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Successful Demand Generation
Techniques for a New Economy
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The economic downturn
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           unabated and spending
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                          Strategy makes or breaks you
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               marketing—the most
The future is now—
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                               Budgeting for
                              your campaign...
Average Sale Price of resulting solutions (approx.) in US$

                     Awareness only    $0-5,000          $5,00...
A real-life situation

Profile company is located in a major metro area and specializes
in e-business solutions ...
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Successful Demand Generation Techniques for a New Economy


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Successful Demand Generation Techniques for a New Economy

  1. 1. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Successful Demand Generation Techniques for a New Economy ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ White paper Driving sales during an economic downturn Launch International Delivers: ■ Consulting & Strategic Marketing Services ■ Messaging & Solutions Workshops ■ Print & Web Collateral ■ Sales Kits ■ Demand Generation ■ White Papers ■ Web & Multimedia Presentations ■ Newsletters & Magazines ■ Design
  2. 2. The economic downturn seems to be continuing unabated and spending continues to be curtailed in response. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ And although conventional wisdom may suggest otherwise, it’s Demand generation is the single most effective and least inadvisable to follow suit with your marketing budgets. In fact, understood facet of marketing. Often treated as an event instead McGraw-Hill Research found companies that marketed during the of a discipline, demand gen has a reputation for being an 1981-82 recession saw a 275% increase in sales for the following albatross around every marketing executive’s neck. The fact is, three years. And the Harvard Business Review reports that those however, that demand generation is a science that can be tested, companies that marketed the most during the recession of 1923 measured, analyzed, improved, and redeployed. garnered the biggest sales increases. ■ ■ According to the book Advertising In A Recession, Jell-O, Crisco, Demand gen today ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Hellman’s, Green Giant, and Doritos cut back in advertising during the 1991 recession and saw sales drop by as much as 26% to It used to be true that “demand 64%. In the meantime, Jif peanut butter and Kraft salad dressing increased spending and raised sales by 57% and 70% increase generation” was synonymous respectively. For a business-to-business (b-to-b) example in our with direct mail. own high tech space, look no further than Intel. The company In fact, demand generation is an interactive system of marketing aggressively launched its “Intel Inside” brand campaign during that uses one or more channels and/or activities to stimulate a the 1991 recession, gaining market share that other computer response and/or transaction from a targeted audience. More processor manufacturers are still struggling to match. Of course, specifically, it is an activity whose purpose is to turn targets into the company’s growth and dominance of the computer processor prospects and prospects into sales. Most often, its success is market was not due to advertising alone, but there is no denying measured by a response rate, but some endeavors aim to simply that promoting the brand when there was little advertising generate awareness or goodwill or open doors for salespeople. competition helped to establish the Intel name in peoples’ minds. Direct mail, email, webinars, seminars, and newsletters are the ■ most traditional forms of demand gen, but sophisticated events Current economic conditions are driving your boss and board of and personalized promotions, such as invitation-only spots at directors to demand that you to do more with less—and increase premiere sporting events and private golf lessons, and dedicated your bottom line. And that’s the key. Done well, marketing increas- web sites are becoming more commonplace. es revenue and improves return on investment (ROI). But return ■ on investment assumes that one will spend money to make it, You’ll be relieved to know that, like all sciences, a formula can be which precludes a “wait and see” approach. applied to predict and measure the desired results. In today’s ■ tough economic times, the science hasn’t changed, but we must be more creative in how we reach our audience. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■
  3. 3. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Strategy makes or breaks you ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ The core of demand generation TARGETS ■ What type of organizations should I be targeting? Should I is the same regardless of separate them by SIC code, size, geography, existing and activity. And there are three new customers? ■ Who is the decision maker and who owns the budget? fundamental rules: Who are the influencers? How is the decision made? ■ You must know who your targets are ■ How and where could I get a targeted list? ■ You must offer them something they consider valuable ■ Who at these organizations should I be targeting? ■ You must decide how you will measure success before Does it make sense to touch multiple levels at the you begin and monitor your progress same organization? Any demand generation effort without a solid list and a fitting DELIVERY offer is destined for failure. But the list and the offer are easy to ■ What method(s) of delivery would the identified job func- identify if you are sure to treat the strategy and planning of a tions be most likely to respond to? campaign as importantly as its execution. You can’t have one ■ Would multiple methods and touches be appropriate? without the other and neither exists in a vacuum. ■ What sort of frequency would be optimal? What sort of ■ frequency can I afford? Consider a proposed campaign to get leads in the pipeline for ■ What do I want the target to do as a result of the contact? “InterSafe,” a theoretical company that specializes in Internet security solutions. If you were the marketing manager, what BUDGET would you need to consider and spec out first in order to ■ What sort of offer would work best to this end? Can I afford determine the actual campaign and its elements? To determine such an offer? If not, what would be the next best thing? your strategy, you need to explore 3 key areas and ask ■ What is my overall budget? questions like the following: ■ What are my average sale price (ASP) and cost of ■ sale (COS)? Answering the questions will likely lead you to the fact that there is no “one size fits all” solution. While the term “integrated campaign” is often translated into “expensive, and more than we want,” it is impossible to build a one-off campaign that effectively addresses the needs of the multiple levels in your target audience.
  4. 4. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Integrated marketing—the most bang for your buck ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Let’s say your company makes software that enhances web site performance—a hot item for e-commerce-focused companies. Your target is the person responsible for the company’s web site. People need to be prodded, reminded, coaxed, and convinced. Five years ago, that person might have been easy to find. Today, If they didn’t, demand generation would not be the $98.6 billion you’ll discover that this may not be a single person at all. And if it business it is. And the more integrated a campaign, the better is, he or she could work in marketing, in business development, in it pulls. sales, or even in IT. A campaign that targeted a single title with a ■ single message would fail before its execution. The best average budget ($10,000-$60,000) campaigns we have ■ seen in the last year, (and by the best we mean the most successful So what is an integrated campaign exactly? Put simply, an in terms of response rates and conversion to sales), are those that: integrated demand generation campaign is one that touches a prospect more than once and in multiple ways (including the ■ Tested a list with telemarketing calls Internet) over a relatively short time period. It’s based on the ■ Followed with an e-mail solicitation based on data derived premise that humans have short attention spans, are mistrusting directly from that telemarketing by nature, and need to be exposed to the same information over ■ Followed that with at least one more activity like e-mail or and over to buy in. It works. direct mail ■ ■ Drove prospects to a dedicated web site for more information A June 2002 study of senior marketing executives at companies and registration with minimum annual sales of $1 billion found that most want to ■ Offered knowledge-based fulfillment that demonstrated integrate online and offline marketing and “are committed to tangible value leveraging the potential of e-mail marketing to drive revenue and ■ Ended with telemarketing follow-up to each and every contact deepen relationships with existing customers.” In addition, 64% of ■ respondents to the Direct Marketing Association’s (DMA’s) 5th Consider a real life example from—now that’s Annual E-Commerce Survey say they target offline customers integrated! Dell Computer Corp.’s Education and Healthcare online and vice versa. What’s more, 34% track net sales across division recently rolled out a campaign they called the “Integrated direct mail, catalogs, and web sites. Demand Generation Plan,” which included e-mail, direct mail, ■ events, and a monthly newsletter. Nicknamed the “Funnel Project”,
  5. 5. The future is now— web marketing in the 21st century Forrester recently predicted that worldwide business-to- business and business-to-consumer commerce will reach $6.8 trillion in 2004, with $3.5 trillion of that in North America alone. On the flip side, the DMA’s recent study, Economic Impact: US Direct & Interactive Marketing Today, projects that a total of $3.8 because it was intended to drive customers from multiple billion will be spent on interactive media marketing in 2002 and channels to the company’s web site, the campaign’s aim was to a whopping $7.9 billion will be spent by b-to-b marketers tap the small- and midsized-business markets through 2006. So what does that mean to you? Put simply, the without the need for individual sales calls. web represents potential for real market share growth if you ■ spend your money wisely. And that means using the web to Dell began the process by collecting potential names through supplement, complement, and differentiate—rather than replace— such channels as direct mail, trade shows, telemarketing, and other demand gen activities. permission-based mail. They then used various incentives to drive those leads to the web, where Dell could qualify the names Here are a few suggestions and gather more information. This approach allowed them to to do just that: track responses based on job function and monitor how market- ■ Look at the acquisition and maintenance of customer and ing tools performed on their own and against each other. More prospect e-mail addresses the same way you look at the importantly, they managed to sign up more than 5,000 new acquisition and maintenance of their physical addresses. accounts within the target market in a 5-month period. ■ Develop and test offers and promotions that will establish ■ how to best use your budget dollars for web marketing. In the final analysis, integrated campaigns aren’t really more ■ Develop and test ways to enhance your existing customer expensive than a more traditional, isolated approach. One- relationships via the web. and-out endeavors simply don’t pull as well as comprehensive ■ Develop and test ways to use e-mail in conjunction with programs and usually require subsequent touches to show a snail mail. significant increase in sales. So, you end up spending just a ■ Use sophisticated, creative techniques for tracking customer little bit less up front and get much less response. In other and prospect use of the web and other channels, such as: words, integrated demand generation campaigns deliver a ■ Unique URLs to link offers to a specific list, proportionately higher ROI—and ROI is what you are looking for promotion, or additional demand gen channel. when you spend your precious marketing dollars. ■ Source code data entry on the web to link ■ purchasers to a specific list, promotion, or additional demand gen channel. ■ Unique phone numbers for web promotions to capture the extent to which a web site prompts inbound calls.
  6. 6. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Budgeting for your campaign ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ When you begin strategizing for your next campaign, Here’s how to remember to do your math. calculate your CLV: We have spoken extensively about spending money to make it and the positive side of ROI. But you can only spend an amount 1. Divide your annual sales by your number of customers to get the average annual sales/ you can reasonably expect to exceed in revenues—which you can customer. estimate by studying the average sale price of the anticipated solution sold. 2. Multiply this by your average gross profit ■ percentage to get the average annual gross profit/customer. If, for instance, you sell a solution with revenue averages in the $5,000 range for an initial purchase but could be potentially worth 3. Estimate how many years you retain an average $50,000 over the product lifecycle (when you figure in mainte- customer. (You can calculate this if you know how many accounts you lose each year—divide that nance and support agreements, upgrades, interim training, and number into your total number of customers to the like), you might be able to justify spending more than $3 per get the number of years an average customer contact on an integrated demand generation campaign. We call stays with you.) this looking at the customer lifetime value (CLV). It’s a calculation 4. Multiply the profit in step 2 by the number of that is basic to the science of demand generation marketing and years in step 3 to get your estimated CLV. should become part of your mindset, perhaps even your new mantra. CLV is the profit you can expect to earn from an average Once you know how much a customer is worth, consider how customer over their lifetime. The number is important because much you are willing to spend to acquire one. That figure is as demand generation profits most often come from repeat business much statistical as philosophical. You must ponder both the cost of and repeat business indicates higher lifetime value (while also a campaign, and the entire sales cycle to close the deal. Sales rep predicting future buyer behavior.) time is expensive, especially if you sell face-to-face. Making sure ■ leads are solid before they are turned over to the sales function is an important facet of an effective campaign. ■ The following chart provides food for thought as you assess customer values and what to send or offer them. ■
  7. 7. Average Sale Price of resulting solutions (approx.) in US$ Awareness only $0-5,000 $5,000-25,000 $25,000-75,000 $75,000+ Delivery channels Snail mail Snail mail Snail mail Snail mail Snail mail (integrated E-mail E-mail E-mail E-mail E-mail approach) Telemarketing Telemarketing Telesales Telesales Web site Web site Web site Web site Newsletter Newsletter Newsletter Offer (individual Brochure, or Case study Coupon/ CD CD or in combination) something that White paper certificate Free services Executive doesn’t require Coupon/ Gadget Executive briefing briefing response rebate Free services Product give-away Video Free evaluation Free evaluation e-newsletter Trip e-newsletter CD Special event e-newsletter Personalized promotion Product give-away e-newsletter Offer value $0 $0-50 $50-250 $250-750 $750+ Results…results…results If you do everything according to the formula, you should be able to anticipate 1 sale for every 165 target names. Remember, the 165 can reflect multiples from the same target companies. Expect a 2-3% response rate from a well-executed direct mail or e-mail campaign and another 2-3% response rate from follow- up telemarketing. Of those total leads, you can usually count on closing 10% for new sales. That means you would need to touch roughly 16,500 contacts to get 100 new sales. ■
  8. 8. A real-life situation Situation Profile company is located in a major metro area and specializes in e-business solutions for the insurance and finance industries. The 1-2-3-4-5 of demand gen campaigns Annual revenues = $2.5 million. Their Goal Get at least 50 qualified leads. They believed they could close Think it through 10% of that or 5 companies. Average sell price of their solution is 1. approximately $100,000. Their budget was $12,500. Strategy is the very foundation of your campaign. You Campaign need to ask and answer all of the questions suggested List: CEOs and CIOs of financial institutions and insurance companies within their Metropolitan Statistical Area (MSA) who in this document. Set realistic goals for a campaign, then had 100-500 employees and $50-$250 million in revenues. The map those goals to tactics. Make sure the offer is of resulting database was a combination of the company’s internal list (18%) and a purchased list (82%). In order to minimize returns value to everyone who receives it. Our experience and test the quality, we recommended info verification calls for the indicates that hitting multiple levels of decision makers purchased list. Having done that, the final list count was 1,224 prospects. works best, so that may require multiple offers. Consider, too, that your method of delivery needs to be Direct mail Message: The Internet has forever changed how companies do appropriate for the target audience. CxO’s don’t read business. If your organization doesn’t already have an e-business postcards. Hit your targets hard and hit them often. strategy, it better get one. We are the experts in developing and delivering e-business solutions to financial and insurance institu- Finally, telemarketing follow up on every campaign is a tions. Complete this survey and receive a free assessment of your must. The majority of your best qualified leads will current infrastructure and be registered for a special drawing to win 1 of 3 Xbox Video/DVD game systems. surface through this last step. Piece: Survey with an accompanying personalized letter and a business response envelope (BRE), which were all housed in a Maximize success custom folder, inserted in a custom 9x13 envelope with the offer 2. printed on the outside, and mailed first class. Test the critical elements: the list and the offer. That The survey itself was one-page and posed 12 questions pertain- doesn’t mean delaying the campaign and spending ing to the prospect’s IT environment, e-business strategy, and web money needlessly. Testing your list means telemarketing site capabilities. This provided good information about the prospect and was used for pre-qualification. to it to verify its accuracy. A clean list is half the battle of a successful campaign. It is not unusual that as much as Offer: A free infrastructure assessment and a chance to win 1 of 3 Xbox Video/DVD game systems. This offer was highlighted in the 50% of a purchased list is of substandard quality. And copy of both the letter and survey and the Xbox was prominently testing the offer means making some calls to people in displayed on the custom folder and on the outside of the envelope. your target audience, such as customers or even Response options: Phone, fax, e-mail, web site, or the BRE. successful salespeople who are in tune with customer Telemarketing: Pre-mailing calls a week before to alert recipients challenges. If you are sending snail mail, be sure to of the impending package and offer. Post-mailing calls by a single prominently display the offer on the outside of the package. professional telemarketer who could talk “techie” and attempted to get the survey from the contact and also set up a sales call.
  9. 9. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Real-life results Results The program exceeded the company’s wildest expectations— they had never run a professional campaign and their internal efforts never exceeded one lead per campaign. Below is the campaign breakdown: Spend wisely Total leads: 53, 10 from the internal list, 3. 43 from the purchased list (4.8% response rate) Right-size the offer. Map the offer against the projected Cost per lead: $236 number of leads versus the ASP, CLV, even COS. Offers Qualified* hot leads: 22 Unqualified leads: 31 need to make sense on many levels. As we said before, Closed deals: 6, totaling more than the desired target action and fulfillment need to fit each $1 million in revenues Campaign ROI: 79% other and your budget. * A lead was qualified if it had a current technology initiative (such as extending back-end data to the web or plans to adopt Close the loop a portal strategy) and were interested in a sales call. 4. It is important to note that while the profile company was thrilled Follow up, follow up, follow up. Your campaign begins with the results, this is the kind of return you can expect from an with the first contact, regardless of what it is. And integrated campaign. although an integrated campaign is just a series of well- strategized, related touches, the frequency and type of those touches can make all of the difference. The only thing worse than campaign failure is a successful one where leads die of neglect. And this comments bears repeating: telemarketing follow up on every campaign is a must. The majority of your best qualified leads will surface through this last step. Measure results 5. At the conclusion of every campaign, you should meas- ure its hits and misses. You can and should measure reach, response rate, and the value of resulting sales.
  10. 10. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ About Launch International ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Call 215-230-4340 or visit Launch International is a strategic marketing services company. We create the messaging foundation and all related sales and support tools that help technology companies build marketing programs of value. We do this through messaging workshops, competitive research, and the development of strategic content and complement it with world-class design. ■ What makes us unique is that we bring a rare blend of technology, business, and communications expertise to every engagement. All Launch International employees have at least five years experience with technology companies as product managers, salespeople, Conclusion marketers, trainers, or communications professionals. Our business has grown 1800% over the last five years, and nearly 100% of that is Current economic conditions present an opportunity to loosen based on referral. We have a proven track record of delivering results. your marketing budgets and drive new leads into your pipeline. ■ Now is the time to follow the proven science behind the discipline If your 2002 goals include creating solutions out of products, and develop and implement innovative demand generation better motivating or training your direct or indirect sales organiza- campaigns. The pay off will be new customers, more loyal tions to sell smarter and faster, filling your pipeline with solid customers, increased revenue, and improved ROI. leads, or even something as fundamental as more effectively ■ presenting your unique strengths though collateral, we encourage you to contact us at 215-230-4340. ■ ■ ■ ■ ■ ■ ■ ■ Launch International, Inc. 95 West Court Street | Doylestown, PA 18901 | 215-230-4340 ©2002 Launch International, Inc. All rights reserved.