Every once in a while, a new buzzword comes along that is predicted to change the way marketing is conducted forever. Back in the 90s, we saw the arrival of CRM. From the mid-noughties on it has been Web 2.0; now, in the second half of 2008, a new marketing phenomena has arrived from across the Atlantic, which once more promises to fundamentally change the face of B2B marketing. This ‘next big thing’ is demand generation, and if you’ve not heard of it or experienced the hype surrounding it so far, you soon will. Not only that, you may also be clamouring for the money to make it a reality for your organisation.
So what exactly is demand generation? How does it work and what does it promise to do? More to the point, is it really as important as its purported to be? How can we be sure that it’s not just another false ‘new paradigm’ for marketing (such as CRM) that initially promised the earth, but ultimately failed to deliver for many companies?
Harmonious relationships
Despite the rapidly growing level of interest, there is no precise and universally agreed definition for demand generation. Someone who has a better idea of what it means than most is Stuart Wheldon, who is director of customer services (EMEA) for Eloqua, one of the leading technology vendors in this space. “Essentially, demand generation is the summation of all the marketing activities conducted to build contact with customers, and then guide them through the process to closing the sale,” he comments.
What is key, he explains, is that demand generation has two main elements: lead generation – which has historically been handled by the marketing function – and lead nurturing – which is generally regarded as the domain of sales. Demand generation, says Wheldon, brings both of these elements together in one integrated process, with the aim of dramatically driving up efficiencies and effectiveness as a result, and ultimately profitability.
Norman Campbell, MD of marketing agency eMarket2, agrees that the potential benefits from demand generation are considerable. He says the hype surrounding it is a consequence of its promise to heal the much-discussed dysfunctional relationship between marketing and sales. Campbell explains that traditionally in most B2B organisations, marketers are focused on conducting ‘interruption marketing’, to grab the attention of prospects. “If they are fortunate, it works and they get a lead which they throw over the fence to sales to follow up,” he surmises. At best, this is a very poor system; at worst the wastage can be enormous, because the outputs from marketing don’t meet the needs of sales. “Ninety per cent of all leads are not followed up – sales people will cherry pick the best ones. They are not good at nurturing.” The remaining leads are simply ignored. By contrast, the objective of demand generation is to hand over fewer, better leads, which will be easier to convert. Those leads that are not handed over remain in the pipeline, with a view to ongoing communications and future conversion.
On paper at least, this would seem to be a far more logical and rational methodology, and its ability to generate increased effectiveness is certainly believable. However, Campbell contends that the arguments in favour of demand generation have been brought into sharper focus by recent events; specifically the current state of the economy in Europe and the US. “While the economy was good, companies had no need to innovate,” he says. With tougher times potentially ahead, companies need to scrutinise their processes to ensure they are achieving the optimum results.
Unsurprisingly, Wheldon at Eloqua readily agrees. “If my budget were being squeezed and I could bring in technology to reduce campaign time and improve output data, I would consider it. It’s a good investment to make when money is tight.”
Philosophy or technology?
It would seem that the potential benefits of demand generation are clear: it helps companies to do both marketing and sales better. In this respect, it could be described as a ‘no-brainer’, something every company will naturally be considering. This being the case, the next obvious question is ‘so how do you do it?’ And herein lies the potential catch with this marketing panacea.
Like CRM before it, demand generation is a business/marketing philosophy which is generally requires technology to realise. And whilst demand generation technology is nowhere near as complex in terms of implementation as the early CRM systems were, it remains a significant commitment in terms of cost and resources, particularly with regards to training.
Campbell of eMarket2 agrees that effective demand generation is heavily reliant on technology. “Technology is not essential, but it will mean companies are more likely to succeed. You need an email system to manage the drip-feed of information to prospects. Without one, [demand generation] will be difficult.”
Whilst email broadcasting functionality within demand generation applications ensures that the right information is getting through to the right prospects – a process which is often automated – analytics capabilities allow marketers to maintain careful scrutiny on the impact of various campaign components and carefully manage and measure ROI.
Given the level of sophistication of these two key demand generation functions, it’s not surprising that specialist applications have often been criticised for being overly complex. With this complexity comes cost, and to date, demand generation technology has not been cheap. Eloqua, for example, has been described as the ‘Rolls Royce of the demand generation world’. However, Wheldon plays down the importance of technology in achieving the business objectives. “It is possible to do demand generation without top-end technology. You certainly don’t need massive implementation. Many companies start simple, focusing on better campaign management. Demand generation is a journey, and every company is different. You need to optimise and learn over time. There is no magic bullet.”
Whilst this is certainly true, it is interesting to note that Eloqua has recently launched an entry-level solution [Eloqua Express – see p10], with a lower price point and less functionality. Whether this is a response to analysts’ comments that Eloqua’s flagship solution may be be too functionally rich for many organisations, or the vendor’s response to more opportunities further down the foodchain, is a matter of perspective. Whichever way you choose to look at it, demand generation is being brought to a broader audience.
Cultural shift
Whilst technology is one barrier, Laura Ramos, vice president at Forrester, suggests there may be a bigger ideological, and perhaps psychological, hurdles to overcome before demand generation can become a reality in many organisations.
She says the culture and ethos of how many marketers behave will make migrating to a new mindset difficult. “Marketers are very quick to respond to [the need to make more sales] by just running another lead generation campaign, without really understanding what happened to the last one, and why this approach isn’t working.” The issue here is accountability and measurability, something which has long been the Achilles’ heel of many marketers. Ramos continues, “Marketers don’t invest in technology: they are used to spending money on marketing programmes [campaigns]. Migrating to lead generation is a big leap culturally. It requires a change in practice in terms of the way marketing works and the way it is understood by the rest of the organisation. Typically marketing is seen as a cost centre, not a strategic facility.”
However, Wheldon contends that marketers are not afraid of change and are actually embracing it. “We see that marketers do want to become more accountable,” he says, adding that far from being a barrier, implementing specific demand generation technology can actually be an enabler and assist in this process. “We can help them through this change process. But they have to be open [to change] – if not then they will struggle.”
Reopening old wounds
Unsurprisingly, the key cultural issue that must be overcome in order to successfully embrace demand generation is the relationship between marketing and sales – or perhaps more appropriately, the lack of relationship. Ramos says rather than easing inter-departmental relations, demand generation may actually cause further conflict.
“Sales may feel threatened [by marketing requiring a bigger role in lead management],” she says. “They may agree with to it, but then demand to see all the leads anyway.”
In most B2B organisations, the sales function is higher up the pecking order than marketing and if a pitched battle is waged over who ‘owns’ the leads, it is likely that sales will win. Arguably the only way to overcome this is for the organisation and its management to undergo a wholesale attitudinal shift; something which is unlikely to happen in the short term.
So, with these obstacles in mind, is it really possible for companies to adopt the new mantra of demand generation? Ramos believes it is: not only that, she also contends that if marketers ignore demand generation, marketing as a profession could be in terminal trouble. “If demand generation doesn’t take root, B2B marketing could become obsolete. Unless they prove demand is there, find the right customers and reduce the cost of sales, they simply won’t have the time to focus on the many other things that they need to do. It’s time for marketing to grow up.”
Campbell is similarly vehement, adamant that companies must embrace the opportunity that demand generation presents. “Companies need to do more with less. They have to get smarter. The old rules have changed. B2B marketing has to change too.”
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EVENT: Click here for details of B2B Marketing’s half day conference on demand generation
SURVEY: Click here to participate in B2B Marketing’s demand generation survey
