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.
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?
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:
- Can marketing be a little bit more efficient generating lead pipeline than field sales people are with cold calling?
- 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:
- Measure how much money your sales organization really spends on demand generation.
- Determine the revenue capacity that would be available if your sales team spent more time working opportunities instead of looking for them.
- 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.
- 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.