November 23, 2009

Demand Generation in the 21st Century

Sales teams cannot reliably meet their numbers by simply selling to those who are ready to buy.  That is because for every customer shopping for a solution there are 8 or 9 that have could buy, but don’t realize that they have a problem, or if they do don’t yet have a budget.  That means sellers must sell to those who are satisfied, in the hope that they can uncover and bring to the fore a latent demand for their solution.

Why Demand Generation is Challenging

The focus on demand generation is one of the most fundamental transformations in the role of the salesperson and the sales organization.  There are several reasons:  

It requires new levels of confidence, knowledge and skill.  That is because the salesperson’s knowledge of features and benefits is not longer sufficient.  Instead he, or she must be able to connect with the customer’s business and industry drivers and to shape to the business case.

It requires a new mindset change - one that can be quite a challenge for sales managers and their teams.  That is because it requires focusing effort on activities that may not contribute to this year’s target.  The payback from demand generation activities, while difficult to measure is long term.  So it requires a commitment of time and resources to activities that will not payback this quarter, or perhaps this year.

It requires a revision of traditional approaches to prequalification.  Indeed the replacing of prequalification with marketing and nurturing.  Leads are generated and prequalified as regards sales readiness.  However, contacts are nurtured to sales readiness on an ongoing basis.  It means replacing budget, authority, timing and need as the criteria for who to target, with profiling customers based on the basis of sector, size and so on.  Of course, it does not mean that prequalification is scrapped; it just means that it is held off until a sales cycles is nascent.

It runs counter to the existing metrics and incentives used by managers and their teams.  For example, compared to traditional selling that sells to people who are searching for a solution, it could double, or triple the time from first meeting to sale.  It could also likely to cut conversion rate to first meeting dramatically if measured in the short term.

It requires that marketing and sales work well together – the sales person cannot do it all alone.  But the marketing required is not that of the glossy brochure.  Rather it centers on providing useful, relevant and credible information to the buyer (e.g. whitepapers, case studies, etc.).

Demand generation is expensive.  It would be much easier to wait for competitors to generate awareness and demand in the market and then exploit it.  However that is not always possible.

What Demand is to be Created?
As a first step in creating demand sellers must decide what they want to create demand for?  And what fundamental need that exists in the target market - business drivers, priorities, strategies, events, and so – that can be leveraged to generating demand for the seller’s solution(s).    For example:
A supply chain solutions supplier in its efforts to generate demand for its solutions among companies unaware of the need for such a solution, took advantage of a recent food safety scare to highlighted the costs associated with meeting food traceability regulations and how their solutions could reduce them.

An IT supplier surveyed its top customers to predict what their IT priorities for next year would be.  With security, cost and compliance emerging as key priorities, the company wrote a series of best practice guides in each area and organized seminars to heighten awareness of these challenges and generate demand for its solutions as a result.

Fundamentally a basic need has to exist (such as the desire to cut costs, save time, ensure compliance, etc.), the objective is to create awareness of it and to bring it to the fore.    The challenge of the seller is to show that the performance of the buyer’s business can be improved in a compelling way that he, or she was previously unaware of.   As in all aspects of sales and marketing is important to focus demand generation efforts on the right customer and the most appropriate solution.

10 Steps to Generating Demand

1.Help buyers to evaluate and reassess their priorities by comparing them with their counterparts and peers (e.g. ‘We asked IT managers about their priorities for 2011 and here is what they said…’).

2.Quantify the problem / opportunity relating to their industry/business, using 3rd party validation to make it credible (e.g. Industry Analysts Gartner put the cost of unlicensed software at up to 30% of software budgets annually…).

3.Show them the results achieved by their peers with your solutions (e.g. ‘We have helped Company X and Y bring its award winning new products to market in just 21 weeks on a new system…’).

4.Provide useful information not marketing blurb, for example white papers, blog posts, case studies and analysts reports rather than marketing brochures.

5.Talk to those who shape priorities, allocated budgets and make decisions.  That means C Level.

6.Run educational events, such as talks, seminars and webinars, where customers and experts can talk about industry challenges and how they can be resolved.    Key to the success of these events is that they are focused on providing useful information, as opposed to simply a form to plug your company.

7.Position your company as a though leader, for example; writing posts, or articles, sponsoring research, or speaking at events.  Seek the limelight by making the topic controversial, using it to provoke and compel buyers to sit up and take notice.  Get people talking about it.
8.Link your solution with a campaign, or a cause that already has momentum.  That is with something that the customer is passionate about, something that is topical, or is ‘cool’.  It can be easier to rally people around a case than a product, or a service.

9.Enlist the support of others in generating demand, for example industry associations, experts and so on.

10.To be effective it must be sustained over time.  It is important to note that effective demand generation is not just one activity; but a programme of activity.

1 comment:

Alexander said...

good information very useful