In the business world today, Demand Gen Strategy is a necessity, not an option.
Building a Demand Gen department in-house has many downfalls when compared to outsourcing Demand Generation to companies that specialize in it.
- More expensive
- Less effective
- Far less scalable
Passive Demand Gen by nature is flawed but a strategy that are ONLY of Passive Demand Gen will always fail.
- Large companies can literally buy Passive Gen business by outspending the competition but they will have to overspend to do it.
- Small companies will always live in the shadow of those that can spend more.
When done correctly, Active Demand Generation can be successful for everyone.
Utilizing Active Demand Generation will always result in the company with the better product/service winning the business instead of the company that spent the most.
To Survive, Companies Must Have a Demand Generation Strategy and a Program of Implementation
Let’s face it, the days of organic growth are long gone. How we build a business now only vaguely resembles the standard methods from just 1 decade ago. Businesses are seldom on Main Street with a steady flow of foot traffic that are potential buyers of your product/service. Businesses now exist virtually. Most have a brick & mortar office of some sort that is their actual HQ, but this office is where the business is ran and possibly where deals are closed or current customers are managed. Today’s office does not benefit from walk-in sales and quick paced organic word of mouth / referral growth. Instead, your storefront is located on the web. AND, with a website, your target market is no longer buyers in your smaller geography, it is now ANYONE IN THE WORLD that is shopping for services like those that you offer. Even better, web marketing is VERY affordable. You just put up a web site and then hire someone for a few bucks a month to handle the Search Engine Optimization (SEO) and Search Engine Marketing (SEM) that will hopefully get your site to pull up in the first page or 2 of results when buyers are looking for your services. In a perfect world, this passive web marketing should result in big upticks in traffic and more opportunities to close business than days past.
Passive Demand Generation Allows You to Survive… Not Compete
Actually, the opposite is true. The same internet that allows you to now compete all over the world, also allows competitors from all over the world to compete in your geography. The larger competitors are spending 100X on SEO and SEM than your entire marketing budget and the end result is that they continue to dominate the first few pages when buyers are actively shopping for services like yours on the internet. 10 years ago you may have dominated the local market but now you compete head to head with global companies that easily grab up the buyers in your target market and leaving you with 1 new client here and there that slipped through the cracks or that you were able to pick up as a referral. Unfortunately, this pace of new client acquisition is difficult to forecast, dangerous to rely on and will never create the level of growth needed for you to build a business that is sustainable, marketable and eventually saleable.
Passive Demand Generation is a Bidding War. He Who is Willing to Spend the Most Will Win.
Passive Demand Generation is not restricted to web marketing. Email marketing, social media marketing, tradeshows, TV, radio, billboards and others are Demand Generation approaches that put your message out to a HUGE audience that is usually not in a buying cycle for your service. We are all wired to filter out advertising that doesn’t correlate to something we are actively seeking unless we find it artistically appealing. But even then, the fact that your advertising is humorous seldom means that I will decide to purchase from you, especially if I am not in the market for your service. For those people that do get nudged into a buying mode or buying cycle, the same huge competitors that you always face will be using the same Passive Demand Generation channels but they will have the added bonus of name recognition and deep pockets. So, the big companies will spend TOO MUCH MONEY and although they grab a piece of the small pool of active shoppers out there, the inevitably spend more than they recoup. Smaller companies often allocate marketing budget to many if not all of these different Passive Demand Gen approaches. Unfortunately, money spent on these passive approaches by a smaller company will often result in a $0 revenue gain.
Active Demand Generation Levels the Playing Field
Active Demand Generation is the act of taking your value proposition, your differentiators, your market identity out into your target market and presenting it directly to the individual decision makers that experience has shown are the best target for your product/service. Active Demand Generation means that everyone is exposed to your messaging because it is being presented directly to them individually. Traditional emotional blocks and objections that crater Passive Demand Gen results can be anticipated and avoided so your true value can be delivered to a receptive person who can then give an honest assessment as to whether they are a good prospect for your services or not. Active Demand Generation is not something that requires the deep pockets of a huge organization and its success rate is not reduced when competing against flashy campaigns from your competitors. Active Demand Generation allows your message to be distilled down and presented person to person where it can resonate and be truly heard and understood.
Cost Effective High Producing Demand Generation is Not Home Grown
When it comes to Demand Generation, businesses really have only 2 options:
- Hire an internal person or an entire team and try to do your own Demand Generation
- Manage all of your Passive marketing efforts
- Manage all of your Active marketing efforts
- Outsource a piece of your Demand Generation strategy or maybe even outsource everything and let an expert do the right things to create demand for you and your services.
Unfortunately, when you compare the two options, it is hard to justify option 1. According to payscale.com, a full time Demand Gen manager on your staff is going to require you paying out a median salary to them of $76k US / year. Multiply that amount by 1.25 – 1.4 to allow for the additional costs of an employee that are often overlooked: health insurance, workman’s comp, unemployment… et al. That means that having a single person on staff focusing exclusively on Demand Generation will on average cost your company of $95,000 to $106,000 per year. This is just the cost of the person, to be able to effectively fulfill the role you need them to fill, they will need access to Demand Gen specific tools and resources. That’s another $1000+ per month in expense. The result? An overpaid, overburdened individual that is delivering leads that are all over the map regarding qualifications and are impossible to follow up on in a strategic and predictable manner.
Reevaluate Your Demand Generation Strategy
Even Inc.com is pushing Passive Demand Generation as the Holy Grail. Their article from May 16 2016, Seven Essential Strategies to Succeed at Demand Generation, presents only 7 Passive Strategies in their list. On the information super highway, Passive Demand Gen is akin to putting your billboard in the middle of millions of other billboards cluttering the roadside. Be a change agent in your industry and make an aggressive move to acquire market share, new customers, and net revenue. Adopt an Active Demand Generation strategy now while your competitors are still putting up billboards.