Demand Generation Funnel: How to Create and Optimize Your Own

A demand generation funnel is a template that prospective customers will follow as they go through the different stages of their journey. The purpose of each stage of this funnel is to provide potential buyers with the information and experiences they need to move forward and make a purchase.

It’s important to adopt the right demand generation plan to target the right prospective customers, achieve conversion rates for your leads, and generate revenue.

Key Takeaways

• A demand generation funnel guides potential customers through their journey from initial awareness to purchase, emphasizing the need for targeted strategies to educate the audience and foster brand awareness, focusing on activities that create a need for the product or service.
• Demand generation differs from lead generation in its broader focus on educating the audience and creating demand for products or services, rather than targeting specific high-conversion profiles, necessitating diverse metrics like content performance and customer satisfaction for effective strategy development.
• Structuring a demand generation funnel involves understanding the audience through market research, mapping the customer journey with stages like awareness, consideration, and decision, and employing strategies like inbound sales and personalized experiences to improve conversion rates and customer lifetime value.

What Is Demand Generation?

Demand generation refers to the different activities you engage in to generate interest in the products and services you offer. It’s a holistic marketing strategy since you’re working with multiple channels for lead gen and focusing on the entire customer lifecycle.

There are different frameworks marketers can use to map the customer journey, such as the sales funnel or map. With demand generation campaigns, you’re focusing on the activities that generate awareness for what you offer and create a need for this product or service.

Demand Generation Vs. Lead Generation: Comparison

The terms demand generation and lead generation are different. You might come across content that uses these two concepts interchangeably. However, there are some significant differences to consider when comparing demand generation vs lead generation:

• With a demand generation strategy, you’re focusing on activities that educate your audience about your products or services. Your goal is to show how your product or service can solve a pain point to create awareness and generate demand.
• Lead generation takes a different approach. A lead generation strategy is usually about targeting a specific profile among your prospects. Marketers often use lead generation to focus on audience segments that have a higher conversion rate or on qualified leads that are likely to spend more.

Demand Generation Vs. Lead Generation: Metrics

Demand generation and lead generation are two methods that rely on data. However, you’ll need to focus on different metrics to develop demand generation marketing efforts or build a lead generation program.

You’ll need to track metrics tied to content performance. Impressions, clicks, click-through rates, and conversion rates are critical for your demand generation steps.

Closing percentages for different channels can also give you an idea of how effective your different strategies are.

You’ll also need qualitative data for your demand strategy since customer experience is a critical aspect of this approach. You can, for instance, use surveys to track your customer satisfaction index over time.

Key performance indicators like your cost-per-lead, customer acquisition cost per single paying customer, or your overall customer lifetime value are critical for both approaches.

Combining Demand Generation and Lead Generation

While the philosophy is different, there are some strategies and metrics you can use for demand generation and lead generation.

A siloed approach can ultimately hurt your marketing efforts, which is why it’s best to combine demand generation and lead generation for a better marketing strategy.

Designing Your Demand Generation Funnel

There is no one-size-fits-all in marketing. You need to look at what makes your audience and your business unique to develop a demand generation campaign that makes sense for your sales development process.

Step One: Get to Know Your Audience

Like any data-driven marketing program, a demand generation funnel requires a solid foundation with quality data.

Market Research

Market research is a great place to get started. Skipping this step can result in your marketing or sales team operating on assumptions that turn out to be incorrect or biased.

Conducting market research through surveys, interviews, and analytics will help you get to know your audience better. Your sales and customer service representatives should also have some useful insights to share about who your typical customer is. You can also use this information to improve your description of a qualified lead and focus on high-quality leads.

Here are some questions to focus on during the market research stage:

• What are the demographics of the typical customer? Can you identify two or more demographic profiles?
• What are the main pain points they are experiencing? What are their goals for the purchase?
• Is the buyer making decisions by themselves? It’s important to consider the other people involved in the purchase decision, especially if you’re offering B2B products or services.
• How much research goes into a typical purchase? What level of confidence do prospects need to reach before they feel comfortable with making a purchase decision?
• Do prospects have a preferred channel for consuming content? Would they rather read an article or watch a video? Are they researching products on desktop or mobile?
• Who do your prospects trust? Are they likely to listen to a brand, or do they want recommendations from industry experts? What is the typical profile of the influencers they trust?

Persona Development and Buyer Journey Alignment

Once you know more about your audience, you can start developing personas. A persona is an archetype that represents your audience or one of your audience fragments.

Look for patterns and common data points in your market research to identify your main audience segments. The personas you create should reflect the main characteristics, goals, and pain points that the members of an audience segment are likely to share.

Personas are a useful tool because they help you relate to your audience. You can also create a typical buyer’s journey map for each persona since there might be similarities and differences in how prospects consume content and move along the demand generation funnel.

Cost Per Acquisition

Now is also a good time to calculate your average cost-per-acquisition. You can divide your total marketing spend by the number of new customers you got over a certain period.

Your cost-per-acquisition will give you an idea of how effective your current marketing efforts are. It’s a benchmark you can use to set goals for your demand generation campaigns.

You can refine this important metric by calculating your CPA for the different channels you use. It’s a good way to identify the channels that seem to work best.

Customer Lifetime Value

Another metric you should calculate is your average customer lifetime value. This number reflects the total value of a customer from the moment of their first purchase to the moment they stop being a customer.

Because retention tends to cost a lot less than acquisition, it’s important to track this metric and implement strategies that will make customers want to remain loyal to your brand.

You can also connect your findings regarding CLV to the insights you were able to obtain from doing market research to figure out which prospects are likely to have a higher CLV or which strategies you can implement during the early awareness stages to boost the overall CLV of a new customer.

Step Two: Map the Customer Journey

Now that you know more about your audience, you can start building a framework that sums up their different activities and experiences throughout the nurturing process.

Why Should Demand Funnels Be Structured?

Structuring your demand funnel into different stages can seem like an oversimplification.

However, it’s a model that helps your sales and marketing teams visualize the progression from an early awareness stage to the first purchase.

There are different models you can use for structuring your demand gen funnel:

• If you want a simple framework, you can work with three main stages, namely awareness, consideration, and decision.
• For longer journeys, it makes more sense to adopt a more complex model with more stages. You can, for instance, label your different stages of awareness, interest, consideration, purchase, post-purchase, and re-purchase.
• If you want to take a WIIFM approach and focus on experiences, a good model to use would be a map with four stages, including discovery, engagement, conversion, and reward.

Marketing Cycle Length

The average marketing cycle length is an important consideration when mapping out the buyer journey.

While some products are impulse buys and have a short cycle length, other purchases require a much longer sales cycle length because of the complexity of the decision process.

Having your sales team track the length of your typical marketing cycle can give you a better idea of the number of stages prospects go through.

You can also look for strategies to shorten this cycle or use your findings to identify the prospects who are getting near the end of the cycle and haven’t made a purchase yet. You can use re-engagement strategies for these users.

Create Your Map

There are a few ways of representing the buyer’s journey map. Here are some models for mapping out lead gen, demand gen, and how you generate interest:

• A funnel template makes sense if you want to focus on a demand generation strategy since this model illustrates how the size of the lead pool gets smaller with each new stage.
• A linear map can be useful to understand the progression from one stage to another and focus on the strategies and experiences that result in a conversion to the next stage.
• For an audience-based marketing approach, think about creating an empathy map that shows the key moments where the customer connects with the brand on an emotional level to highlight the most important lead magnet for each stage.
• A chart can be a good way to convey more information for your map. You can map out your different stages and list the key goals, pain points, contact points, content pieces, and influencers for each stage.

Demand Generation Funnel Progression and Conversion Rate

If you decide to develop a demand generation process, a funnel is the best way to represent your sales processes.

You would have the awareness or discovery stage at the top of the funnel. This stage represents the initial contact with your brand. Your main goal is to create awareness for your brand and get prospects to recognize it at this stage.

As the funnel gets narrower, prospects move to an early research or engagement stage. They start consuming content or connecting with your brand on social media or via another lead magnet. Generating interest for your brand, products, or services is important so you can begin educating your audience.

The next stage of the funnel gets even narrower as you focus on educating your audience to generate demand. The prospects who are still in the funnel are now in the research stage.

You can weed out some of the prospects at this stage and focus on sales accepted leads. The focus is on delivering quality content and memorable experiences to deepen their connection to your brand while sharing the information they need to make a purchase decision.

At the bottom of the funnel, you’ll find the sales or decision stage. This last step represents a purchase.

However, the journey doesn’t end there. You need to deliver an outstanding experience during the sale, but you also need to keep engaging the users acquired to achieve several goals, including repeat sales, higher customer lifetime value, and word-of-mouth marketing.

The funnel framework illustrates how a certain percentage of your audience moves on to the next stage of their journey thanks to your demand generation efforts.

This percentage is your conversion rate. It’s important to track your conversion rate from one stage to the next and implement strategies to improve your sales cycle, including focusing on leads that are more likely to become paying customers, delivering high-quality content, and engaging the right audience through memorable experiences.

Demand Generation Strategies That Work

Now that you have a detailed map for your demand generation funnel, you can work on identifying the different strategies you can use to get more paying customers through lead gen.

Brand Awareness

During the early stages of the sales cycle, your focus should be on brand awareness. You need a powerful branding strategy so that prospects will remember and recognize your brand.

Your branding strategy can include web design, a unique color scheme, print marketing, and the creation of a voice that is unique and engaging.

Inbound Marketing

B2B inbound marketing strategies will help you capture web traffic from users who are experiencing a specific pain point. There are many inbound marketing campaigns to explore for your demand gen strategy:

• Your SEO efforts will help you get clicks from users who are researching topics related to what you offer. Start optimizing your content with a free tool like Google Analytics. You can get a free report with useful SEO insights.
• You can also use an inbound marketing strategy like keyword research to uncover new trends and develop marketing materials aligned with what your target audience is researching.
• Paid advertising can be a great way to increase brand awareness and get more clicks.
• Blogging, content syndication, and guest posting are some of the best inbound marketing campaigns if you want to generate leads. With a content strategy that includes publishing new blog posts regularly, you can capture more web traffic and help users explore content that will help them progress on their journey.
• A newsletter or a series of automated emails can help you stay in touch with prospects who have expressed interest in your brand. An email series is a great way of delivering bite-sized content that will help prospects during the research or consideration stage and that will help with generating revenue.
• There are other channels to explore, including social media, video, podcasts, sales calls, and more. Focus on the ones that make the most sense for your audience.
• Outbound efforts can also help you get more leads. You can capture more sales opportunities and generate interest with campaigns like sending mailers to potential customers.

Conversions and Repeat Sales

Mapping your demand generation funnel can help you uncover which strategies result in a higher conversion rate from one stage to the next.

There are different strategies you can focus on to boost conversions and get repeat sales:

• Developing a logical linking hierarchy will help visitors find more content that is relevant to their journey and engage with your content longer.
• Many marketers use techniques like contact forms, white papers, and newsletters to capture leads while delivering valuable content.
• Don’t forget to create strong calls to action. While encouraging users to make a purchase isn’t a good strategy if you implement it too early in the buyer’s journey, you can create CTAs that encourage prospects to sign up for your newsletter.
• Lead nurturing is important. Once you get the contact information of a prospect, keep delivering content at regular intervals. Get their permission to receive phone calls so you can have a salesperson contact them.
• Focus on engagement after the initial sale with a thank you email or a follow-up from a salesperson. You can continue to educate customers after their first purchase for cross-selling or upselling.
• Offering a personalized experience can make a difference, for instance, by making customized product recommendations.

How to Improve Your Demand Generation Process

You should aim for continuous improvement and always look for ways of building a better demand generation funnel.

Close Rate Per Channel

Collecting data about each channel so you can calculate your close rate per channel will give you a better idea of which channels are the most effective. You can then decide to adjust your marketing budgets for these channels.

You should also calculate your average profit per channel to identify the best demand generators and focus on these channels for your demand gen efforts.

How to Measure the Success of a Demand Gen Campaign

You should set some goals for your demand generation campaign and establish a timeline to track your progress.

If you fail to hit a milestone, think about making some changes to the strategies you use. Having some clear goals will help you determine what success looks like for your campaign.

Focus on Incremental Improvements Over Time

Keep in mind that change isn’t going to happen overnight. You might need to implement some fundamental changes to your sales and marketing processes to build an effective demand generation funnel.

Be patient since you need to collect data once you have a funnel in place to identify where there is room for improvement.

Conclusion

Using a demand generation funnel as a template for the buyer journey will help you focus on the strategies that generate awareness for your demand while delivering value to your audience. It’s also an approach that will help your marketing and sales teams work closely together to achieve better results.

FAQ

Here are a few additional things you should know about demand gen.