and videos to attract and engage your target audience.
  • Email Marketing: Sending targeted and personalized emails to nurture leads and keep your audience engaged.
  • Search Engine Optimization (SEO): Optimizing your website to rank higher in search engine results for relevant keywords.
  • Social Media Marketing: Using platforms like Facebook and LinkedIn to share content and run targeted ads to reach a wider audience.
  • Pay-Per-Click (PPC) Advertising: Running paid ads on platforms like Google Ads to drive immediate traffic to your website.
  • Webinars and Online Events: Hosting online events to educate and engage with potential customers in real-time.
  • Influencer Marketing: Partnering with influencers to promote your products and increase brand awareness.
  • Referral Programs: Encouraging existing customers to refer new prospects by offering incentives.
  • Account-Based Marketing (ABM): Targeting specific high-value accounts with personalized marketing campaigns.
  • Public Relations (PR): Using media coverage and press releases to increase brand credibility and awareness.

Demand Generation Strategies

Okay, so demand generation is key. But what are the actual demand generation strategies that work? As noted above, there will be some differences in your approach depending on whether your orientation is B2C or B2B. But there are similarities, too.

1. Master Inbound Marketing

One notable component of a demand generation strategy, as noted above, is an inbound marketing approach — which involves above all a sense of respect for the customer.

Start by modeling your ideal customer so you can then strategize how to target them. That can involve using social media to craft a profile of the kinds of sites they would visit and the sorts of material they would show an interest in.

2. Demonstrate Authority in Your Space

As the aim of demand generation is to establish your brand as a market leader, the best strategies involve establishing authority and promoting trust. Creating alliances with companies that complement your own is one way of establishing yourself as a peer worth considering in your field. That could be via co-sponsorship opportunities of conferences or panels.

Creating quality content like thoughtful essays on your areas of expertise — or white papers, if they’re for a more professional or academically-minded audience — relating to issues your business deals with is another easy and proven way to establish your bona fides in your field. That could extend to the sponsorship of seminars or podcasts related to your field of expertise. You can probably name the half dozen companies that are mainstays as podcast advertisers. It’s a powerful way of allying your brand with the right company.

3. Provide Useful Resources (For Free)

Giving away materials or creating an app resource that demonstrates your business’s prowess is another excellent demand gen strategy for marketers. Note that you should give them away for free, to reduce as much friction as possible and make it easy for your potential customers to find you. That might take some getting used to, but remember that you need to establish yourself with your potential customer base and take steps that will lead to their reaching out and consulting you as an authority.

4. Utilize Competitions

Competitions, too, may be a winning demand gen strategy. Your aim here is good word-of-mouth and positive awareness of your brand, as well as to create a desire for your goods. Many consumers may not win the competition, but you want them to stick around your site and explore content, sign up for further emails, and make a purchase or two.

5. Request Customer Testimonials

Giving away products and content doesn’t have to be a one-way street. You can request positive online reviews from real people who have used your products. Testimonials can be a powerful incentive to other possible consumers. 

The aim here is to position yourself as the go-to in your field. Think of how “Kleenex” stands for the world of facial tissues, “Xerox” is synonymous with copiers, or more recently, how “Netflix” stands for the world of streaming services.

Demand Gen Metrics & KPIs

Although you might think demand generation involves somewhat amorphous concepts such as goodwill and interest, your success can still (and must) be measured.

It’s important to set key performance indicators (KPIs), and other benchmarks to make sure your efforts are paying off. Some of these demand generation metrics include:

  • Marketing Qualified Leads (MQLs): These are potential customers who have shown enough interest in your product or service that they are considered more likely to become a customer than other leads.
  • Sales Qualified Leads (SQLs): These are leads that have been vetted by both the marketing and sales teams and are deemed ready for the next stage in the sales process.
  • Cost Per Lead (CPL): This is the total cost of your marketing campaign divided by the number of leads generated.
  • Cost Per Acquisition (CPA): This measures how much your business spends to acquire a new customer.
  • Customer Lifetime Value (CLV): This is a prediction of the net profit attributed to the entire future relationship with a customer.
  • Return On Investment (ROI): This is a measurement of the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.
  • Close Rate Per Channel: This measures the percentage of leads from a specific marketing channel that convert to a sale.
  • Marketing Cycle Length: This is the average amount of time it takes for a lead to become a customer after initial engagement.
  • Average Deal Size: This measures the average revenue your company makes from each closed deal.
  • Contribution to Total Revenue: This metric shows how much revenue can be attributed directly to marketing efforts.

In the age of big data, you can track not just how many visitors come to your site, but what content they read and find useful, so you can keep iterating and making improvements to your strategy. Stay on top of your demand generation strategy and keep it nimble and flexible.

Performance TV Changes Everything

Performance TV transforms your connected TV (CTV) — the device that allows you to stream video and other content — into a performance marketing powerhouse. It allows you to reach engaged, curious viewers where they are but also allows you to use data to tailor your offerings to them.

When it comes to demand generation, that’s incredibly good news. Streaming is where viewers’ attention is, providing more diverse content and more niche content. It’s a perfect place, with the right expertise, to find viewers and, by helping them identify their pain points, turn them into your consumers.

CTV has become the new way to find and target engaged consumers, as web marketing becomes old-fashioned, thanks to changes in digital tech like the deprecation of the third-party cookie on sites like Google and changes to data privacy laws.

By contrast, Performance TV allows markets to build profiles of their ideal consumers, and then target them with precision, while also allowing for continual improvement in the process to keep them engaged and in your company’s flywheel.

TV advertising has always been a great way of creating demand for products and letting consumers know your company exists. But in the old model, you were simply buying expensive TV real estate and hoping that a small percentage of viewers would spark to your product and later remember their interest in it. 

With Performance TV, demand generation is easier, as you can target audiences and then drive new and highly-qualified traffic to your site immediately, minimizing friction. By establishing firm goals and KPIs for your campaign, you can optimize your demand gen campaign via programmatic media buying technology. You can decide what you want the end goal of the campaign to be, and make sure it’s effective.

Essentially, when it comes to demand generation, Performance TV brings together the best of digital advertising and the best of TV advertising, to give you a sparklingly effective marketing B2B tool. Omnichannel marketing capability means you continue to reach your audience whether they switch to their phone, tablet, or laptop.

Demand Generation: Final Thoughts

If you’re serious about demand generation, you owe it to your business to get in touch with MNTN today. MNTN is the market leader in Performance TV and the hardest working software in TV. They won’t rest until you have a demand generation strategy you’re getting real results from!