Demand generation describes marketing activity that builds awareness of – and demand for – your company’s products and services. Focused on the top of the sales funnel, demand generation activity is always free for the audience to consume (that is, it doesn't sit behind a paywall or form), and can incorporate a range of marketing activities, from social media marketing to search engine optimisation (SEO), pay-per-click advertising (PPC) and content marketing. In short, demand generation refers to any activity that gets people interested in who you are and what you offer.
Demand generation vs. lead generation
Lead generation and demand generation are complementary but separate activities. Where demand generation ‘warms people up’ by engaging with them in ways that build awareness of your brand, lead generation is about sealing the deal. It refers to marketing activities that turn that interest into names and contact details that you can sell to. LinkedIn is an important platform for lead generation, read how to make the most of your LinkedIn campaigns here.
Companies need both approaches to build a series of touchpoints with customers and to move them through the sales funnel, says Sarah Hughes, a demand generation marketing specialist. In B2B markets, there can be as many as 15 touchpoints before a customer makes a purchase, she adds.
How much do demand generation and lead generation cost?
Demand and lead generation each require their own budget and campaign management. On average, companies tend to spend about £6 on demand generation for every £4 spent on lead generation, says Hughes. However, what you spend on each depends on your own business situation, and which activity is likely to be more important in your specific circumstances.
Spice Kitchen is a small business that sells high-end spice tins to consumers via its website, at live events, and through wholesale agreements with retailers. Demand generation is critical to the company’s strategy, says founder Sanjay Aggarwal. “We have focused on getting our name out there at every opportunity. We’ve used email marketing and event marketing to drive almost all our growth.
"We have very attractive products that look and smell beautiful, so if we can create awareness, then our ability to convert that into sales has been great.”
Four demand generation marketing strategies
According to one recent survey, 44% of B2B marketers planned to increase spending on demand generation over the subsequent 12 months, with activities such as content marketing, virtual events and email marketing at the top of their list [1]. For SMEs wanting maximum results from a modest investment, Hughes recommends the following strategies:
1. Content marketing
Content marketing involves creating and sharing material such as blog posts, webinars and podcasts via your website and social media channels. This activity need not break the bank: according to a Semrush survey of companies across the globe, 37% of those investing in content marketing in 2020 spent less than $10,000 (£7,300) [2]. This type of demand generation helps to keep your business top of mind so, when a customer is ready to buy, it’s less costly to convert them.
Read our guide to content marketing for small businesses.
2. Virtual events marketing
Virtual events can be a compelling source of demand generation. Hughes recommends LinkedIn Events for webinars and other virtual events. The relatively new feature is free to use for businesses, and a great way of reaching potential customers and showcasing your expertise without spending huge amounts.
3. Free resources
Alongside content marketing, consider developing resources that potential customers can use or download, such as virtual tools, reports and white papers. This type of activity can be used as a precursor for lead generation activity, where users can extend their use of the free resource by providing an email address and additional details.
4. Email marketing and customer relationship management (CRM)
Email can be used to contact large groups of current or potential customers to help drive demand for your business and keep it top of mind. Personalising your contact (possible on a large scale through use of automated email platforms) can even strengthen your customer relationships. The Data & Marketing Association estimates that email marketing is one of the most cost-effective ways of generating business demand, with members generating £35 in revenue for every £1 invested [3].
Find out how to deliver an effective email marketing campaign.
How to optimise spend on demand generation marketing
Running demand generation activities can be time-consuming. Consider automating as many processes as possible to free up staff time, says Hughes.
Email marketing processes such as segmentation, personalisation and tracking can be easily automated and this functionality is available through platforms including HubSpot, Salesforce Pardot and Klaviyo. A monthly subscription to Klaviyo costs around £300 per month to contact up to 50,000 recipients.
Use Google’s free Keyword Planner tool to identify your audience’s search terms. Tools such as Wordable can help you to import content from Google Docs into WordPress without the need to re-format, which saves valuable time.
Social media tools such as Hootsuite, Buffer and Later make it easy to schedule, plan, and review content across multiple channels. Many of these platforms also offer built-in analytics that will speed up the process of measuring ROI.
The American Express® Business Gold Card is accepted by platforms such as Hootsuite, Later and Klaviyo. For every £1 you spend, you'll receive one Membership Rewards® point, which an be redeemed as statement credit to offset your other business costs¹.
At Spice Kitchen, Aggarwal has hired specialists for SEO and email marketing on very short-term contracts. “We spent a few thousand getting systems set up and automated, so that we can run those ourselves, or they run themselves,” he says. “We’ve hired an in-house copywriter, but for everything else, I ask experts to come in and teach us how to do it ourselves, which has worked out to be much more cost-effective.”
Measuring demand generation performance
Demand generation KPIs can be divided into metrics that track engagement, and metrics that track revenue:
Engagement metrics
- Website traffic, dwell time and bounce rate
- Free trial sign-ups, free tool usage, and resource downloads
- Email open rate (OR) and click-through rate (CTR)
- Social media likes, shares, comments and saves
Revenue metrics
- Cost per acquisition (CPA) – this should be measured by channel and/or campaign so you can identify where to focus your efforts
- Sales cycle length – track how long it takes to convert a lead into a customer and test different tactics to shorten this time period
- Customer lifetime value (CLV) – it takes time to measure the net profit that a customer generates over the lifetime of their relationship with you, but it’s an important indicator of which activities make the most difference to your business
The American Express Business Gold Card gives you up to 54-day payment terms, so you have time to measure the performance of your demand generation campaigns before committing to further spend².
1. Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms and conditions apply.
2. The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card.
Sources
[1] durhamlane, The State of Demand Generation: 2021 Report
[2] SEMrush, Content Marketing Statistics You Need to Know
[3] Data & Marketing Association, Marketer Email Tracker 2020
