Why Nearly 60 Percent Of Enterprise Demand Generation Programs Underperform

“Leaders of the future will have to be visionary and be able to bring people in - real communicators… it's going to be incredibly valuable and incredibly in demand.”
--- Anita Borg (1999)

When American computer scientist Anita Borg spoke these words, the World Wide Web was still in its nascency.  At the time, there were roughly 280 million internet users.  Today, there are over 3.4 billion users.  In parallel, the number of active websites has grown 10-fold since 1999.  Today, there are over 311 MM active websites worldwide.
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While the ascension of the Web has largely been a boon for marketers, it has also presented clear challenges in recent years.  Specifically, how do you differentiate yourself from your competitors, stand out from the crowd and identify your business as a leader in a competitive marketplace? For a growing number of companies, particularly those with a long sales cycle, the answer to the puzzle has been Demand Generation.

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What Is Demand Generation?
In theory, Demand Generation is “the focus of targeted marketing programs to drive awareness and interest in a company's products and/or services.”  The scope of the discipline includes:

• Brand building campaigns
• Specialized outbound marketing
• Content rich inbound marketing (Social Media, Blogs, eBooks, Podcasts, Videos etc.)

Demand Generation defines your organization’s personal relationship with your leads, prospects and customers. However, unlike traditional lead generation and customer acquisition programs, the objective of Demand Generation is to build and nurture key prospect and customer relationships for the long term.

An ideal Demand Generation platform establishes your organization as the expert in your line of business. Your customers turn (and return) to you for solutions to their most difficult challenges and purchase decisions. They also trumpet your products and services within their peer circles. From a P&L standpoint: the net effects of an effective Demand Generation program are two-fold: 1) it increases the lifetime value (LTV) of your customers AND 2) it decreases the cost to acquire new customers (CAC). In addition, an effective Demand Generation also increases market share over time.  

​Several early adopters and innovators have been very successful with their Demand Generation efforts. For example, companies like Five9 and HubSpot have firmly established themselves as leaders in their respective B2B marketing service categories largely due to their well-​​executed

Demand Generation programs. Consequently, many other companies (across a vast ray of industries) have jumped on the Demand Generation bandwagon in recent years.

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Is Demand Generation Producing Positive Results?
The answer to this question really depends on whom you talk to. For example, a recent Annuitas benchmarking survey of 100 B2B enterprise marketers indicates that only 2.8% of the respondents believe that their Demand Generation programs are very effective. Conversely, a whopping 58.5% of the respondents said that their programs are largely ineffective:

​In contrast, a recent survey by Demand Metric reveals another side to the story. While only 30% of study participants report having a B2B demand generation process that meets their objectives, respondents with advanced business analytics capabilities report significantly better results.  Indeed, “when predictive analytics are applied, process performance soars, effectively meeting the objectives set for it over half of the time.”

To us, the Demand Metric survey results suggest that many marketers aren’t completely engaged in the full discipline of Demand Generation. While the Effectiveness Rate for companies that apply analytics is significantly better than their peers who don’t (55% vs 18%), even that figure seems disappointing. Obviously, for most of the marketers polled in both surveys, something seems to be lacking or missing in their Demand Generation formulas. In our experience, there seems to be two critical factors that many organizations overlook or completely ignore when they decide to adopt demand generation methods: organizational structure and process management.
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The Essential Building Blocks For Effective Demand Generation
Industry analysts predict that Demand Generation budgets will continue their upward trend. According to the 2017 Demand Generation Benchmark Report, two-thirds (67%) of marketers expected to increase their budgets this year. Furthermore, one-third (33%) of marketers anticipated a rise of 20% or more. Similar budgetary increases are also expected for 2018. Consequently, it’s a near certainty that CEOs and CFOs will soon begin to demand better results from their Demand Generation investments. If marketers continue to under-perform, you can bet that heads will start to roll.

That said, blame for ineffective Demand Generation programs shouldn’t be solely directed at Marketing and Sales executives.  We’d argue that many organizations have attached themselves to the DG buzzword without understanding the full nature of the discipline. Consequently, it seems that many companies focus on tactics while missing the big picture.

For example, when C-Level professionals are asked, "What exactly does Demand Generation entail?" Many of them will point to content creation or marketing automation (or a combination of the two). Better yet, scour job boards and you’ll find several Manager / Director level positions entailed with the responsibility of "Leading" Demand Generation efforts within companies large and medium and small alike.

We believe that tactically reliant Demand Generation recipes are almost certainly destined for failure. In our experience, we’ve found that tactical proficiency is only one factor in becoming an effective Demand Generation marketer. You must realize that Demand Generation is a complete business discipline. Ergo, for a company to be truly effective in the discipline it must embrace Demand Generation as an overall business strategy.  For the strategy to succeed, your company must first become a customer-centric organization.  As we've learned over the years, this often requires a measurable degree of organizational restructuring, realignment of departmental duties and a commitment to enterprise analytics.
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Conclusions
For your Demand Generation program to be truly effective, your organization needs to be structured around your customer rather than your products or services. As Erin Kelley of Annuatas noted a couple years back, “If you don’t know your buyers inside and out, there is little guarantee that your demand generation programs will work in the way you expected.”

It's our belief that many companies that experience failing or below expectation results from their Demand Generation efforts haven't fully embraced the DG concept as an over-arching business strategy.  Like any key strategic initiative,  your Demand Generation strategy requires a clear commitment from C-Level leaders and buy-in from every layer of subordinate management in order to truly be successful.  

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​Author: Erik Gagnon - Managing Partner, Chi Rho Consulting
 
Note:  This is the first in a series of Jumpstart Strategies articles that will address Demand Generation. Please check back soon for our second article: The 4 Strategic Pillars of an Effective Demand Generation Platform.