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 is not a compelling differentiator

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. It’s “the most robust” or has “the broadest feature set” and the like. Often, this is backed up with a Harvey Balls chart showing their product alongside the competitors. “Gartner says that these are the key features in this market, and we do them while [insert giant, fast growing company] 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.

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.

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.

Market confusion – what’s in a word?

Business strategists and marketers throw the word “market” around liberally, using it in different contexts with different definitions without explanation. This can be confusing.

I especially notice the difference moving from an investment perspective to an operational perspective. In the former, the term is often more seller-focused. For example, “who are the players in the market?” In the latter, the term is often more buyer-focused. For example, “our market is automotive companies.”

“The market is $30 billion.” (Overall bazaar, refers to the amount buyers are spending with sellers.)

“We sell to the higher education market.” (Refers to a group of buyers.)

“We can beat anyone in the market when it comes to color choice.” (Refers to a group of sellers.)

“Let’s take this RFP to the market.” (Sellers)

“The market won’t respond well to that message.” (Buyers)

Like I said, this can get confusing, especially if you’re trying to discuss something with precision, like a model for positioning.

For the sake of clarity, here are some definitions.

Market: The overall bazaar, including sellers of a product type and buyers of a product type. Buyers have some (but not all) overlapping problems to be solved (needs), and sellers have solutions with some (but not all) overlapping capabilities. The definition is typically somewhat loose, and different parties may not agree on the specifics. Analyst groups derive a lot of value from time defining and sizing markets.

Market segment: A group of buyers of the product type, filtered by one or more criteria. Needs are very overlapping.

Target market: A market segment the seller has chosen to target.

Product category: Aka Product Type. A group of products that solves a common set of problems. A product category can be broadly defined or narrowly defined (e.g, network security products or firewall products, respectively). Which is used is dependent on the context.

Competitive arena: The vendors competing to sell to a particular buyer. Over time, a company will find itself in the same competitive arena repeatedly, competing with the same sellers to meet similar buyer needs. This is likely a subset of all sellers, with many overlapping capabilities. In aggregate, this is typically a product category.

An important characteristic of these concepts is their semi-organic nature. A market needs both buyers and sellers, and the components are defined by what sellers are offering and what buyers are looking for, and these influence each other. Existing buyer needs (i.e., needs buyers are aware of) are the biggest factor in determining markets, but sellers can introduce new needs and influence the perception and priority of existing needs.

Sellers need to tread a delicate balance: get too far away from what buyers are already looking for and you risk “getting ahead of the market” and failing. Only follow what buyers are already asking for and you risk becoming a me-too product, competing only on price.

Threading this needle correctly is the goal of product strategy and positioning, which I’ll explore in a future post.

What people miss about Kevin Durant moving to the Warriors

With the first game in the 2017 NBA Finals behind us (as well as the entire 2017 NBA regular season), we can confidently say that Kevin Durant has made the Warriors a better team. No surprises there.

But what’s missing from many conversations is how Golden State has made Kevin Durant a better player. KD is playing at a higher level now than he ever did in Oklahoma. Sure, he’s not making more points, but he’s making them more efficiently, getting more rebounds, blocking more shots, generally playing better.

There’s all this talk about how unfair it is that KD went to the Warriors, how shameful it is that he joined the team that he lost to, about how there’ll be asterisk next to his championship ring since it’s not his team.

But what if that’s not what it’s about?

What if it’s just about someone who loves what they do (play basketball) and wants to do it to the best of their ability?

The Warriors don’t allow him to just win rings, etc. They allow him to play basketball at his highest level. It’s not about points made – it’s about how they are made. The Warriors were built to allow Steph Curry to do Steph things, and are based on what Draymond Green can do. And KD got lucky – he fit right into their scheme. He makes them better, but just as importantly, they make him better.

Who doesn’t want that?

There’s a saying that if you want to be successful you should maximize your strengths. You can focus on minimizing your weaknesses, but in the end, you won’t achieve your ceiling, you’ll just raise your floor. By being part of a team where your strengths are maximized, you can perform to your greatest potential. By joining the Warriors and ignoring the slings and arrows, KD found somewhere that his strengths would be magnified, and his weaknesses mitigated. There’s no surprise he’s willing to take less money to stay in that environment. It’s about more than winning, it’s about fulfilling potential and about transcending limitations.

There are some good lessons in here for the rest of us. Most people spend their careers fitting a square peg in a round hole and trying to sand down the edges. What if you found a square hole? Figure out what you do best, and find a place where that’s recognized, appreciated, and needed.