SaaS: Demand vs. Lead Generation

Many SaaS com­pa­nies have a demand gen­er­a­tion func­tion with­in mar­ket­ing. I think the term “demand gen­er­a­tion” is ter­ri­bly mis­guid­ed.

There is no such thing as gen­er­at­ing demand. Demand either exists or does not.

If demand exists in the mar­ket­place, it can be chan­neled to your com­pa­ny via lead gen­er­a­tion mech­a­nisms — such as cold call­ing, pay-per-click adver­tis­ing, etc.

If demand does not exist, there is noth­ing you can do about it.

Some­times, it’s eas­i­er to see an idea when it’s in anoth­er indus­try.

Let’s say you run a food com­pa­ny.

You’ve devel­oped a prod­uct that’s loaded with fat and sug­ar… and tastes like crap.

You’ve had a dif­fi­cult time gen­er­at­ing sales (no duh…).

So, you decide to hire a direc­tor of demand gen­er­a­tion. After all, you need to gen­er­ate some demand, right?

There is not demand for food that’s bad for you and tastes ter­ri­ble. It doesn’t exist. No amount of so-called “demand gen­er­a­tion” is going to do any good.

Now… if prospec­tive cus­tomers have a prob­lem that’s annoy­ing enough that they want to solve but they don’t know that your prod­uct is an option, you can chan­nel pre-exist­ing demand to become leads for your offer­ing.

You can edu­cate your tar­get cus­tomer on why your approach is more advan­ta­geous than liv­ing with the prob­lem or any oth­er com­pet­i­tive option. You can even close a sale.

What you can’t do is make cus­tomers care about prob­lems that they don’t per­ceive, don’t care about, and don’t want to pay mon­ey to solve.

Many of the clients I work with end up gen­er­at­ing sales growth of 40% to 100%+ per year. I turn down the major­i­ty of prospects that want to work with me. One of the qual­i­fy­ing cri­te­ria when choos­ing clients is find­ing out whether mar­ket demand exists in the prospec­tive client’s mar­ket­place.

If there fun­da­men­tal­ly isn’t any demand, there is noth­ing I nor any­one else can do to solve that prob­lem. The founder should pick a dif­fer­ent prob­lem to solve for that tar­get cus­tomer or per­haps pick a dif­fer­ent tar­get cus­tomer alto­geth­er. What they shouldn’t do is try the impos­si­ble.

There used to be an expres­sion here in the Unit­ed States that was used to describe someone’s sales skills. It’s not polit­i­cal­ly cor­rect to use any­more, but I’ll use it to make a point.

“He’s so good at sell­ing that he could sell ice to Eski­mos.” (The bet­ter way to say it is: “He is so good at sell­ing that he could sell ice to the Inu­its.”)

The idea was that the per­son was so good that he could sell some­thing to peo­ple who don’t need it.

I think this is a ter­ri­ble idea.

A bet­ter approach would be a more strate­gic choice to try to sell portable space heaters to Eskimos/Inuits instead!