In B2B marketing, demand generation is more important than brand building, but only to a point.
In this week's blog, Hugh draws from our most recent alignment study, published jointly with Marketo to explain what happens when you increase how much effort you give to branding and demand generation. What we found is that increasing focus on demand generation improves closure rates, up to a point. After that point, more demand generation actually reduces your closure rates.
We'll also show you how to get the whole report, for free, at the end of this video.
In B2B marketing, demand is more important than brand, but only to a point. So, can you have too much demand?
If you have listened to some of my recent blogs, you know that in 2005 we published the first of our landmark reports into alignment. What we learned then has shaped much of the debate on the topic of alignment ever since.
In 2014 we published the 2013 refresh of the landmark alignment research. What we learned about training, process, automation, structure, tactics, demand generation, measurement and location is going to get the debate started all over again.
In this blog I am going to focus on just one chapter from that report. Chapter 8 looks at how much focus you should give to demand generation, and what effect we can have on closure rates, revenue contributions, and customer churn if we get it right. I'll also show you how to get the whole report, for free, at the end of this video.
Marketing spends its energy on a number of key activities. Some of its energy is spent getting the market ready. We call that Environmental Marketing (EM) as it is all about creating an environment for success. Some energy is spent on getting the channel ready (Channel Readiness, or CR), and some on getting the channel and market talking (Demand Generation, or DG).
Across the sample, we found marketers allocating the largest portion of their energy to Demand Generation.
1. Demand Generation 45%
2. Environmental Marketing 25%
3. Channel Readiness 10%
4. Other 20%
Good news, right? As the probability of closing Marketing-Qualified Leads grows, the amount of budget allocated to Demand Generation also grows steadily, from 34% to 52%.
But we could prove no causality. That is, when we turned the data on its head and looked not at what successful companies did, but at what made them successful, we saw a different picture. When we looked at the input first (how energy was spent across EM, DG, and CR), and the consequential closure rates, we found inconsistent patterns for MQL closure, MQL to SQL acceptance, and SQL closure.
But we did find a distinct pattern for proposals. In a moment or two I'll show you how to get a full copy of the alignment report. First I'm going to do two things: I'm going to show you how to to lift the probability of closing your proposals. I'm going to invite you to receive more blogs like this.
Let's get to the conclusion first. How do we lift the probability of our proposals ever closing? The probability of closing a proposal grows steadily as Demand Generation's share of the marketing pie grows, but closure rates peaks at 35% of total budget, and decline steadily from there. So although the average Demand Generation allocation is 45%, this report suggests that 35% is ideal.
Although we advise businesses to adjust their allocation to Demand Generation as their target market matures, our recommendation across all buyer-maturity stages has traditionally been closer to 50%.
This new research suggests a more modest focus on Demand Generation might be called for.
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OK, so here's how to get a copy of the alignment report:
We'll show you there how you can access the 2014 report, or a webinar I did with the key conclusions or both.
If you'd like to see if MM's go-to-market planning workshops known as 'Funnel Camp' and 'Funnel Mastery Workshop' would help you to lift the performance of your Sales and Marketing systems, why not speak to your Funnel Coach today? Contact details on the web site.
I'll show you why Marketing tactics early in the journey have more effect on closure rates than sales tactics later in the journey next week. But for now, may your funnel be full, and always flowing.