What Is Demand Generation and How Can It Grow Your Agency?
As an agency owner, you may have heard the saying “build it, they will come.”
This iconic line was coined from the 1989 movie Field of dreams. Kevin Costner, the lead actor, heard a mysterious voice asking him to build a baseball diamond in a cornfield.
Though it may sound like a great idea in a movie, it doesn’t work that way in real life. Starting a business with the hope that customers will flock in is an ineffective strategy in today’s competitive market. Because no matter how great your product is, people won’t come if they don’t know it exists.
A better and more effective strategy will be to create brand awareness and drive interest in your product or services. Only then will people come.
This is exactly what demand generation entails.
In this article, you’ll learn:
The definition of demand generation
How it differs from lead gen marketing
Metrics to measure the success of demand generation campaigns
Team roles in demand generation
Demand generation solutions you can use to scale your agency
What is Demand Generation?
Demand generation is a marketing strategy that focuses on driving brand awareness and interest in your business and its product or services.
The term demand generation (also called demand gen) isn’t the latest buzzword in town. It has been in existence for years. However, it recently started gaining prominence as businesses now understand the importance of providing value to their audience before asking them to buy.
In short, demand generation starts with:
Researching your ideal customers and creating a buyer persona
Developing free, valuable content like images, videos, infographics, podcasts, and thought leadership blog posts that address their problems and position your product as the best solution.
Promoting your content using various channels like social media, website, or email to create awareness and generate demand.
Is demand generation the same as lead generation?
According to a recent demand gen survey, 69% of marketers indicated their demand gen budgets will increase between 1% and 20% in 2022. Some of them seem to be confused about the terminology, though. They often interchange demand generation and lead generation. While the strategies may overlap at certain points in your marketing strategy, they are not the same.
Lead generation focuses on capturing the details of prospects who have shown interest in your business; then nurturing them until they become customers.
Also read: lead generation for agencies
On the other hand, demand generation is a broader marketing strategy that touches on the different stages of a buyer’s journey. So it’s safe to say lead generation is a smaller part of a demand generation strategy.
But some agency owners make the mistake of focusing only on lead generation. This strategy isn’t sustainable in the long run because not everyone is ready to buy. This opinion is shared by the pioneer of demand gen:
Demand generation vs. demand creation
Demand generation and demand creation share the same goal of driving demand and interest. But where do they differ?
The goal of demand generation is to increase your sales pipeline with quality leads that will help you scale your agency. When you provide the right information to the right audience at the right time, you generate demand for your solution.
Demand creation is a marketing strategy that focuses on building awareness and demand for a new product.
Imagine you identify a recurring pain point in your industry that none of your competitors are offering as a solution. Wouldn’t it be a great idea to create a product around it? You bet it would.
But getting clients to buy your new product will be difficult because there’s little or no demand for it. In fact, your potential clients may not be aware of the problem that your product solves.
So what do you do? Create demand for it by sharing valuable content to help people realize the problem and position your product as the solution.
Take Airbnb for example. Long before they launched, hotels and guest houses were in existence. But the founders identified a problem that most people weren’t aware of and created a product to address it. Today, the company is worth $60 billion.
What’s more, demand creation is not limited to building awareness and interest in new products alone.
Businesses that want to:
Promote an existing product to a new audience can also make use of demand creation tactics.
Introduce an improved product to their existing clients must also create artificial demand because people are not easily receptive to change.
Demand generation metrics: what should I measure?
Likes, shares, and retweets are nice, but measuring your demand generation tactics go beyond vanity metrics. To get a true sense of how your demand generation campaign is performing, you have to track the right metrics.
This way, you can:
Analyze your marketing campaigns
Identify areas to improve
Use the data to optimize and improve your demand generation campaigns
That said, here are seven important demand gen metrics to measure:
1. Marketing qualified leads (MQLs)
Marketing qualified leads (MQLs) are the people who are aware your business exists, and have shown an interest in your agency’s products or services. Tracking this metric gives you an idea of how well your potential customers recognize your brand.
2. Sales qualified leads (SQLs)
Once your sales team has identified potential clients who are more likely to purchase your product, they become sales qualified leads (SQLs).
SQLs are considered more qualified through their behavior and interactions with your sales team. As such, tracking the metric helps you understand the nature of leads that are coming in through your sales funnel. An effective demand-generation process will lead to more SQLs.
3. Cost per acquisition
What’s better than getting clients? Getting clients for a lower cost. Something most agency owners desire. But how will you know the amount you’re spending on acquiring a client if you don’t track it? That’s where Cost per acquisition (CPA) comes in.
CPA is the amount it costs to acquire a single client for your business. Tracking this metric helps you determine whether you are spending a lot of money to get clients. To calculate your CPA, simply divide the total amount you spent on a marketing channel or your entire marketing activities by the number of clients you acquired.
For example, if you spend $2,000 running Facebook ads, and you get 20 customers, your CPA will be $100. In other words, you spent $100 to acquire a single customer.
4. Cost per lead
Cost per lead (CPL) is the amount it costs your agency to get a new lead.
To calculate your CPL, simply divide the total cost of a marketing campaign by the number of leads generated. For instance, if it costs $1,000 to run a lead gen campaign and you got 20 leads, then your cost per lead will be $50.
The importance of tracking your CPL is to determine the efficiency of your demand generation process across all marketing channels.
5. Customer lifetime value
The goal of every business owner is not only to acquire clients but to also retain them long-term. Remember, it costs less to retain clients than to acquire new ones.
That’s the importance of tracking your customer lifetime value (CLV). It helps you understand the total value a customer brings over the course of their entire relationship with your agency.
CLV also helps you to better understand the impact your demand gen campaigns have on your bottom line, understand the potential value of different customer segments and identify opportunities to increase customer retention and revenue.
To calculate your CLV, simply estimate the average amount of money that a customer will spend on your business throughout your relationship with you and multiply it number by the length of time that they will remain a customer.
6. Demand gen cycle length
Depending on the nature of your business, some sales may take longer than others. However, it’s essential to track the demand gen cycle length because it will help you understand how long it takes to close a sale. If it takes longer than normal, you can identify areas to shorten the sales cycle.
Also, this metric will help you identify the channels you are closing clients in a shorter time frame. This way, you can focus your demand gen efforts on these channels.
Team roles in demand generation
As organizations are increasingly adopting demand generation as part of their marketing strategy, it’s no surprise to see team roles being carved out to ensure marketing campaigns are successful.
However, even experienced sales and marketing teams will have a hard time generating demand for a product without sufficient knowledge and experience. That’s why you need a dedicated demand gen team to manage all campaigns at different stages of the sales funnel.
Depending on the size, structure, and budget of your agency, your team can be made up of individuals who specialize in different areas.
Let’s take a look at some important demand generation team roles:
1. VP of demand generation
This VP of demand gen is responsible for developing and implementing effective demand generation strategies, as well as overseeing the day-to-day activities of the team.
The success and growth of any demand generation process is solely on the manager. In smaller organizations, this person is the Manager or Director of demand generation.
2. Marketing automation specialist
According to the aforementioned 2022 demand gen survey, 39% of marketers identified marketing automation as a key initiative in accelerating their demand gen strategies.
A marketing automation specialist is a key player in any demand generation team. The person uses marketing automation software to manage and execute several demand gen campaigns like lead scoring, email marketing, lead nurturing, chatbot marketing, etc.
3. Content marketing specialist
Behind any successful demand generation program lies a powerful content strategy. And the reason isn’t far-fetched. Content is what you’ll use to attract, educate, engage and provide value to potential customers. The right content will position your business as an authority and build credibility in the eyes of your audience.
It’s not a surprise that 93% of B2B marketers use content marketing to increase engagement and demand for their services. Also, 58% of marketers say content marketing will see an increased budget prioritization in 2022 which is bound to increase in 2023 and beyond.
A content marketing specialist’s role is to create compelling content that resonates with your target audience and generates interest in your product. Content such as blog posts, social media captions, white papers, email newsletters, landing pages, etc.
4. Social media manager
If you want to create awareness and interest in your product, there’s no better place to do it than social media because that’s where most people spend their time. The average person has 7.6 active social media accounts and spends 2 hours and 24 minutes a day on them.
The social media manager manages your agency’s social media accounts and leveraging them to create awareness, engage with prospects and drive conversions.
5. SEO specialist
When your potential clients are searching for a solution to their pain points, more often than not, the first place they go is Google. As such, one way to generate demand for your product is by optimizing your website to increase its visibility on search engines. That’s the job of an SEO specialist.
An SEO specialist handles on-page and off-page website optimization, researching relevant brand keywords, optimizing website content and blog posts, and improving the technical parts of your website.
6. Analytics specialist
When all is said and done, you must track your demand gen campaigns to help make data-driven decisions. This is the job of an analytics specialist.
An analytics specialist is responsible for:
Using analytics tools for agencies to track and measure the performance of demand generation campaigns
Analyzing the data generated from demand generation activities
Providing insights and data-driven recommendations to the demand generation manager
The analytics specialist’s role is crucial because insights from the report will help identify trends, study consumer behavior and suggest areas of improvement.
Grow your industry knowledge
These are some common roles on a demand generation team. By leveraging the expertise of each specialist, your team can effectively create awareness and interest in your product, translating into quality leads and sales for your business.
4 popular demand generation solutions
Here are four common software demand generation professionals use to track campaigns, automate, measure metrics, and scale their agencies.
1. Act-on for marketing automation
Act-on is a dream software for demand generation marketers. It’s a marketing automation platform that makes it easy to attract, engage and convert prospects to clients all in one app.
It offers various features such as email marketing, lead scoring and nurturing, landing page creation, social media management, analytics and more. Act-on is great for creating, implementing, and optimizing your marketing campaigns.
2. Hubspot marketing hub for marketing strategy
Hubspot marketing hub is a platform that provides a range of tools for marketing and sales teams to manage their marketing tactics and improve their performance.
Some of its features include website and content management, social media marketing and email and campaign management, lead management, reporting and analytics.
3. Service Provider Pro for client management
Once your demand generation strategy is in full swing, you’ll need a platform to manage clients. This is what SPP was built for.
One of SPP's features that’s great for demand gen is the drag-and-drop form builder. You can use it to create custom contact forms for inquiries or to get prospects as leads into your client portal.
4. Xoxoday Plum for rewarding loyalty
Rewarding loyal customers is a great way to keep generating demand for your product. It also helps with word-of-mouth marketing as customers are more likely to refer others to your business if they are satisfied with your services.
As such, you can use software like xoxoday plum to send incentives to your loyal clients. Xoxoday plum offers a range of tools for employee engagement, rewards and recognition. It helps businesses improve employee morale and productivity. This way, you can generate leads through referral programs and employee advocacy.
What is demand generation FAQ
What is meant by demand generation?
Demand generation is a broad marketing strategy with the goal to bring attention to an offering, usually via free content (blog posts, videos, infographics).
What are demand generation campaigns?
A demand generation strategy can include specific campaigns that have different goals. For instance, focusing on being interviewd in podcasts to reach a specific audience.
Demand generation vs. demand creation?
While the goal of demand generation is to find quality leads for your sales pipeline, demand creation focuses on building awareness about your product or service.
Scale your agency with the power of demand generation
As you’ve seen throughout this article, demand generation is an essential strategy for any agency looking to build an effective sales process, increase its customer base and drive sales.
By identifying your ideal clients, creating compelling content, implementing targeted marketing campaigns and leveraging several channels, you can effectively generate demand for your products or services and get high-quality leads.
Also, it is important to continuously track, analyze and optimize your demand generation efforts. This way, you can be sure you are reaching your target audience and acquiring clients in a way that is not affecting your bottom line.