What Is Demand Generation?

What Does Demand Generation Do?

Demand generation puts your company in the memory of buyers who will need what you sell later, so that when the need arrives they look you up by name instead of starting from a blank list of suppliers, which matters because only a few buyers are deciding at any time.

John Dawes of the Ehrenberg-Bass Institute made the case in 2021: if companies change providers such as their main bank or law firm about once every five years, only about 20% of business buyers are in the market over a year, and something like 5% in a quarter.¹ He calls the 95% who aren't buying a heuristic rather than a precise rule, and shows how to work out your own share: divide one year by the average time between purchases, then by four for a quarter, so a two-year cycle gives half of buyers in a year and around 13% in a quarter.¹

The Channel Selection step asks of every channel whether your buyers are already looking for you, because the answer sets that channel’s job and how long to wait before judging it.

How Is Demand Generation Different From Lead Generation?

Demand generation works on buyers who aren’t deciding yet and asks for their attention, while lead generation works on buyers who are deciding now and asks for their contact details, which changes what each offers and how each is judged.

Demand generation and lead generation compared

Each fails without the other, because warmed buyers still need a page and a person ready when they act, and lead generation alone competes for the few buyers deciding now, who, as Dawes argues, favor names they already know.¹ Judging the two takes different rules, which How Do You Measure Demand Generation Success? covers.

How Do You Create a Demand Generation Strategy?

Create a demand generation strategy from the buyer outward: choose the buyer worth reaching early, learn when their need begins, reach them before they search, and have a page and a fast reply waiting when they act.

1. Choose the buyer worth reaching early, since reaching people months before they buy means a longer wait for the money back, which only buyers worth a lot over the relationship can carry (the IMPACT Prospect step finds them).
2. Work out how often that buyer replaces what you sell, so you know how many are choosing in a quarter and how long the program must run.
3. Name the moment the need begins, such as a budget cycle, aging equipment or a new person in the role.
4. Pick channels where that buyer pays attention before searching, such as ads aimed by job title, outreach to a named list of accounts, associations and events.
5. Make things that help without a form, each with a clear path to a Prospect Magnet worth asking for once the need arrives.
6. Have the capture side ready before launch, with a page for that Prospect Magnet and a same-day reply (Prospect-to-Lead Conversion covers both).
7. Write down how the program will be judged, and over what period, before it launches.

What Does a Demand Generation Manager Do?

A demand generation manager runs the programs that reach best-fit buyers before they’re looking and turns that attention into sales conversations, which in the roles we see means content, events, paid social and account lists, planned with sales.

When you hire or review one, we’d hold the role to four things:

• A written target buyer shared with sales, so programs reach the accounts sales wants to meet.
• Qualified pipeline and signed customers from those buyers over a full buying cycle, rather than downloads.
• A say in the capture side, or a firm agreement with whoever owns the pages and follow-up, since warmed buyers who wait two days for a reply can be lost at the last step.
• A budget steady enough to be judged, since a program cut in its second quarter never reaches the buyers whose turn comes later.

In the smaller companies we work with, one person or an agency often runs both demand and lead generation, and work with a result this month tends to win the week, so split the budget in writing; How to Structure a Marketing Department covers where the role fits later.

When Is Demand Generation the Wrong Place to Spend?

Demand generation is the wrong place to spend when you aren’t yet catching the buyers who already search, when your pages and follow-up can’t turn interest into conversations, or when the budget can’t outlast one buying cycle.

• When search demand isn’t captured yet, because in our experience catching buyers who already search pays back sooner and shows which searches become customers.
• When the capture side leaks, since buyers who arrive at a page with no clear offer, or wait days for a reply, waste the slow money at the last step.
• When a customer is worth too little to wait for, which depends on lifetime value, how early it arrives and your cash flow.
• When the budget can’t outlast one buying cycle, because the program will be judged before most of the buyers it reached can act.

When your category is new or buyers don’t know they have the problem, the reverse holds, because there is little search to capture and demand generation becomes the main route. For a smaller business it often means being known in the right association and staying in touch with past customers and the people who refer them.