When designing an effective demand generation plan, it is important to have goal alignment as documented in the sales and marketing plan and to create and apply a managed, repeatable process. The demand generation planning process typically starts with market sizing since it is critical to know if a market is large enough to support the revenue requirements of the business. Next, the solution needs to be clearly defined and a unique selling proposition crafted that will resonate with the target audience. The last step is to reverse engineer the revenue targets to lead targets in order to optimize the market penetration strategy.
A high level checklist for developing an efficient and effective demand generation plan should include:
- A demand generation strategy that aligns with marketing’s goals and supports corporate objectives
- An integrated demand generation plan to execute against a specific timeline (versus “one-off” programs or events)
- A database of suspects, prospects and customers with rich information
- Compelling offers aligned by audience and stage of the buying process
- Integrated marketing automation and sales force automation
- Formalized lead management processes to convert qualified leads to qualified opportunities
- Sales tools in the right formats and synchronized with the sales process
- KPIs (Key Performance Indicators), dashboards and metrics
Demand Generation Planning – Estimating the Market
Estimating the market requires thoughtful segmentation. Within a target market, it’s important to create homogeneous segments based on the appropriate criteria to support the business. Next, estimate the size of each market segment (number of companies) and document assumptions about market penetration rates, for each year, by embracing the technology adoption curve. Finally, add in estimates for the average selling price and then calculate revenue per segment.
Demand Generation Planning – Sizing the Market Opportunity
Document the total available, served and target markets. The next step is to identify the industries that are most likely to purchase the offering, based on the target account profile. Resist the temptation to default to all industries, as that will dilute the message and weaken the unique selling proposition, diminish differentiation and result in a lackluster market penetration strategy.
Even if an offering is applicable to a wide range of industries, identifying specific industry knowledge, specific workflows and subject matter experts will make a huge difference in selling and implementing the solution. Create a laser-like focus by identifying the industries and number of companies in each industry, all the while taking advantage of product differentiation and domain expertise.
Take it a step further by documenting the functions within the organization that would be part of the decision-making or implementation process. Also, estimate the number of contacts in each function that would be ideal to connect with. This will serve as a framework to develop the suspect, prospect and customer databases and enhance the market penetration strategy.
Demand Generation Planning – Demand Generation Plan Overview
It’s always a good idea to paint the macro picture before getting too far into the weeds. This is because the 30,000 foot view will effectively communicate — at the executive level — the desired goals, objectives and strategies and serve as the True North for guiding tactical decision making. First, document and communicate the objective for marketing for the year. This seems obvious but it can be rather confusing. For example, is the focus to drive revenue or bookings? Is it to drive new license revenue or installed base sales? Next, state the overall strategy—how marketing will achieve the desired outcome. Unanimous agreement from sales, marketing and the executive team needs to be reached at this point. If not, go back, rinse and repeat.
Demand Generation Planning – Reverse Engineering the Numbers
It’s important to synchronize sales and marketing, and one way to do that is through the numbers. By taking the sales goal and reverse engineering the number of responses, marketing qualified leads, sales qualified leads and closed won deals, it will be clear to the sales and marketing teams what they are signed up to accomplish. This is easily done by using actual results or estimates for the average sales price, average sales cycle, responses and conversion rates in the “waterfall” or sales funnel.
In many situations, the closed won deals are carefully analyzed to highlight where the deals will actually come from to reach the stated goals—for example, either by distribution channel or by segment within each distribution channel.
Demand Generation Planning – Terminology & Roles
Another important step in synchronizing sales and marketing is through the documentation of terminology and roles.
Demand generation, when done right, is an integral part of the sales process. Let me explain. If demand generation or marketing did not exist, a sales rep would still be expected to sell. In other words, a sales rep would be required to perform some marketing tasks. Most of the time, sales people do not have the same level of expertise to address the task as someone in marketing who focuses on the task as a full-time job. Also, because some sales reps simply have no interest in performing marketing tasks, those tasks would frequently go undone.
Assume a sales process to be linear, for argument’s sake, and place sales prospecting on the left end of the spectrum and closed won deals on the right end of the spectrum. Next, sales and marketing management should sit down and document, in the sales and marketing plan, all the steps involved between these two endpoints. Finally, a vertical line is placed, by mutual consent of sales and marketing, as to where demand generation (marketing) will focus and the precise hand-off point to sales, to optimize the lead management process.
The sales rep is an expensive resource, especially when the costs of sales engineers and other people needed to support the sales process are factored into the equation. Another point is that while salespeople are typically really good at selling, they may not be as good at sales prospecting or at other marketing tasks – even in the best run companies. Best practice is to allocate the most efficient and effective resource to the task. In general, that means the task on the left hand (sales and marketing will jointly draw this line) are typically handled by marketing while those on the right are handled by sales and that will support the market penetration strategy.
It is critical to have a managed repeatable process, clear terminology and specific roles documented for clean hand-offs and intelligent lead management follow-up. The sales and marketing teams need to work hand-in-hand every day. This means regularly communicating through meetings, conference calls and relying on the KPIs, dashboards and metrics to ensure everything is working smoothly and adjustments are being made when needed.
Demand Generation Planning – Sales & Marketing Pipeline
Many people refer to this step in the sales and marketing plan as the waterfall. Documenting these assumptions will help ensure that the market is large enough to support the revenue requirements of the business, that marketing spend will drive the appropriate portion of the sales pipeline for sales and that the market penetration strategy can be realized.
Estimate the number of suspects that can be driven into the top of the sales funnel through inbound and outbound programs. For example, assume that building a suspect database of 50 contacts for each of the 4,000 targeted companies is the goal. Research states that there are over 20 people involved in a B2B purchase of a product with a value over $100,000.00, so it is easy to see how the universe of suspects becomes large quickly. However, because there is no guarantee that the people targeted in your integrated marketing campaigns will be the 20 at each company that will actually be involved in the purchase process, the 2.5X multiple of this number provides a buffer.
Next, estimate the number of people responding to an inbound and outbound integrated marketing campaign. Depending upon whether historical data exists or not, this may need to be an assumption based on industry averages. Even though each program will have a different response rate, it is better to start simple with one estimate for response rates (unless actual data exists in a granular format) and expand to more granular estimates over time. Otherwise one runs the risk of analysis paralysis.
Next, estimate the number of responses, marketing qualified leads, sales qualified leads and closed won deals required order to meet or exceed the bookings or revenue target. Proactively managing this waterfall is critical as the goal is to make the funnel tight with conversion rates high. There are two ways to increase the number of closed won deals:
1. Push more through the funnel
2. Convert more of what is in the funnel
Demand Generation Planning – Model Assumptions
When building efficient and effective demand generation programs, advance planning is required.
The waterfall illustrates the steps needed to arrive at a closed won deal; however, the element of time was not included. Now, the focus needs to shift to Qualified Opportunities (QO’s) or Sales Qualified Leads (SQLs), depending upon one’s preferred vernacular.
Document the different types of demand generation programs that are available and be sure to include a time axis. It’s also key to document assumptions about the percentage of qualified opportunities that will be created for each demand generation program, by quarter.
In general, the more interaction with a prospect by a sales person, the greater the probability of a qualified opportunity being created in a shorter time span. Review these metrics each quarter and update them to increase forecast accuracy.
Demand Generation Planning – Demand Generation Strategy
In general, there are four primary demand generation strategies.
1. The Chase Strategy – when a company builds a database of company contacts that fit the specific target account profile mutually developed by sales and marketing and systematically stimulates them through inbound and outbound campaigns.
2. The Co-Create Strategy – here, a company seeks out individuals, groups, consortiums or other companies that have an existing relationship with a group of people that fit the target account profile. The focus is to leverage this third-party relationship that has credibility to gain access to their community.
3. The “They Will Come” Strategy – this concept assumes a company will create content, present compelling offers, offer subject matter expertise, demonstrate domain knowledge or simply be a high profile company that acts like a magnet to draw traffic in.
4. The Caught Strategy – in this scenario, the focus is to lure a target audience to a website by offering a compelling reason for them to visit the site. The goal is not to have someone fill out a form, but to capture the name of the company and automate a reverse look-up to gain contact information for people that map to a specific target account profile. The focus is centered on determining which companies “have smoke coming from within” with the assumption that there “must be a fire” inside.
Please look for Part 2 of this post that will cover the operational aspects of demand generation planning and execution.
Watch a how-to video on demand generation planning by clicking here>>