Are Demand Generation Benefits Worth the Startup Difficulty?
Demand generation is complicated and expensive, at least in the short term. As a startup, is it worth doing? The answer is yes, especially if you work with an expert Chicago demand generation agency.
This blog post discusses the following to answer these questions:
- What is demand generation?
- What are its benefits and drawbacks?
- How can you manage its challenges and succeed?
If you are ready to talk about these points, read below. Let’s go!
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What Is Demand Generation?
Demand generation is a marketing framework that involves creating a need or desire among potential customers for a product or service by strategically promoting it through various channels. These include content marketing, paid ads, email marketing, and social media.
Its primary purpose is to raise brand awareness and engage users throughout their customer journey. This way:
- Your brand becomes the primary choice or one of the considerations when the audience is ready to buy.
- You can guide them effectively as they go through the sales funnel. In the process, it improves their customer experience, which can translate to customer loyalty.
Differences Between Lead and Demand Generation
Many often confuse demand generation with the similar sounding “lead generation.” Although both are interlinked, they also have major differences. To understand this, let us talk about the sales funnel.
The structures can vary depending on the industry. Usually, a target market goes through several stages before buying. These are:
The phases slightly differ for B2B marketing with intent and evaluation because of the many decision-makers involved.
As customers move through these steps, the percentage that makes it to the end (action) declines. For instance, only five might take action if you have 100 people in the awareness stage.
Demand generation heavily focuses on putting the brand into its target market’s consciousness. It is not concerned about making a sale. Instead, it wants to educate or teach the users about the brand.
- What are its features?
- How does it work?
- What benefit does it have?
- What problem is it trying to solve?
Businesses use various marketing channels to attract and engage their audiences. Users might take action if they have learned enough about a business and their interest is piqued. For example, they might sign up for a newsletter or schedule a demo.
Once users are engaged at this level, lead generation, which usually works at the bottom of the funnel, is initiated. The sales team might call or give them exclusive discounts to try a product. If the business is using email, the recipient might get access to gated content.
Benefits and Challenges of Demand Generation
Demand generation is time-consuming and risky. It is like widely casting a net and hoping that you can catch as many fish as possible. Otherwise, try again.
It is also expensive. Search engine optimization, for instance, can cost at least $5,000 a month to retain an expert’s services. On the other hand, paid ads can cost $2 per click on Google.
The question then becomes, “Is it worth the effort and resources of a fledgling business or a startup?” These are enterprises that should have a tight hold on their budget. If not, the burn rate speeds up, or the cash flow quickly dries up.
Surprisingly, the answer is yes — when done correctly. Here are the best reasons why:
1. Demand Generation Quickly Increases Brand Awareness and Visibility
As mentioned, people do not get into the sales or lead generation funnel unless they know that your business exists. Excellent content marketing strategies can let your target market know that you are open and ready to do business.
However, because you use several touchpoints, you can significantly and quickly improve your brand's visibility. If SEO takes about six months to see productive results, you can shorten it by a few weeks or months when combined with paid ads.
2. It Shortens the Customer Journey
All customers go through different stages before they buy a product (or not). You cannot control that. What you can manage is how long they stay in the sales cycle.
Demand generation also informs the audience about your business. It builds trust and credibility, so that your target market can:
- Become more receptive to your messages and calls to action.
- Spend less time comparing you with other brands.
- Avoid hesitating to engage with your business even after buying.
- Transform into advocates because they believe your products or services can also help others.
3. Demand Generation Becomes Cost-Effective in the Long Term
Like many digital marketing strategies, demand generation is not a one-time activity. It works efficiently, especially regarding cost, when you plan it for the long term.
First, it delivers high-quality leads in the following ways:
- Those with zero interest in what you offer are less likely to sign up to join the mailing list. This is true even if they get a free product or trial.
- People who take action during the awareness stage are better prepared to engage with the sales team.
Second, the framework is data-driven, helping you make sounder financial decisions. Several demand-generation key performance indicators (KPIs) can tell you which tactics are working, which are failing, and which ones you should eliminate. This, in turn, gives you a better idea about resource allocation.
Third, it can lead to a lower acquisition cost. This is because the target market has already been pre-qualified through techniques such as lead scoring. With the right data, you can customize your message and content based on their funnel stage.
How To Overcome Demand Generation Challenges
Here is the bottom line: the benefits of demand generation outweigh the drawbacks, including the costs. However, you can only maximize the advantages of demand generation when you do it right.
Here are some ideas to help you get started:
- Choose the applicable metrics to measure success. These include customer lifetime value (CLV), cost per lead (CPL), and sales quality leads (SQL).
- Invest in automated marketing software. Automation helps you save time and effort while executing demand-generation campaigns. It also helps you segment audiences and customize messages that are relevant to them.
- Ensure that your content is up-to-date and targeted. Match your marketing channels with your target audience’s demographics and online behavior. Consider their funnel stages as well.
- Leverage influencers to get the word out about your business. Reach out to mentors and experts in your industry. Ask them to share content such as interviews, reviews, or blog posts.
- Set up lead scoring systems that conform to your ideal customer profile (ICP). This helps you identify, qualify, and nurture high-value leads.
- Develop an effective follow-up system for prospects who fail to respond or express no interest in your offerings. For those who show interest, attempt multiple touchpoints using different channels. These include email, phone, and social media.
Demand generation is not the easiest marketing strategy, and all have their pros and cons. However, it is highly beneficial, even for startups with limited resources.
If you want to leverage this to boost your new business online, it helps to work with an expert. Digital Authority Partners (DAP) is a Chicago demand generation agency that can help you create a targeted program. Our knowledge and experience help you identify the right audiences, pick the appropriate channels, and measure your success.
Contact us today to discuss your business goals.
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