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Feature Story . . . |
Demand Creation Is a Myth
Why it doesn't work for PS firms
by Randy Shattuck, The Shattuck Group
I love guitars. For 20 years I've collected, played and admired them. Nylon and steel string, electric, classics and even off-brand, no-name guitars. I love the way they sound, look and feel in my hands. So I guess you could say I'm a sucker for all things guitar. My mailing lists prove it. I must be on 10 different lists from the major guitar manufacturers and retailers. Even if I don't buy immediately, if their guitar catches my eye, I'll wait for a sale. It's easy to create demand with me.
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I hear professional services (PS) executives toss around the term "demand creation." Based on they way they talk, I have a sense that they believe demand can be created with B2B buyers in the same way that guitar sellers create demand with me. Just catch my eye, and eventually I'll buy.
I receive literature from PS firms that is heavy on eye-candy but light on substance. Frankly, I think demand creation for B2B PS firms is a myth. And you can throw in "lead generation" too. I don't believe in either of them. Surprised? Keep reading, and I'll explain.
In my first article, Build a Strong PS Brand I defined PS brands as roughly synonymous with reputation and outlined the six elements inherent in every PS brand. I also made a bold statement. I claimed that brand building is the key to exponential growth and that it leads to lifetime wealth in a liquidity event. This article will amplify one of those six brand elements positioning.
Demand creation A B2C concept
Demand creation is a concept borrowed from B2C marketing. It works from assumptions that simply do not hold true for B2B PS. In my second article, Understand the B2B Buying Cycle, I noted the differences between B2B and B2C buying. B2C buying is often low-risk, inexpensive, impulsive and easily stimulated. B2B buying, however, is methodical, complex, budgeted, high-risk and analytical.
PS firms cannot advertise their services on the radio and expect that decision-makers will "rush on down" and buy them like a cola drink. The same goes for direct mail, e-mail, trade advertising and trade shows or any other form of promotion. Demand creation simply doesn't work and here's why.
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The nature of PS demand
PS demand cannot be created. It can only be fulfilled or shaped to a limited degree. If a business does not need what you sell no matter how much you stimulate the market through advertising and promotion you'll waste money. They won't buy it if they don't need it. Period. If you do not understand what the market needs and will pay for, you are wasting your time.
Lead generation is bunk too
At The Shattuck Group, we used to run extensive marketing campaigns to "generate leads." We would turn the leads over to our clients' sales staff who would follow up on the first five of them. But when they didn't smell a purchase order (PO) right away, they'd quit and say the leads were bad. We used to become very frustrated by this in fact I'll write a future article about the relationship between sales and marketing. However, our perspective has changed.
PS firms need prospects
I have come to realize that every PS firm needs prospects primed to purchase what you sell. The attributes of these prospects are:
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They have a business problem or opportunity you can address profitably.
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They are willing to take a close look at your solution.
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They have adequate budget.
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They have a sense of urgency to solve the problem or take advantage of the opportunity.
Ultimately, sales people want to talk to these kinds of prospects. The more you can fill your pipeline with people of this nature, the more you can make rain.
How do you get these prospects?
You must position for them. A PS firm's position is the intersection of three dynamics:
How do you position your firm to ensure that prospects, as defined above, consistently fill your pipeline?
Conduct market research
If we concede that demand cannot be created, then we must also concede it is our job as marketers to discover what demand exists. The single best way to do this is through qualitative and quantitative market research.
Qualitative market research taps into the impressions of a few target decision-makers. Quantitative market research looks for statistically valid trends from scientific polls conducted with randomly sampled target decision-makers. I believe it is best to begin with qualitative research to identify potential trends and then use quantitative techniques to confirm that a trend really does exist.
When conducting market research, it is vitally important to deploy a sound methodology. At The Shattuck Group, we ask several key questions when beginning a market research campaign:
Where are decision-makers' points of pain today, and what keeps them up at night? These can include positive drivers such as opportunities as much as negative drivers.
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What solutions exist today to address these points of pain?
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How adequately do these solutions address needs?
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How much do decision-makers spend on current solutions?
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What gaps exist between decision-makers' desired results and solutions providers' actual deliverables?
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How much loyalty do decision-makers hold to current solutions providers is there a chance to unseat current providers?
A mistake we see many PS firms make is rolling out service offerings without doing their homework, which leads to ho-hum results. Too many PS executives believe that the combined experiences of their staff are enough to determine what the market needs, cares about and will spend money on. This is usually not true. Market research will tell you in very certain terms what decision-makers care about and where they will, and will not, spend money.
Craft unique service offerings
Once you understand where the market is struggling and where companies are willing to spend money, look at your firm. What core competencies exist in your staff? How uniquely can you address market demand while maximizing profits?
Herein lies a fundamental problem. Most PS people are trained in similar institutions to deliver similar results. Unless you create a unique position, you will have little competitive differentiation and little opportunity to charge a premium due to under-cutting from competitors.
I believe that positioning is fundamentally about finding a unique way to fulfill demand. Usually, this requires fresh ideas and outside perspectives. Once you've conducted market research, gather your sharpest minds, either internal or external, and go off-site for a meeting to kick around ideas.
Raise awareness consistently
If you know what the market needs and will pay for if you can deliver it profitably and if you have a position that competitors cannot quickly copy all you need is awareness.
B2B buyers purchase in cycles based on budget availability. If you consistently raise awareness, when they have budget and need, they'll contact you first. Remember, B2B buyers have incentive to use their budget. For most of them, it's use it or lose it.
Raising awareness is about telling your unique story to the market not gimmicks. Awareness campaigns that attempt to stimulate purchase behavior through special incentives and deep discounts often erode perceived value and profits. Just tell your story.
Define a profile of your target decision-makers. Then choose targeted media to put your message in front of them. Avoid over-reach: touching (and paying for exposure to) people who will never buy your solution. Keep your messages simple, direct and targeted at the desired win-results of your target profile decision-maker.
Take these steps. Give them a little time. Keep a large umbrella handy. You're going to need it.
About the author:
Randy Shattuck is a senior marketing executive and founder of The Shattuck Group, a full-service marketing firm that specializes in professional services marketing. You can reach him at randy@theshattuckgroup.com.
