Category: Blog

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Demand gen and lead gen and when to use them

Marketers often use the terms “demand gen” and “lead gen” interchangeably, but they are actually two distinct concepts, with some overlap. I’d like to clear up what they are and how they differ.

Demand generation is focused on building awareness of the problem a product solves and the solution it offers, and guiding prospective buyers through a journey. Demand gen ends up relying almost entirely on content generation in a variety of mediums.

Lead generation, as the name says, is focused on generating leads (sales ready and not) and qualifying them. It includes a variety of methods, including inbound marketing (using content and SEO), advertising (PPC), content syndication, purchasing leads, outbound email and telephone marketing (SDRs), etc. 

For purposes of this distinction, lead gen is concerned with the initial conversion activity – getting someone into the funnel, regardless of qualification. Once they are in, demand gen efforts nurture them along to increasingly qualified stages (by raising their awareness of the problem and solution), and eventually they are sales-ready. 

You could have some lead gen overlap here, as you may want to proactively qualify them during the nurture process. Although nurturing is a demand gen activity, qualifying them is lead gen. For practical purposes, the distinction is meaningless here.

One way to think about the distinction that does make a difference is to consider the content used for each. The goal of lead gen content is to get someone to give up their contact information (convert) and download it. The focus is on the content piece itself – it’s what the prospect wants. It needs to be attractive and interesting, but doesn’t need to lead back to the company. All we know is that we’ve offered something of value in exchange for the opportunity to talk to you in the future.

Demand gen content, on the other hand, is all about spreading awareness of the problem the product solves and the solution. It must be focused on the solution, but it should be spread as far and wide as possible. Demand gen content is less likely to be gated – the goal is getting the word out, not getting leads.

Product breadth or flexibility is not a compelling differentiator

Why do CEOs and CTOs think that having the “most complete” or “most flexible” product is something to be proud of? It’s not. In fact, it’s a red flag and something to run away from.

We’re all customers.

As a customer, when I buy something, I want the best solution to solve my need. I don’t really care if a product solves others needs as well. Is it best for me?

Yet, I see numerous B2B companies crowing about their product breadth or flexibility. It’s “the most robust” or has “the broadest feature set” or is “the most flexible” and the like. Multiple CTOs have told me “we can build anything with our product.” Often, this is backed up with a Harvey Balls chart showing their product alongside the competitors. “Gartner says that these are the key features for our market, and we do ALL of them while [insert competitor] doesn’t.”

When you drill into sales, you’ll almost always find the same story: that customers are rarely (if ever) buying the whole product – they just want two or three modules – or worse, every customer is buying it for their own value prop.

Executives wonder why they aren’t growing faster when they think have “the best” product out there.

The problem is that the value of having the broadest product accrues to the business, not the customer. A customer doesn’t get any value for resources you’re spending on features or modules they don’t use or won’t use.

Getting back to my statement at the beginning: as a customer, I want the product that solves my problem the best. I generally don’t care if your product solves other problems as well (unless those are also my problems); I just want my specific problem solved.

Your company likely conducts customer interviews about your product. Making this matter worse for companies is when customers say they value the product’s flexibility, reinforcing the notion that flexibility is the value prop. When this happens, the smart exec drills deeper into the situation, to uncover why the customer values the flexibility. 9/10 times, they’ll discover that the customer was unable to solve their real problem with the products on the market, but because of this product’s flexibility, they were able to solve it. They may say they value the product’s flexibility, but what they really mean is that they value the product’s ability to solve their problem, albeit with some elbow grease. If there was a product out there that solved it directly, without elbow grease, they’d probably jump at it.

Why is this important?

First, if your product’s unique capability is its flexibility, realize that it’s not going to sell at scale. No one starts out saying “I need something flexible.” They start out saying, I need something that’ll solve my problem. Eventually, they realize that nothing does and they occasionally end up having a conversation with your sales engineer who helps them solve it. This is a great path to slow sales and missed goals. You need to address problems they are looking to solve.

Second, if you’re guiding your product’s development and working to solve an increasing number of problems, realize that your competition is working to solve specific problems you cover better, and when your potential customers are given the choice between something that is focused on solving their specific problem perfectly, and something that can be used – however imperfectly – to solve a whole variety of problems, they’ll chose the former.

When a market is new, most problems are not addressed very well, and there’s room for “generalist” products. Over time, as competitors move in, the most valuable problems are solved, leaving generalist products with lower value problems to solve. And in highly competitive markets, generalist products are left with problems that aren’t widespread enough or profitable enough for other companies to address them – the table scraps.

You can build a profitable company around this, but it’s not a growth/scale story. If you’re going for growth/scale, you can’t afford to build a generalist product.

Process is about raising floors and removing ceilings

I’ll admit it: I’m obsessed with creating processes. Whenever it looks like I’m going to do something more than once, I start creating a process. It’s nothing big – I just write down what I plan to do before I do it. Viola! A process.

Processes can take many different forms and names: a checklist, a plan, a recipe, a playbook, a workflow, etc. They are all processes. The dictionary defines process as “a series of actions or steps taken in order to achieve a particular end.“

Often the very act of writing down the steps highlights a few things I might have missed. Once I’m done, I can update it based on what actually happened, and the next time I do it, I’ll make fewer mistakes and do so in less time.

This is even more the case at a startup.

Some people cringe when they encounter a process. “It’s onerous!” they worry, “it’ll slow us down and we’re moving fast!” It might slow you down a bit. But it shouldn’t slow you down too much — otherwise, it should be reviewed and streamlined — and it might prevent you from making a mistake that will slow you down a lot more. And the next time you do it, you’ll go much faster.

Another way of looking at it is as an easy way to avoid dumb mistakes, especially in high-pressure, rushed situations, which is basically all the time in a startup. An even better way of looking at it is as a way to spend less time thinking about easy things and more time thinking about hard things. When you don’t need to spend time thinking about the little things, because you have a checklist, you can think about the big things. How can we do this better? Is this even something we want to do?

Processes are especially helpful even it comes to creative work.

At Loud Dog (the creative agency I ran), we had a process for almost everything. Some things were more logistics than anything, and these are obvious process candidates: launching a website, building a server, collecting client information, etc. But we had a process for creative things as well: creating logos, website designs, videos, developing names.

Often clients were excited about our well-defined processes. These were usually the ones that had been around the block before and seen what not having a process looked like. Other clients were reticent – mostly concerned about time and cost. “Do you really need to take all that time to generate one simple thing? I heard that the Nike logo was created over a weekend by a college student. Can’t you just do the same thing?”

This misunderstands creativity. The process doesn’t guarantee amazing. What it does is protect against downright bad. Without a process, creativity is hit-and-miss. Sometimes inspiration hits and it’s AMAZING. Other times, it’s not. A good process avoids this, grants a higher likelihood of amazing, and ensures good. There’s plenty of bad out there. When you need to generate results, not just the possibility of results, you need a process.

Well-defined processes help organizations scale.

Beyond ensuring good quality, good processes codify and distribute knowledge, ensuring consistent quality as an organization grows.

Every organization engages in repeated activities, from finding and hiring new employees, to designing new features, to marketing, selling, and servicing customers. The more of these repeated activities an organization is able to identify and codify, the more they will maintain quality as they scale, and the faster they’ll be able to scale.

Ad hoc efforts are the enemy of scale.

When a team fails to introduce process to their work, they end up relying on ad hoc efforts – one-time efforts designed specially for the task at hand. Although sometimes ad hoc efforts are necessary, they often rely on the heroic – and siloed – efforts of individuals. And individuals are not scalable. Processes are the opposite of ad hoc efforts.

At the end of the day, processes ensure consistent quality and allow organizations to scale. Creating good process is challenging and hard work, but well worth it in the long run. Relying on ad hoc efforts can create good short-term results, but you end up relying on heroic individual contributions that aren’t always duplicable and are never scalable.

Of course people like sprawl

I just finished reading an article in the Atlantic Monthly about El Paso’s struggles with urbanization. The article suggests that there’s less demand for new urbanism because – shock! – people actually like the suburban lifestyle.

Of course people like the suburban lifestyle! This shouldn’t be a surprise to anyone. The problem with suburbanism and why we should promote urbanism isn’t because people actually like an urban lifestyle, it’s because there are hidden, long-term costs of suburbanism that are rarely accounted for. These include environmental costs, social and cultural costs, and basic costs of ongoing community service. Unlike many urban costs, these don’t come out of our pockets today, but come out in the long run.

This is tied to a larger American problem of mispriced goods. Capitalism is a wonderful system, but relies on a few fundamentals, including transparency, competitiveness, and accurate pricing. When goods are not priced correctly, we can’t act rationally. And suburbs are not priced accurately.

No wonder, then, that people love living in them! You get unbeatable convenience, room, and an easy lifestyle for much less than its worth. Unfortunately, our communities will pay the price in the end.

Bottoms-up vs Top-down sales models

I found this post on new enterprise versus old enterprise software sales interesting: http://brandonb.cc/is-your-b2b-startup-new-enterprise-or-old-enterprise

The basic gist is that the traditional top-down enterprise software sales model (“old enterprise”) – characterized by executive-level contacts and long sales-cycle – is being joined by a new model that starts from the bottom and goes up (“new enterprise”). The author goes on to describe some patterns he’s observed, concluding that it’s really driven by the customer.

I don’t have fully fleshed thoughts on this, but a few things spring to mind:

  • As SaaS becomes more prevalent, more types of software will be available in the “New Enterprise” model.
  • Siloed data continues to be a problem – this is really only fixed by a top-down approach. It can be alleviated, however, by more open software. Different topic, but I expect “openness of data” to be a corporate requirement in the future (i.e., don’t buy software that tries to lock up our data).
  • The most successful companies will be those that can master both, using a bottom-up approach to support an eventual top-down sale. Winning products need to work (and be compelling) on their own, and support the complexity that a full-enterprise sale requires. Right now, most companies seem to be good at one or the other.