A demand
generation funnel is a template that prospective customers will follow as
they go through the different stages of their journey. The purpose of each
stage of this funnel is to provide potential buyers with the information and
experiences they need to move forward and make a purchase.
It’s important to
adopt the right demand generation strategy to target the right prospective
customers, achieve conversion rates for your leads, and
generate revenue.
What Is Demand Generation?
It refers to
the different activities you engage in to generate interest in the products and
services you offer. It’s a holistic marketing strategy since you’re working
with multiple channels for lead gen and focusing on the entire customer
lifecycle.
There are
different frameworks marketers can use to map the customer journey, such as
the sales or map. With demand generation campaigns, you’re focusing
on the activities that generate awareness for what you offer and create a need
for this product or service.
Demand Generation Vs. Lead Generation: Comparison
The terms demand
generation and lead generation are different. You might come across content
that uses these two concepts interchangeably. However, there are some
significant differences to consider when comparing demand generation vs lead
generation:
- With a
demand generation strategy, you’re focusing on activities that educate
your audience about your products or services. Your goal is to show how
your product or service can solve a pain point to create awareness and
generate demand.
- Lead
generation takes a different approach. A lead generation strategy is
usually about targeting a specific profile among your prospects. Marketers
often use lead generation to focus on audience segments that have a higher
conversion rate or on qualified leads that are likely to spend more.
Demand Generation Vs. Lead Generation: Metrics
Demand generation
and lead generation are two methods that rely on data. However, you’ll need to
focus on different metrics to develop demand generation marketing efforts or
build a lead generation program.
You’ll need to
track metrics tied to content performance. Impressions, clicks, click-through
rates, and conversion rates are critical for your demand generation program.
different
channels can also give you an idea of how effective your different strategies
are.
You’ll also need
qualitative data for your demand strategy since customer experience is a
critical aspect of this approach. You can, for instance, use surveys to track
your customer satisfaction index over time.
Key performance
indicators like your cost-per-lead, customer acquisition cost per single paying
customer, or your overall customer lifetime value are critical for both
approaches.
Combining Demand Generation and Lead Generation
While the
philosophy is different, there are some strategies and metrics you can use for
demand generation and lead generation.
A siloed approach
can ultimately hurt your marketing efforts, which is why it’s best to combine
demand generation and lead generation for a better marketing strategy.
Designing Your Demand Generation Funnel
There is no
one-size-fits-all in marketing. You need to look at what makes your audience
and your business unique to develop a demand generation campaign that makes
sense for your sales process.
Step One: Get to Know Your Audience
Like any
data-driven marketing program, a demand generation funnel requires a solid
foundation with quality data.
Market Research
Market research
is a great place to get started. Skipping this step can result in your
marketing or sales team operating on assumptions that turn out to be incorrect
or biased.
Conducting
market research through interviews, and analytics will help you get to
know your audience better. Your sales and customer service representatives
should also have some useful insights to share about who your typical customer
is. You can also use this information to improve your description of a
qualified lead and focus on high-quality leads.
Here are some
questions to focus on during the market research stage:
- What
are the demographics of the typical customer? Can you identify two or more
demographic profiles?
- What
are the main pain points they are experiencing? What are their goals for
the purchase?
- Is the
buyer making decisions by themselves? It’s important to consider the other
people involved in the purchase decision, especially if you’re offering
B2B products or services.
- How
much research goes into a typical purchase? What level of confidence do prospects
need to reach before they feel comfortable with making a purchase
decision?
- Do
prospects have a preferred channel for consuming content? Would they
rather read an article or watch a video? Are they researching products on
desktop or mobile?
- Who do
your prospects trust? Are they likely to listen to a brand, or do they
want recommendations from industry experts? What is the typical profile of
the influencers they trust?
Persona Development and Buyer Journey Alignment
Once you know
more about your audience, you can start developing persona A persona is an
archetype that represents your audience or one of your audience segments.
Look for patterns
and common data points in your market research to identify your main audience
segments. The personas you create should reflect the main characteristics,
goals, and pain points that the members of an audience segment are likely to
share.
Personas are a
useful tool because they help you relate to your audience. You can also create
a typical buyer’s journey map for each persona since there might be
similarities and differences in how prospects consume content and move along
the demand generation funnel.
Cost Per Acquisition
Now is also a
good time to calculate your average cost-per-acquisition. You can divide your total
marketing spend by the number of new customers you got over a certain period.
Your
cost-per-acquisition will give you an idea of how effective your current
marketing efforts are. It’s a benchmark you can use to set goals for your
demand generation campaigns.
You can refine
this important metric by calculating your CPA for the different channels you
use. It’s a good way to identify the channels that seem to work best.
Customer Lifetime Value
Another metric
you should calculate is your average customer lifetime value. This number
reflects the total value of a customer from the moment of their first purchase
to the moment they stop being a customer.
Because retention
tends to cost a lot less than acquisition, it’s important to track this metric
and implement strategies that will make customers want to remain loyal to your
brand.
You can also
connect your findings regarding CLV to the insights you were able to obtain
from doing market research to figure out which prospects are likely to have a
higher CLV or which strategies you can implement during the early awareness
stages to boost the overall CLV of a new customer.
Step Two: Map the Customer Journey
Now that you know
more about your audience, you can start building a framework that sums up their
different activities and experiences throughout the nurturing process.
Why Should Demand Funnels Be Structured?
Structuring your
demand funnel into different stages can seem like an oversimplification.
However, it’s a
model that helps your sales and marketing team visualize the progression from
an early awareness stage to the first purchase.
There are
different models you can use for structuring your demand gen funnel:
- If you
want a simple framework, you can work with three main stages, namely
awareness, consideration, and decision.
- For
longer journeys, it makes more sense to adopt a more complex model with
more stages. You can, for instance, label your different stages of
awareness, interest, consideration, purchase, post-purchase, and
re-purchase.
- If you
want to take a customer-centric approach and focus on experiences, a good
model to use would be a map with four stages, including discovery,
engagement, conversion, and reward.
Marketing Cycle Length
The average
marketing cycle length is an important consideration when mapping out the buyer
journey.
While some
products are impulse buys and have a short cycle length, other purchases
require a much longer sales cycle length because of the complexity of the decision
process.
Having your sales
team track the length of your typical marketing cycle can give you a better
idea of the number of stages prospects go through.
You can also look
for strategies to shorten this cycle or use your findings to identify the prospects
who are getting near the end of the cycle and haven’t made a purchase yet. You
can use re-engagement strategies for these users.
Create Your Map
There are a few
ways of representing the buyer’s journey map. Here are some models for mapping
out lead gen, demand gen, and how you generate interest:
- A
funnel template makes sense if you want to focus on a demand generation
strategy since this model illustrates how the size of the lead pool gets
smaller with each new stage.
- A
linear map can be useful to understand the progression from one stage to
another and focus on the strategies and experiences that result in a
conversion to the next stage.
- For a
customer-centric approach, think about creating an empathy map that shows
the key moments where the customer connects with the brand on an emotional
level to highlight the most important lead magnet for each stage.
- A chart
can be a good way to convey more information for your map. You can map out
your different stages and list the key goals, pain points, contact points,
content pieces, and influencers for each stage.
Demand Generation Funnel Progression and Conversion
Rate
If you decide to
develop a demand generation process, a funnel is the best way to represent your
sales processes.
You would have
the awareness or discovery stage at the top of the funnel. This stage
represents the initial contact with your brand. Your main goal is to create
awareness for your brand and get prospects to recognize it at this stage.
As the funnel
gets narrower, prospects move to an early research or engagement stage. They
start consuming content or connecting with your brand on social media or via
another lead magnet. Generating interest for your brand, products, or services
is important so you can begin educating your audience.
The next stage of
the funnel gets even narrower as you focus on educating your audience to
generate demand. The prospects who are still in the funnel are now in the
research stage.
You can weed out
some of the prospects at this stage and focus on sales accepted leads. The
focus is on delivering quality content and memorable experiences to deepen
their connection to your brand while sharing the information they need to make
a purchase decision.
At the bottom of
the funnel, you’ll find the sales or decision stage. This last step represents
a purchase.
However, the
journey doesn’t end there. You need to deliver an outstanding experience during
the sale, but you also need to keep engaging the customers acquired to achieve
several goals, including repeat sales, higher customer lifetime value, and
word-of-mouth marketing.
The funnel
framework illustrates how a certain percentage of your audience moves on to the
next stage of their journey thanks to your demand generation efforts.
This percentage
is your conversion rate. It’s important to track your conversion rate from one
stage to the next and implement strategies to improve your sales cycle,
including focusing on leads that are more likely to become paying customers, delivering
high-quality content, and engaging the right audience through memorable
experiences.
Demand Generation Strategies That Work
Now that you have
a detailed map for your demand generation funnel, you can work on identifying
the different strategies you can use to get more paying customers through lead
gen.
Brand Awareness
During the early
stages of the sales cycle, your focus should be on brand awareness. You need a
strong branding strategy so that prospects will remember and recognize your
brand.
Your branding
strategy can include web design, a unique color scheme, print marketing, and
the creation of a voice that is unique and engaging.
Inbound Marketing
Inbound marketing
strategies will help you capture web traffic from users who are experiencing a specific
pain point. There are many inbound marketing campaigns to explore for your
demand gen strategy:
- Your SEO efforts
will help you get clicks from users who are researching topics related to
what you offer. Start optimizing your content with a free tool like Google
Analytics. You can get a free report with useful SEO insights.
- You can
also use an inbound marketing strategy like keyword research to uncover
new trends and develop marketing materials aligned with what your target
audience is researching.
- Paid
advertising can be a great way to increase brand awareness and get more
clicks.
- Blogging
and guest posting are some of the best inbound marketing campaigns if you
want to generate leads. With a content strategy that includes
publishing new blog posts regularly, you can capture more web traffic and
help users explore content that will help them progress on their journey.
- A
newsletter or a series of automated emails can help you stay in touch with
prospects who have expressed interest in your brand. An email series is a
great way of delivering bite-sized content that will help prospects during
the research or consideration stage and that will help with generating
revenue.
- There
are other channels to explore, including social media, video, podcasts,
sales calls, and more. Focus on the ones that make the most sense for your
audience.
- Outbound
efforts can also help you get more leads. You can capture more sales
opportunities and generate interest with campaigns like sending mailers to
potential customers.
Conversions and Repeat Sales
Mapping your
demand generation funnel can help you uncover which strategies result in a
higher conversion rate from one stage to the next.
There are
different strategies you can focus on to boost conversions and get repeat
sales:
- Developing
a logical linking hierarchy will help visitors find more content that is
relevant to their journey and engage with your content longer.
- Many
marketers use techniques like contact forms, white papers, and newsletters
to capture leads while delivering valuable content.
- Don’t
forget to create strong calls to action. While encouraging users to make a
purchase isn’t a good strategy if you implement it too early in the buyer’s
journey, you can create CTAs that encourage prospects to sign up for your
newsletter.
- Lead
nurturing is important. Once you get the contact information of a
prospect, keep delivering content at regular intervals. Get their
permission to receive phone calls so you can have a salesperson contact
them.
- Focus
on engagement after the initial sale with a thank you email or a follow-up
from a salesperson. You can continue to educate customers after their
first purchase for cross-selling or upselling..
How to Improve Your Demand Generation Process
You should aim
for continuous improvement and always look for ways of building a better demand
generation funnel.
Close Rate Per Channel
Collecting data
about each channel so you can calculate your close rate per channel will give
you a better idea of which channels are the most effective. You can then decide
to adjust your marketing budgets for these channels.
You should also
calculate your average profit per channel to identify the best demand
generators and focus on these channels for your demand gen efforts.
How to Measure the Success of a Demand Gen Campaign
You should set
some goals for your demand generation campaign and establish a timeline to
track your progress.
If you fail to
hit a milestone, think about making some changes to the strategies you use.
Having some clear goals will help you determine what success looks like for
your campaign.
Focus on Incremental Improvements Over Time
Keep in mind that
change isn’t going to happen overnight. You might need to implement some
fundamental changes to your sales and marketing processes to build an effective
demand generation funnel.
Be patient since
you need to collect data once you have a funnel in place to identify where
there is room for improvement.
Conclusion
Using a demand
generation funnel as a template for the buyer journey will help you focus on
the strategies that generate awareness for your demand while delivering value
to your audience. It’s also an approach that will help your marketing and sales
teams work closely together to achieve better results.
FAQ
Here are a few
additional things you should know about demand gen.
Why is a demand
funnel important?
A demand gen
funnel is an important tool because it helps you visualize the different stages
your target audience goes through from the moment they become aware of your
brand to the moment they make a purchase decision.
It also helps you
identify the channels and strategies that help prospects move from one stage to
the next during this process.
How to design a
demand generation funnel?
You can use a
template with three or more stages. Marketers often base their map or funnel on
a model with the awareness, consideration, and decision stage but you can adopt
a more complex model.
It’s important to
conduct market research to get a better idea of what the typical buyer’s
journey looks like for your target audience so you can adopt a model that makes
sense for your industry and the right target audience.
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