Challenge: When to Invest in Demand Generation?
Demand generation is a perennially ‘hot topic’ because every organization needs to ensure a consistent flow of prospects ongoing to ensure it can meet its sales objectives. Take the recent focus on Account Based Marketing as refinement of programs, processes, systems and data to orchestrate and optimize demand generation results. Every emerging organization must have a clear customer acquisition strategy – or at least a plan to get to one. These involve go to market channels/programs, MarTech stack, programs and ultimately the expected cost of customer acquisition. Since all early stage companies need to quickly scale sales, isn’t investing early in demand generation the sure fire way to do this?
All too often, companies are pouring money into the demand generation programs and systems without a clear understanding of the customer journey. Demand generation is a set of tools and processes designed to support successful customer acquisition, onboarding through to customer success and advocacy. Without clearly understanding both the buyer persona and their journey, marketing cannot hope to make this process faster and more reliable.
This thought was raised in a recent article posted by a CEO entitled “How I Burned 10 Million Dollars So You Don’t Have To”. In the article, Matt Munson notes:
“We went ALL IN on an inside sales driven model. For good reason. With solid proof. But we nearly broke the company. We certainly caused incredible heartache for dozens of people.
I wish we’d tested earlier. More thoughtfully.
I regret not staying smaller for longer. Living off $3M to find product-market fit, with a real, scalable acquisition channel. And keeping the other $5M in the bank for scaling powder.”
Matt’s quote is spot on. It is so clear that we need to get this right. Every discretionary dollar is precious – and we can’t start data gathering and testing early enough. Moreover, before we spend anything, we need to clearly understand where in the customer journey this program or tool will have impact and how we will measure its effectiveness.
The best early stage companies I have seen most recently focus solely on sales in the early stages before engaging marketing to help scale. Even later, with a defined sales process, these early investments need to be scoped and measured appropriately. Over the past several years, I have been continually surprised with results and had to make significant resource allocation changes. Matt’s advice is true for us all. First identify the buyers and their process from awareness to engagement to purchase and to ongoing success. Set in place expectations for your programs – in cost, conversion rate, timing and more. Doing this on a shoestring marketing and sales budget is the right place to start and forms the basis of ongoing testing and optimization.
Investing in demand generation people, systems and processes too early can easily drive interest and engagement that does not result in revenue. The result is a recipe to burn cash and miss key milestones.
Lesson: Understand your sales motion first and only then scale demand generation with a measurement and test plan in place.
