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CEO @ Refine Labs | Host @ Revenue Vitals Podcast | LinkedIn Top Voice
Demand Creation vs Demand Capture – two of today’s marketers’ most critical focus areas.
Demand creation (aka demand generation) is about driving awareness and interest in a product or service, while demand capture focuses on attracting and converting the roughly 5% of your target market actively looking for a solution.
Familiar marketing frameworks–like the Predictable Revenue and Demand Waterfall–that once laid the groundwork for many SaaS companies’ go-to-market strategies are now outdated and doing more harm than good.
Why? Because B2B buyers are much different in 2023 than in 2011 when these frameworks were published.
In this episode of Closing Time, Insightly CMO Chip House welcomes Chris Walker of Refine Labs to take a trip down the go-to-market history lane and discuss how marketing and sales leaders can modernize their GTM strategy with an ‘all-bound integrated revenue team.’
Times have changed. The way businesses run their businesses has changed. The way sellers sell has changed. And the way buyers buy (e.g., the buyer’s journey) has changed.
The digital landscape has taken center stage, with buyers relying heavily on online sources such as search engines, social media, and industry forums to research and evaluate products and services. This shift towards self-education has led to extended decision cycles and a greater emphasis on authentic online reviews and peer recommendations, shaping purchase decisions.
Chip and Chris discuss three go-to-market motions – events, outbound, and paid search – and how businesses should adapt their strategies to match today’s buyer journey.
Events: In the early 2000s, investing heavily in events and trade show booths made sense because the internet was less mature. B2B buyers relied on conferences to discover new innovations and technologies. However, today’s buyers have numerous efficient ways to learn about companies, rendering the high cost of trade show booths misaligned with modern buyer behavior. Events still hold value for networking, content creation, and market research, but the emphasis on expensive booths should be reconsidered.
Outbound: In the past, outbound strategies were essential because the internet wasn’t a primary source of information for buyers. Companies had to find contact information through methods like scanning badges at trade shows or gating content to collect email addresses. However, with the advent of predictable revenue models and advances in database technology like ZoomInfo, outbound tactics should evolve. While outbound remains important, the focus should shift from contact collection and generating MQLs to creating genuine demand.
Paid Search: Paid search was highly effective in 2001, but its overall performance has declined over the years, following a typical technology adoption curve (see image above). Initially, ad prices were low, and users didn’t recognize ads as such. However, as more companies invested in paid search, ad effectiveness decreased, resulting in higher costs for the same results. In recent years, the ROI of paid search has notably degraded, prompting companies to reevaluate their strategies (see image below). Many might find better results by focusing on branded terms or reallocating their budget elsewhere.
The first step for companies looking to evolve their GTM strategy is to rethink how they are measuring marketing success. Too many companies are building reports with biased metrics (think ad companies like Google or Meta, who have no incentive to supply you with data that doesn’t make their platform more money) instead of creating unbiased metrics that will incentivize the behavior you want to see. Once you identify low-performing programs, that budget can then be reallocated to more lucrative efforts.
Figuring out whether you’re capturing demand or creating it can make a big difference in how well your company performs in today’s market.
Historically, in the early 2010s, many B2B SaaS companies relied on demand creation due to limited marketing efforts. Sales teams were responsible for engaging and educating prospects, creating demand, and managing the entire sales cycle. But as marketing sought to drive measurable ROI, they took on lead generation, creating an assembly line approach:
Marketing generated leads > SDRs called them > and account executives (AEs) closed deals.
The challenge? Each part is optimized for its own success, not the overall system.
The result: marketing could produce tons of Marketing Qualified Leads (MQLs), but sales still missed quotas because the alignment was off.
To balance this, there’s a need to shift from this assembly line model to an all-bound integrated revenue team. This approach recognizes three critical components: creating demand, capturing demand, and converting pipeline into revenue. It involves the whole company – sales, marketing, and outbound teams – in each part of the process.
Smart salespeople post on LinkedIn to create awareness and start conversations – demand creation. Smart marketing teams host events to accelerate the pipeline – demand capture.
But here’s the catch: many companies still rely on outdated lead generation metrics, which incentivize MQL volume. This leads to misaligned incentives and often prevents teams from embracing these new approaches, despite clear data showing that the old ways aren’t working anymore.
Traditional models like Predictable Revenue and the Demand Waterfall may no longer serve companies well, primarily because B2B buyers have evolved significantly since their inception in 2011. It’s high time for a fresh perspective and an approach that reflects the changing realities of how businesses operate and buyers make decisions.
In the realm of demand creation, there are essentially three tiers to consider: thought leadership, product marketing, and category marketing.
Thought leadership is broad and transcends product-centric discussions, focusing on providing valuable insights. However, many B2B companies often struggle with this because they tend to overly emphasize their product and narrow their scope. They sound more like vendors pushing their solutions than genuine thought leaders. To excel in thought leadership, B2B companies should adopt a consultant mindset, offering comprehensive guidance tailored to their target customers.
Product marketing, on the other hand, involves showcasing your product’s merits in comparison to perceived competition. While many companies do this well, they often falter in content distribution. Instead of concentrating solely on optimizing search engine rankings, companies should leverage diverse creatives and target customers through platforms like LinkedIn ads. The focus should be on educating potential clients about real-world success stories within their industry, building trust through relatable narratives.
Category marketing is the third tier of demand creation. B2B companies frequently become overly fixated on their competitors, neglecting to market their category or the broader industry movement they’re part of. This can limit their perceived authority as a category leader. When businesses engage in competitive advertising, they might inadvertently end up promoting their rivals. Hence, it’s vital to balance these aspects.
Every company, regardless of its offerings, can benefit from a content strategy anchored in these three pillars – and supported by both paid and organic distribution channels for optimal reach.
Visit Refine Labs’ website or follow Chris on LinkedIn to stay up-to-date and dive deeper into each of these topics.
Demand creation versus demand capture. What does this even mean? And when should you focus on one and not the other? We’re going to talk about it in this episode of Closing Time. Thanks for tuning in to Closing Time the show for Go to Market Leaders. My name is Chip House. I’m the CMO of Insightly CRM, and today. I’m joined by Chris Walker, who’s the CEO of Refine Labs and also host of the Revenue Vitals Podcast. Welcome to the show, Chris. Chip, great to be here.. Thanks for having on the show. Also been enjoying getting to know you in the comments of LinkedIn posts here and again.. So looking forward to a live chat. You bet. Yeah, I think we sort of know of each other in LinkedIn comments anyway. Right. So it’s great to be talking to you in person. So what I want to start with Chris. So I’ve been in SaaS actually for like 25 years, right? And I started out in B2B SaaS probably 2001 and focused very much on paid search, outbound, and events were kind of my three main go to market motions. And I’ve heard you talk about how the game has changed significantly, especially in the past couple of years, and it’s kind of accelerated. Can you talk more about that change and why you think it’s changed so much? Gosh, Chip. First off, you’re an OG 25 years, 2001. I’m old. Shoutout to that you’ve probably seen a lot of change going on here. The thing that I want to start to highlight is that the general B2B go to market motions while there’s more technology around it, and companies are now thinking about quote unquote account based marketing and blah, blah, blah, blah, blah. The general go to market motions have not changed at all. And given how much has changed in the world and how buyers discover things,. I think that it warrants at least a discussion or a challenge of how we do things. First one, let’s go to events, in 2008 or 2012 when your company would boot up and spend 60% of the marketing budget on tradeshows and events or sometimes even higher. Why did you do that? It’s because the Internet had barely matured. You didn’t spend that much on your website and B2B buyers went to conferences to discover new innovation and technology, and they would carefully peruse the booths because that was the main way to discover something. It’s how you learned about new companies, right? Yeah. Yeah. And ten plus years later, a B2B professional or buyer can learn about a company in a million different ways that are so much more efficient for them than waiting until next August to go to your trade show conference and show up at your booth. So I just don’t think that events, specifically the booth expense. I think that events are worthwhile for the networking and business development and creating content and doing market research. And there’s so many benefits of events, but buying the booth and spending 50% or more of your variable marketing budget on events, trade show booths, that is. I think is wildly misaligned with how the world works today. When you think about outbound. I’m not saying that you shouldn’t do outbound. What I am saying is that when you know the predictable revenue model was published in 2011 and piloted at Salesforce and other companies in the mid 2000s, 2007, the only way to get to people was to call them or send them mail or see them at an event.. They weren’t using the Internet, they weren’t looking for your company online. And so what did you need to do? You needed to find their contact information because it wasn’t readily available in a database like ZoomInfo or other ones today. And so you had to find their contact info by scanning their booth, their lead badge at a trade show booth by trying to get them to fill out some gated content. So they gave you their email address or to try and have them sign up for a webinar. So there are all of the motions to drive outbound were around how do we collect contact information so that we can do outbound, which then drove the marketing strategy around how do we MQLs or lead volume, or oftentimes just contact information, not even really a lead. And then lastly, 2001 paid search must have been doing real, real nice. But over the past 20 plus years, paid search has seen a dramatic decline in overall performance. And every single channel will go through this. If you look at television and radio and even like social media ads like META and Instagram, they go through the exact same adoption curve where the ad prices are inexpensive at the beginning, and the people using the platform don’t know that they’re ads yet broadly. And so for those two reasons, the ads are a lot more effective at the beginning when you think about overall ROI and then over time, the channel more people spend money on their the quality of how they spend the money goes down. The effectiveness of how a buyer would actually click on that ad and consume it goes down, therefore leading to a much higher cost for the exact same result. Over the past 3 to 5 years, I believe, and I’ve seen at more than 100 B2B companies that I’ve analyzed myself, there is a dramatic degradation in overall ROI of paid search generally to the point where a lot of companies would be better off only buying their branded or company terms and spending the rest of the money somewhere else. Not even buying their category name potentially, just given the the cost of the ads and the effectiveness of the ads and what the ROI is. And so in B2B companies, we build a bunch of what I would think about as bullshit reports to justify the things that we’ve been doing for a long time by connecting metrics and other things that typically the ad platforms like Google or LinkedIn or the event, they supply you with these metrics, which obviously are biased toward the thing that they sell you. When I think about the number one challenge in B2B companies, it’s the idea that the metrics that get set in a company drive and allow the wrong behaviors by both internal employees, agencies, freelancers and consultants to appease those metrics when the real solution is not to go find another agency or to go to like fire your consultant. The real solution is to fix the metrics so that those behaviors aren’t allowed to happen anymore. And so that’s one of the core things that I’m focused on with my company and for my own personal endeavors is that I think that these types of things shouldn’t be happening anymore. And I think that if we were able to change how we score and measure marketing and go to market overall, it would become very clear that these low performing programs should be stopped, decreased, and the budget should be reallocated elsewhere. Yeah, well let’s start there, because one of the things you had said prior that I thought was super interesting is just defining demand capture versus demand creation, demand generation. And that really kind of was an aha moment for me. When you first mentioned it in a podcast that I saw maybe a year ago, maybe two years ago, I don’t know how long ago. Chris, But part of the reason that that’s super effective is because, as you point out, I think B2B SaaS, especially a lot of different companies are focused on demand capture, such as paid search, right? Where people are filling out form downloading, you know, a white paper or something like that, and then sending it over to the SDR team to call. So but help me through this. Why is that model broken? And what is demand creation? What’s the other path? Yeah, so let’s go back in time. So I think this is really interesting because when you go back in history, you can see why these things were created and then you can look into the future and say the assumptions of why we created this in the first place no longer exists. We should change what we’re doing. And so let’s think back to, you know,. I worked at a B2B company in 2012, and besides doing a webinar every once in a while and building some trade show booths the marketing team did nothing to drive actual demand, and that’s what was happening for. B2B companies for the most part in 2012 and forward. And so what happened and typically you didn’t have like an AE and an SDR and a solutions consultant, and a customer success manager and all that stuff. What did you have? You had one person that was responsible for selling the deals, account managing the deals, expanding the deals, and that was their overall role. They were more like a territory manager than an AE. And so in that specific situation, when the marketing team wasn’t bringing any demand in, the salesperson was responsible for going out, engaging with the people, educating them and creating demand, then capturing the demand into a sales meeting, then closing it, then having them be successful, then expanding it. And so the sales rep was basically responsible for the entire cycle, which is the mindset that a lot of people bring about why sales is so important. And I think why sales gets commission the way that they do still, which may not make sense anymore today. And then what happened is, oh, marketing needs to drive in the 2012 2015. Marketing needs to be able to drive ROI, we’re not able to measure anything. They need to be able to do these things.. So what happened? Then instead of having the sales resource have to actually go and source the contacts, then marketing just took responsibility for getting the contacts so the SDR could call them to try and book the meeting for the AE, which then created predictable revenue and the demand waterfall, an assembly line approach to go to market. assembly line, lead generation marketing does stuff to get leads. SDR is low cost resources, then cold call those leads to try and get them into a meeting. And then once they get into a meeting, the sales rep is supposed to try and close as many meetings as they can into revenue. And each part of that assembly line marketing, SDR and sales are all optimizing for their micro part of the process, not the overall system. And so what does that happen? That’s why marketing is able to get 100,000 MQLs in a year and the sales team still misses quota by 40% because marketing is optimizing for the MQL, not for the sales team to hit their target. And so what I think we need to get to is we need to transition from this assembly line, lead generation system to an all-bound integrated revenue team where you have three main things that you need to do to drive net new business. You need to create demand. You need to capture demand, and then you need to convert pipeline into revenue. Those are the three different things. And then recognizing that marketing, the entire company for that matter, sales and SDRs can play a part in all of those different parts of the process. Smart salespeople are posting on LinkedIn to their target customer to drive awareness, to get inbound DMs, to start conversations, to build a personal brand. Smart sales reps are doing that.. That’s demand creation. Smart marketing teams are hosting field marketing events for people that are in stage four, accounts that are in stage four pipeline to accelerate that pipeline and increase win rates. That’s a great move. But it’s not exactly what a marketing team did in the assembly line lead generation system. So you can see that smart companies are already moving to this all-bound integrated revenue team. The problem is that they still use the assembly line lead generation metrics. And so it prevents, it de-incentivizes a sales rep to post on LinkedIn and it de-incentivizes a marketing team to post on LinkedIn or to create a podcast or do other things because the metrics are incentivizing MQL volume. And to be frank, it’s the number one reason that a customer of my company would fail is because they cannot break away from, We need to get as many MQLs as possible with direct attribution, despite the fact that in their data it’s clear that the shit isn’t working. Yeah. But there’s an ingrained mindset For decades now that have been happening here. There are adopted, quote unquote best practice frameworks that drive these things. And I’m very focused on building a new framework for B2B companies to operate on, because I just see over and over again predictable revenue and demand Waterfall are now failing companies. The main reason is because B2B buyers are much different in 2023 than they were in 2011 when these things were published. Yeah, it’s fascinating because I felt the shift right. And as you talked about,. I’ve been doing this for a long time. I did a B2C banner in 1998 that had a 15% click through and it was like a B2C e-commerce focus and so downloaded a ton of product just from that one banner. But I felt it shift over the past couple of years. And this is something I want to drill into with you, Chris, though, is, for example, demand creation for you as a thought leader, for a person who’s sort of a practitioner who’s selling your ideas,. I think is different than it is for a brand when there’s when the alignment between the spokesperson and the product is maybe less there. Can you talk about that a little bit? You get what I’m saying. I get what you’re saying, but I don’t agree. Okay. I mean, let’s talk through why. So I see basically three different tiers of demand creation. You have thought leadership, you have product marketing and you have category marketing and category marketing, you’re marketing the category, your category, against the status quo, not you against your competitor. In product marketing, it’s typically you against perceived competition and in thought leadership, it has nothing to do with your product and it’s much more broad than the little space that you play in for your product. The problem in B2B companies is that they are basically only focused on talking about themselves and their product and their little small window that they play in, which makes it very hard for them to be objective thought leaders. And so the thought leadership strategy falls down because they don’t act like a consultant. They act like a vendor that’s trying to sell you their specific product. So it’s not really leading thoughts. And you can tell in their language and how they behave that it’s biased. I think that B2B companies should do this and could do it in the thought leadership category, you need to take the mindset that I’m the best consultant for my target customer or my target account. It’s a very hard mindset for a B2B company, a technology vendor or otherwise to actually live. That’s what’s hard about it. Product marketing. A lot of companies do it right. We’re building case studies, we’re building use cases, pages. We build all these different stuff where I think companies fail in product marketing is in the distribution. They think about distribution is how do we rank this in a search engine, not how do we take this customer story, put it into seven different creatives and then run it against all of our target customers on LinkedIn ads to educate them on how a company like them in their industry that’s noncompetitive or super successful using our product. B2B companies just, I think, fall down in the distribution of this content and then oftentimes B2B companies because they’re so focused on the competition, like, oh, how are we going to beat blah blah, blah competitor, that they don’t market the category at all. They only market against whoever they think that they’re competing with. And I think that marketing the category or the movement that you all are, that you all are driving at your company, then gets you perceived as the category leader. When I think that if you’re marketing against a competitor like Switch from X to Y, oftentimes what you’re doing is actually spending money to advertise your competitor. If you’re talking about your competitor and you’re paying to show them that oftentimes the people that receive the advertising will perceive it as an advertisement for your competitor, which is a very odd psychological thing. And so to just bring the point home,. I think that every company, regardless of what they sell, should be operating a very similar content strategy, using those three core pillars, leveraging both paid and organic distribution to distribute it, not one or the other. In order to be successful in a thought leadership strategy, you need to take the mindset of I am a consultant that helps my target customer with everything in their world, not just the little space that I play in. Yeah, makes good sense. I mean, that’s the whole ideation behind the creation of this Closing Time podcast is speaking to go to market leaders who often adopt CRM and that but just that it’s like the pain points that they think about that they focus on in their everyday jobs and how they can get better, right? I mean, is that essentially what you’re focusing on? How fucking boring would this podcast be if it was only about CRMs? You know what I mean? Yeah, exactly. Hey, Chris, that’s all the time we have for this episode and excited to talk to you next week for our next episode. Cool. Let’s do it. And thanks to all of you for joining us today on this episode of Closing Time. And please join us next week for the second part of my discussion with Chris.