J. David Green

Four Steps to Convince CEOs that Demand Generation Should be a Marketing, Not a Sales, Function

For most of us, the phrase “demand generation” conjures up things like campaigns, trade shows, and the corporate website.

But what about sales prospecting? Despite all the newfangled marketing automation tools, most CEOs increase the funding for demand generation by authorizing the expansion of the sales organization.

Surprised?

You shouldn’t be. Books like SNAP Selling, Sales 2.0, SPIN Selling and Solution Selling for years have been teaching sales people to generate demand, one conversation at a time. Most companies don’t call what sales people do “demand creation” or “demand generation.” No, we’ve given it more pedestrian names, like “pipeline development,” “sales prospecting” or “cold calling.” But, really, what’s the difference between what sales people are trying to do and what demand-generation does?

The Percent of the Sales Budget Spent on Demand Generation

Efficient sales people don’t spend much of their time prospecting. They network. They get referrals. They leverage LinkedIn and Twitter, and monitor news feeds about key accounts. When done properly, these activities are very effective and do not take a great deal of time. The rest of their pipeline will come from sales-ready leads.

But many sales teams spend 20 percent or more of their time prospecting. A recent technology software client of mine, for example, had their six-figure field sales people spending more than 40 percent of their time prospecting.

Multiply those percentages of time spent prospecting by the total sales budget for the team in question and, in most companies, money indirectly (and maybe inadvertently) allocated by sales for demand generation is at least as large as the entire marketing budget. In fact, it could be a multiple of the marketing budget.

Think about that.

It’s not like sales people like to cold call, cold calling is time consuming and often demoralizing. Sales professionals would prefer to talk to people who have a problem they could solve. So why do sales people do it?

There’s one simple reason: they have no choice. Marketing rarely generates a sufficient volume of truly qualified leads. It’s not because marketing can’t or won’t. It’s because marketing doesn’t get the funding necessary. So sales people have to pick up the slack.

The Case for a Larger Sales Force

Against this backdrop, how hard is it for sales leadership to make the case that the way to increase revenue is to hire more sales people? New sales people generate demand. Sales management has years of evidence of the correlation between more sales people and more revenue. It’s not always true. Obviously, the product and services have to warrant demand generation efforts, but if they do, adding more sales people will generally grow revenue.

The Case for a Larger Marketing Budget

There’s a flip side to this argument, one that has been getting more and more compelling. What about increasing the investment in lead generation to drive more revenue through the current sales organization? If a sales force is using 20 percent or more of its available time to find sales opportunities, there are two key questions:

  1. Can marketing be a little bit more efficient generating lead pipeline than field sales people are with cold calling?
  2. To what degree?

With each advancement in marketing automation and database marketing, the answer has to be a resounding “yes!” There is a revolution going on in content marketing because of these advancements and our expanding knowledge of buying behavior. Social networks have further accelerated the possibilities.

The old budget allocation benchmarks should be challenged. Marketing leaders should be showing the CEO and the CFO and the other key stakeholders in the C-suite that marketing needs more funding in order to really move the revenue needle.

A Four-Step Plan for Making a Bigger Different with Lead Generation

If that sounds like your situation, let me share these ideas for driving change:

  1. Measure how much money your sales organization really spends on demand generation.
  2. Determine the revenue capacity that would be available if your sales team spent more time working opportunities instead of looking for them.
  3. Share these findings with the executive leadership team and propose an experiment in collaboration with sales, finance and your CEO to improve sales’ financial performance: supply a sales team with a sufficient volume of sales-ready leads so that their time spent prospecting is cut in half.
  4. Compare the revenue performance of the pilot team with that of their peers.

Set up the experiment to give key stakeholders the proof points that will convince them that it would be a no-brainer to reallocate budgets to scale the effort. Make sure the pilot sales team is reasonably representative to eliminate key variables like the solution being sold, the talent selling the solution, and the market you’re selling to. That way, you can attribute any increases in pipeline and revenue to the lead-generation investment.

Share and Enjoy:
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • LinkedIn

Lead Generation, Marketing Strategy, Sales, Sales Leads



  1. July 30th, 2011 at 05:39 | #1

    All things matter if you are growing a business in the industry. B2B strategy always need time and attention to work completely.Our main focus should be on the customer leads which are giving us business and profit so try to satisfy them through your services and products.

  2. July 30th, 2011 at 18:07 | #2

    David,

    Awesome post! We’ve tried to say this same thing a thousand different ways on 3FORWARD’s Sales Leaders Blog and have yet to come close to making it this clear and convincing! The one post where we’ve had the best response makes this argument but from the point of view of the Sales Leader. It’s an email they can send the CMO asking them to ‘take over’ this responsibility from their sales reps. (http://bit.ly/qkUFa4). Love your feedback on it and thanks so much for putting this out!

    Matt Smith, 3FORWARD

  3. J. David Green
    J. David Green
    July 30th, 2011 at 20:03 | #3

    @Matt Smith
    Matt,
    Thank you for the kind words. From reading your blog post, it seems we have a similar point of view. I’ve found that looking at things from sales point of view has the same positive benefits as looking at things from a customer point of view when making a product, generating demand, closing deals, and providing post-sales support.

  4. J. David Green
    J. David Green
    July 30th, 2011 at 20:05 | #4

    @lead answer @ leading way
    I agree that we should serve customers and prospects as a means of lead follow up. That point of view in pre-sales conversations, whether human or digital, is central to lead nurturing. Thank you for the comments.

  5. August 3rd, 2011 at 08:43 | #5

    I guess the key question is whether Marketing is able to turn an untroubled suspect into a troubled prospect. And this depends on what you are selling. I doubt that marketing is able to create leads if provocative selling is needed. For companies where most of the selling is done via Key Account Managers, Marketing has to shift to an account based marketing mode if they want to be successful in creating leads. In most cases this is a major and costly undertaking.

    The suggested experimentation approach seems therefore to be good advise. For the reasons mentioned above I am though bit more skeptical about the success rate of such experiments

  6. August 5th, 2011 at 05:03 | #6

    @Christian Maurer
    Christian,
    That’s a really good question and thanks for raising it.

    My answer is “yes.” The best sales methodologies are often transferable to mass-customized marketing. For example, 20 years ago, Miller-Heiman published what at the time was revolutionary: Strategic Selling. That book talked about different buyer types and how sales people needed to recognize and sell to them. Now, the best marketers focus on buyer types (personas) and tailor the marketing message accordingly. I think marketing has made huge advancements in mapping content to the buying cycle and using thought-leadership to build trust.

    The inferences marketing can deduce from what Steve Woods calls “digital body language” are growing, too. And keep in mind, that marketing is only beginning this journey of having digital conversations with the market. Technology advancements and our own understanding are growing very rapidly and so that what was once far fetched is becoming common.

  7. August 8th, 2011 at 22:34 | #7

    Fantastic article. I hope many corporate executives get a chance to read and consider your perspective.

    The divide truly is split. Many execs figure Marketing should generate all leads so that Sales can focus on closing. Conversely, many execs assume Marketing is for press releases and collateral and the selling should be left to Sales.

    The truth is right down the middle. Marketing and Sales should jointly focus on the sales funnel, the sales objections, the sales qualifications, and the sales conversions and then divide and conquer based on skills. Typically, that would mean Marketing would own the top half of the funnel and Sales would own the bottom half. Of course that’s an over-simplification but very effective and efficient overall.

    We recently broadcast a webinar that discussed the tactics to generating sales and marketing content. It went into great detail about sharing the funnel across teams and then creating content that both Sales and Marketing could utilize for their respective lead generation and sales conversion efforts. It actually can become a very unifying approach to getting the alignment, and the ownership, resolved as you have discussed above. You can check it out here if you’re interested. http://www.myleadagency.com/how-to-make-marketing-content-that-matters

    So, if you don’t mind my asking, what inspired you to write this post?

  8. August 22nd, 2011 at 04:37 | #8

    David,
    Nice write up! Thanks for this. As a company in the demand generation space, this is what we have been telling our clients all along. And yet,most companies still see Demand Generation as an extremely tactical function. I suppose, one must add here that this perspective is more true for Services organizations, as opposed to Product Companies where demand generation is taken a lot more seriously. In fact, we recently ran a survey with Software Services and Product companies ( our company focuses on Tech companies alone), and as was expected we found that most services companies tend to believe that Hiring Sales people with existing relationships, and Analysts Relations/ Consultants took a precedence over Demand generation as a customer acquisition channel.Traditional Demand Generation in terms of field marketing and Inside Sales figured third in the list. At QEDbaton, We have been constantly harping on the need for a structured process to identify and engage prospects when they are in the buy mode. I think a lot also has to do with the mistrust that exists between Sales and Marketing. And this perhaps, has to do with the way marketing is measured today. In a lot of cases,companies choose to align Inside Sales with the Sales function. This invariably makes the function vulnerable to the inadequecies of the sales people,and thus compromising the long term impact! I completely agree with you, that Demand Generation needs to be treated as Strategic function, and is definitely better aligned with Marketing.

  9. September 4th, 2011 at 04:06 | #9

    @Abhijit Gangoli
    Hi Abhijit
    Thank you so much for the kind words. I wrote a blog post a few months back that may interest you: 9 reasons why marketing should own the teleprospecting function.

    http://b2bleadblog.com/2011/04/marketingownsteleprospecting.html

  10. September 4th, 2011 at 04:14 | #10

    @Darryl Praill
    Hi Darryl -
    Thanks so much for the praise. The reason I wrote this post is that I believe marketing can have a much, much greater and more strategic impact on revenue than they do. And a much larger slice of the budget pie, ultimately. A couple of things are clear to me in looking back at sales and marketing over the last decade or so:

    The internet is encroaching on human to human interaction, as people can do more and more via the web and often prefering to do so.

    The inside sales function, in which I would include dedicated teleprospecting, telequalification, and telenurturing functions, is encroaching on field sales.

    These trends are only beginning and they promise much greater sales and marketing efficiency and scalability. This is what CEO’s need to see.

  1. February 20th, 2012 at 15:09 | #1
  2. February 7th, 2013 at 14:02 | #2