Why Does the Demand Creation Function Exist?

The Demand Creation Function, if Done Correctly, is Part of The Sales Process.

The demand creation function exists because it requires specialized skills over a broad range of topics. If performed by a rep, it would require mastering a number of concepts and techniques that account for a small fraction of what a sales rep should be doing (face or voice time with customers and advancing qualified opportunities in the pipeline) in the course of a day. In other words, if the demand creation function did not exist, sales reps would be responsible for performing the tasks of the function and they simply don’t have the time or interest to do it well, consistently.

Some companies do not have a Demand Creation function and there are three primary outcomes: 1) the tasks would not be done; 2) they would be performed in a substandard manner, or; 3) in a few rare instances the tasks would be performed well.  There were enough terms and concepts in that response to screw an organization up for 6-12 months. I know as many consulting opportunities I receive prove this point. Let’s make some sense out of it.

First Point: Lead Generation vs. Demand Creation

When the term lead generation is used, typically, the speaker is referring to a “webcast”, an email blast or a tradeshow. There is little focus on integration with other demand creation vehicles, with other marketing activities or with demand management. For the most part lead generation produces one offs or drive bye’s that are suppose to create “Leads” and it is assumed more with a focus on CPL.

As opposed to Lead Generation, Demand Creation is a concept that focuses on sales objectives, specifically, bookings. A Demand Creation plan is focused on building and integrated plan, jointly, with Sales and Development. The objective is to build a plan to make quota based on reverse engineering the numbers (average sales price, average selling cycle, number of targeted companies, conversion ratios, time lags, etc). The other side of the equation is to understand the products and solutions. The Demand Creation team works with product marketing / solution marketing / industry marketing teams to package the solutions and key messages that the company will go to market with for the specified quota period. The net result is an integrated plan that will drive bookings.

Second Point: The Efficient Allocation of Resources

The cost of a direct sales rep for a technology company selling to an enterprise is about $400K per year (assumes 200 business days a year and the cost is ~$2K/day or $150/hr). The most value a rep can provide is when they are interacting directly with a customer or qualified prospect. So, the objective is to remove all tasks do not fit this bill.

Percentage of time and specialization. A sales rep would spend a very small portion of their time building lists, developing messaging, writing emails, creating signage, building content, developing offers, etc. The quality of work will vary as some sales reps lack training, have little interest and lack the time to perform the task well. However, if you take key tasks (DB Manager, Social Media Community Manager, Lead Nurturing, Event Management, etc.) from all of the reps and create a full time position to perform this function in a one to many model, reps will have more bandwidth to focus on the high value aspects of their function (customer and prospect engagement).

Third Point: Penny wise and Pound Foolish

If the Demand Creation function did not exist, the requirement does not go away, it simply falls on the shoulders of the rep. Some Reps may be able to do a good job at all aspects but the majority will not – for reasons described earlier. However, even if a rep can do most tasks well, once their pipeline fills, they will have to turn attention away from demand creation activities so a pipeline crash is eminent. If the pipeline does not fill it will reinforce the fact that the resource to perform the task is not optimized from an ability perspective. Not to mention the $150 an hour price tag. Remember, if a rep has a $2M nut and the ASP is $200K, they need to close 10 deals and that is almost one per month. Some studies suggest that the actual amount of time to close an enterprise software deal is 30-45 business days and the elapsed time may spread from 6-12 months.

This is why demand creation is so critical to the organization. The issue is that most companies do not understand the nuances of demand creation, do not hire the right people or cannot find the right people and they resort to lead generation or letting the sales reps fend for themselves. The net result is that the probability of the company not making its number, a weak pipeline, lots of infighting, low morale and a huge waste of time and money increases exponentially.

In Summary, Demand Creation

• Allows for an intelligent approach to building qualified pipeline from an integrated plan
• Efficient allocation of resources (specialization and cost)
• Provides a consistent pipeline for all channels

For more information on building a Demand Creation Plan, visit http://www.fourquadrant.com.