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Mike Lieberman, CEO and Chief Revenue ScientistTue, Mar 7, 2017 12 min read

Do You Need Demand Generation Or Inbound Marketing? How To Decide

It Might Not Be Inbound Marketing Or Demand Generation; It’s Probably Both

Inbound Marketing and Demand Generation Require BalanceMarketers love to label everything. Perhaps it’s the creative side of what we do. So, we created a label for the kind of marketing that focuses on people actively searching for what you do, and we call that inbound marketing. We also created a label for the kind of marketing that focuses on people not actively looking yet, and we call that demand generation.

It would be nice if it was that simple, but because everyone uses these approaches differently, the lines are increasingly blurry and there has definitely been some fraying at the edges. For instance, consider pay-per-click. Its advertising (paying for placement), but people are actively searching for the phrase, so is it inbound or demand generation? Maybe it doesn’t matter. Maybe the key is evaluating your situation and creating the right mix from a variety of methodologies.

I’ve already written a handful of articles on what demand generation is, how it differs from inbound marketing and how to deploy it at your company. Today’s article is about assessing your marketing needs as a business, orchestrating the right set of tactics regardless of their classification and then optimizing them to produce results.

Dive Deep Into Your Personas

To make an intelligent decision on demand generation, inbound marketing or some combination of both, you need to have a deep understanding of your prospect personas. Are your prospects actively searching? Are they actively aware? Are they engaged in buying behaviors? If they are and there’s enough activity to drive your new business revenue goals, inbound (or at least a heavy dose of inbound) makes sense.

If they’re not actively searching, not aware that solutions exist or aware that you exist, or don’t believe that solutions to their challenges are available outside their walls, demand generation (or at least a heavy dose of this approach) makes sense.

However, this is where it gets sticky. In most cases, our clients have some awareness and some general lack of awareness, making it more about balancing the approaches than selecting one or the other. That’s OK. Just keep that in mind as we work through the other aspects of defining your marketing strategy.

Evaluate Your Level Of Investing In Marketing

Match Your Marketing Budget To Your Marketing ApproachThis might be one of the most overarching decision points around demand gen or inbound. How much do you have to invest in marketing? Awareness-based demand generation is going to include more waste than inbound. Consider the example of the banner ad on a website. That’s demand generation based on impressions. Regardless of how many people actually need what you do, you paid for people to see it.

The inbound approach, on the other hand, focuses on getting you in the right place at the right time for prospects seeking what you do. This by definition is going to be more targeted and more efficient. It’s not necessarily better, just a different approach.

Do you have the budget to support awareness-generating demand marketing? Some people might argue that this type of marketing takes longer, but I’ve seen inbound campaigns take time to gain traction too, so I’m not sure this is really much different. Others might argue that the demand gen awareness is a required precursor for the inbound that comes after their awareness has been triggered. If that’s what you think, then technically it would take longer than starting your marketing once awareness is present.

This might also explain why demand generation is more widely used at bigger, more sophisticated, more marketing-tech-savvy businesses and why inbound is more widely used at smaller, more entrepreneurial businesses.

Again, I’m trying to help you decide which or how much of each is right for you, so evaluate your budget and what you’re planning to invest in marketing. Is efficiency important to you? If it is, you might want to consider a higher mix of inbound. If its not, more outbound demand generation could support your goals.

Look At Your Time Horizon

When should you expect results? It’s the million-dollar question. When will each of these approaches start to work? When can we expect the leads to start flowing in? I’m not sure there’s a clear direction here regarding how fast you need leads. Inbound is not a fast-start strategy, but neither is demand generation focused on building awareness. They both represent long-term plays.

However, this is where I think account-based marketing could fill some of the gaps. This isn’t a short-term results tactic either, but if you find opportunity at least you have a playbook to turn it into revenue. I think producing results faster is a challenge for both approaches and comes down to planning your marketing vs. executing one way or another.

What I mean by that is if you have creative bottom-of-the-funnel offers, you can generate leads from inbound quickly. That bottom-of-the-funnel offer would work just as well with a demand generation campaign. It comes down to thoughtful execution of your content and conversion strategy as opposed to an inbound vs. outbound discussion. Understanding this helps you in either scenario.

Assess Your Team’s (Internal Or External) Capabilities

This could be one of the biggest and least-often discussed challenges associated with both methodologies. Most of the marketing people I meet have a lot of experience doing demand generation tactics, so that’s rarely a challenge. But when it comes to inbound, it’s a little different. We get a steady stream of calls from companies with internal marketing teams that admit they don’t know how to make all the complexities work to produce leads.

My recommendation is to do what you’re good at or get someone to help with what you’re not. As you go through your assessment and you deem inbound worth pursuing, you’d be much better off getting help instead of attempting to struggle through it, not producing results and then claiming the entire practice “doesn’t work.”

I’d give you the same advice on the flip side. If you’re an inbound rock star but decide you need to do some remarketing, pay-per-click and banner ads but you’ve never done work like this, you need help here too. If you don’t get the expertise you need, you’ll be measuring the success based on incomplete execution. It’s not a valid test and you might be leaving a significant number of opportunities on the table.

It’s clear to me from everything I’ve read that demand generation is mostly focused on getting people’s attention who are not active in a buyer cycle, while inbound marketing is clearly focused on those people who are active in their buyer cycle.

Now, the word active becomes important here. I don’t mean “ready to buy today” and active buyer cycles are all dependent on the size/scale of the purchase. Some large and complex purchases might take a year of active cycles, while some smaller and less complex purchases might take just a few days.

With that understanding as a backdrop, it appears that the major difference comes down to some of the elements discussed here. How big is your budget? HubSpot CEO Brian Halligan has always said inbound is about the size of your brain, not about the size of your wallet. How long can you wait for leads? Inbound does take time because you’re earning a prospect’s attention and you’re on their schedule, not yours.

But what’s new here is that it might just come down to what your team is comfortable with. If your team members have been doing demand generation for their entire careers, it’s likely that they’ll continue to want to execute awareness-related tactics. Inbound is new, it’s scary and it’s risky. Perhaps it’s too risky for bigger organizations, with more exposure and more eyeballs watching the marketing execution.

However, I think it’s more about using the right mix of tactics from both based on your target prospect persona, budget, time horizon and company goals, which surprisingly enough brings us full circle and back to the strategy aspect of marketing. If you jump into the tactics without completely planning your approach and attack scenarios, your chances of creating the right mix are low.

On the other hand, if you think through the buyer journey and the experience you want to create for your prospects, you’ll have the map to help decide which demand generation tactics and which inbound tactics create the perfect prospect experience. That creates high numbers of visitors to your website, ultra-high conversion rates and large numbers of marketing-qualified leads, sales-qualified leads, sales opportunities and new customers.

This sounds like the goal of every marketing team, sales team and management team on the planet. It’s exciting to know that this is a realistic objective for any company that approaches lead generation and revenue growth from this holistic perspective.

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Mike Lieberman, CEO and Chief Revenue Scientist

Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.