How to create a Demand Generation strategy
Demand gen approach we used to generate $1.2m in ARR in one quarter.
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What is demand generation?
You have probably heard about demand generation as a concept already. But do you really know what it is?
As the name suggests, it’s about creating (generating) demand for your business and your product. It became popular in the B2B SaaS space in recent years as a response to the shortcomings of lead generation. Previously, you would run a lead generation campaign and offer a lead magnet (webinar, ebook, whitepaper, etc.) in exchange.
The problem is that with time people become desensitized to this strategy. It quite often leads to wrong emails, low-quality leads, no response from contacts, etc. That’s because people are signing up to get a resource they need, and not to get called, emailed, and sold to.
Then came demand generation. Compared to lead gen, it’s a wider concept. It can, and often does incorporate lead magnets and some gated content to generate contact information. But the basic premise is different.
Lead generation is oriented toward capturing contact information. It is focused on targeting those users who are ready to give their contact info. Demand generation is focused on addressing TAM (Total Addressable Market). It generates demand for your product by providing valuable information to your audience. It’s about educating them about their problem, showing how your product can address that, what features you have, and how they solve their particular problem.
Demand generation is about showing your audience they need your product. It’s about understanding that they are not ready to buy now. You focus on building a relationship, and building trust so that they look for your brand specifically when they are ready to buy.
Why should you do demand generation?
When you focus on capturing the demand you are effectively focusing on 1-3% of the TAM. That’s the portion of the audience who is already aware of their problem, knows the alternatives the market offers, and is looking to make a purchase decision.
Demand generation helps you tap into the other 97-99%.
It allows you to get your brand out there, reach those audiences, make contact, and provide valuable information.
Most people are not in the market for your product. You have to be on top of their mind when they are.
By educating your audience about how you can help them solve their problems you become the first option they think of once they know they are going to make a purchase. You become an authority. At that time they have a much higher intent and likelihood of converting into a paying customer.
Who should do demand generation?
TLDR - Everyone.
Demand gen started in the B2B space and is still prevalent there.
But who should be trying to create demand for their product? That’s right, everyone.
All companies should be investing time and money in getting the information about their products out there. You need to show that you understand your customer’s problem. You know what it’s like, and you need to show that.
They need to know that your product can help them, and how. They also want to hear about your features, how they work, and how exactly they solve a problem.
Have a blog post, ebook, or whitepaper that details how your customers can address their problems? Great, promote it! Turn it into 3 social media posts, a YouTube video, and some banners. Tell everyone about it.
By educating your audience you earn their trust.
Once they are in the market, they will click on your ad and convert. Or, they will think of you and search for your brand directly. Either way, you are the first option they think of, and they are coming to you with the intent to buy.
How to make a demand generation strategy
Now, let’s get into it.
Creating a demand generation strategy is a process and we will break it down by stage.
Target Audience
Buyer’s Journey
Goals in each stage of the Buyer’s Journey
Messaging by stage
Channels
Budgeting
1. Target Audience
This is pretty much a no-brainer. You have to start with who you want to reach. I won’t go into why it is important to truly know and understand your audience. If you are reading this you already know that.
To create an effective strategy you should have your ICPs (Ideal Client Profile) figured out.
If you work in the B2B space you need to know:
Their Industry,
Job role,
Role in the buying process,
Company size and estimated revenue,
Location,
Their budget,
Number of employees,
Who is on the buying committee,
What problems are they facing,
What goals are they looking to achieve.
If you are in a B2C space you should focus on:
Job,
Age,
Income,
Location,
Hobbies,
Challenges,
Goals,
Spending habits.
Your target audience will differ depending on what kind of business you have. But nevertheless, understanding your consumer really sets the stage for step #2.
2. Buyer’s Journey
In marketing theory, the buyer’s journey is a process through which a person goes from identifying a problem all the way to purchasing and then using the product.
They go through several buying process stages:
Problem Identification
Solution Exploration
Requirements Building
Supplier Selection
Implementation
Use
Promotion
There are several theories in marketing about the buyer’s journey. We simply decided to use this one as the most common.
Let’s break down the stages:
Problem Identification - Your audience is not yet aware of the problem they have. Maybe they noticed it, but they haven’t yet identified it as a problem to be solved.
Solution Exploration - Your audience knows what problem they have. They started researching what solutions were available on the market.
Requirements Building - They gathered information about what’s available. Now they are building a list of requirements that they need to have in order to solve their issue.
Supplier Selection - Okay, now they know what they want. They are looking for the best vendor to provide the solution.
Implementation - They purchased the product. In B2B this would be the integration stage.
Use - They are using the product.
Promotion - The stage we all want to get to. In this stage, our customer is a fan (evangelist). They like our product so much that they are promoting it themselves.
3. Goals by each stage
Since our customers are looking for different things in each stage, we have to accomplish a different goal in order to move them onto the next stage.
Problem Identification - Since your audience is not yet aware of their problem, your job is to point it out. Show you understand their issue.
Solution Exploration - Your audience is aware of their problem. Now is the time to show that you can solve it, and how.
Requirements Building - In this phase it’s ideal for educating your audience about all the features that your product has. Show them what your product does and how it practically solves their pain.
Supplier Selection - It’s time to make your company (product) stand out. Show them what makes you better than the competitors.
Implementation - Smooth integration process or easy sales process goes a long way. It saves the customer time and reduces stress. This is where you begin to delight your customer.
Use - Your goal is to delight your customer with your product and customer support so that they become raving fans.
Promotion - Your customer is already a fan. Now it’s time to make it easy as possible to promote your product further. Reward them for it.
4. Messaging by stage
We already established that your customers need different things at each stage. That’s why we need to communicate different messages across stages.
Now is also a good time to split the stages into two groups. We will divide them based on how they interact with your business.
Marketing & Sales (first 4 stages)
Customer Success (last 3 stages)
In the second group, your target audience is hopefully already your customer. You won’t need any messaging here, just an awesome product and CS team.
Let’s break down the messaging in the first 4 stages:
Problem Identification - Focus on educating your audience about the problem.
Solution Exploration - Educational message about how you can help them alleviate the problem and achieve their goals.
Requirements Building - Focus on informing your audience about how your features work, what they do, and what problems they solve.
Supplier Selection - Accent on why they should pick you and not the competitors.
5. Communication Channels
Now that we have defined our audience, their buying process, and our messaging, we need to decide how to best reach them.
This stage will be heavily influenced by what type of business you run. If you are a B2B business, there is a high likelihood that your audience will be on LinkedIn, at review sites, and will be interested in reading your blog.
However, if you are in the B2C sphere, chances are, your audience is not looking for a phone case, skin care product, or video game on LinkedIn.
I can’t give you a definitive breakdown of channels as it will depend on your specific business and your budget.
As a rule of thumb, you should definitely have both an organic and paid presence. When it comes to organic you can develop a content strategy, make long-form blog posts and/or videos and repurpose them in shorter formats on various social platforms.
When it comes to Paid channels it pays to invest in Paid Social activities + Display ads in the upper stages of the buyer journey. To capture demand you can retarget users with Search ads and Conversion campaigns on Social channels.
6. Budget
The final step in the creation of a demand generation campaign is to set the budget for each activity. This will depend on what stage your business is in and how many resources you have available.
Again, I can’t give you a definitive answer on how to use your budget. This is very specific to each individual business.
The general rule is to use 60-70% on the upper stages of the buyer’s journey. This is where you are targeting a wider audience and you have much more campaigns and creatives. Remember, only 1-3% of TAM is ready to buy at any given moment. You are trying to generate demand with the other 97-99% who are not.
That’s why spending is higher at the top of the funnel.
The last 30-40% of the budget will be left to capture the existing demand. This will most likely be spent on retargeting campaigns to drive people to the website to make a purchase or request a trial.
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