Can we really ‘create’ demand – and does it matter?

This little piggy went to market, but why?  

This is the big question in B2B marketing circles in early 2024: does ‘demand creation’ exist? In other words, did someone persuade our piggy to go to market for something she didn’t realise she needed? Or did she go to market because, well, she needed some groceries and a new hat and she was always going when she was good and ready, thank you very much? 

This question has blown up recently in B2B marketing circles. Dale W Harrison’s recent post claiming “demand creation doesn’t exist” provoked both backlash and vociferous support; others have subsequently piled in for and against.  

On the surface it seems an odd issue for marketers to get worked up about, resting as it does on the semantics of vague terminology. Can marketers create demand where none previously existed? Depends on how you define both ‘creation’ and ‘demand’. 

Is 100% alignment between B2B sales and marketing teams truly possible?One camp argues it’s ludicrously naïve to say marketing can ‘magic up’ demand where none previously existed. The marketer’s job is to make sure their brand is in the best position when the customer decides to come to market of their own accord. The other camp says of course we don’t magic demand out of thin air, but we can have a meaningful, and perhaps definitive, influence on whether a purchase is made or how a budget is spent. 

Both positions seem reasonable, nor do they contradict each other. Why, then, is everyone getting so worked up? 

Partly I think it is because, behind the question about demand creation, there is a deeper one. A question which pokes a stick in the ribs of some of our deepest anxieties: how much agency do we marketers really have? 

Why it’s time to move beyond lead generation as a measure of effectiveness in B2B marketingHow much growth is the result of our sublime positioning and Cannes-winning creative? And how much is just the relentless march of market forces, our distinctive brand assets amounting to little more than fiddling round the edges? 

The anxiety is particularly acute in B2B right now because we are in a moment of transition. The old models are being challenged by new and big questions being raised about what good B2B looks like. 

The end of the generation game

Historically, the standard model of B2B marketing went thus: marketing generates leads for sales, sales takes responsibility for closing them. Sales and marketing bicker about the real source of those few leads that convert. Each year we take the number of sales we need, multiply that by conversion rates, and ask marketers to deliver a stupidly high number of leads which unsurprisingly end up being of poor quality. 

Lead generation is a classic case of Goodhart’s law, which states when a measure becomes a target, it ceases to be a good measure. It’s also a classic case of efficiency over effectiveness: cost-per-lead can most easily be reduced by buying cheaper leads, and cost-of-acquisition by increasing lead volumes to make sure you ‘tag’ as many potential customers as possible, ignoring incrementality. Marketers often end up paying lip service to MQL targets whilst trying to do the ‘real job’ on the side.  

But while few are fighting the corner of the MQL anymore, the question of what to replace it with still provokes plenty of interesting debate.  

Demand generation or brand salience?

Lead generation is traditionally seen as a subset of a broader discipline called demand generation. This is perhaps the real target of Harrison’s criticism – the idea that marketers can create a suite of content that pushes people through the funnel from top to middle to bottom. 

In antithesis to demand generation, Harrison and others like the LinkedIn B2B Institute make the argument for brand salience. Since the ’95/5 rule’ suggests that only 5% of your audience is ever in market at once, the marketer’s job is to build strong associations for the brand across key category entry points, to be front of mind when the buyer comes to market – due, in Harrison’s term, to ‘internal state change’.   

We don’t persuade business decision-makers into making a purchase, we build memory structures so they think of us when they start their purchase journey for CRM or tax law or outsourced payroll. 

Is the time right for B2B brands to embrace influencer marketing?In September 2022, Harvard Business Review released some research with Google that seemed to add a coup de grace to these arguments. It claimed 80% to 90% of respondents have a set of vendors in mind before they do any research and, crucially, 90% of them will ultimately choose a vendor from the day-one list. 

So being on the shortlist, mental or literal, is a big part of the marketer’s job, and it seems reasonable to say that this shortlist is determined to a large degree by brand salience.  

But this is only half the story. If we stop there, it implies a fatalism about the sales process that amounts to negligence on the part of the marketer. 

A complementary model: The three Vs

Our influence on demand is often weaker than we’d like to think. This is undoubtably true. But there are nevertheless critical choices to be made – in particular those that stem from the characteristics of a complex sale. This distinction is often lost in the debate about B2B. Salience alone may be enough for a transactional sale, but here we’re talking about multiple decision makers and weeks or months of process.

When we talk about the complex sale, we need to understand the three Vs of revenue – value, volume and velocity – and the fact that they represent trade-offs. It is possible to increase the value of deals, but they will almost certainly take longer to progress and be of lower number. It is possible to accelerate pipeline or increase the volume of deals, but you are likely to sacrifice value. 

Demand is the result of all sorts of factors in a highly complex system. Our influence on it is inevitably weak, our ability to predict it low, our ability attribute it effectively limited. We will never really know the extent of our agency over it. (After all, behavioural science tells that if we asked the pig why they went to market, they wouldn’t have access to their true motivations and would likely mumble some story about their brother not getting any roast beef). 

One B2B marketer on why the CMO has to be the ‘nerve centre’ of the businessWe can, however, describe the qualities we want from deals using the three Vs. This has the advantage of being common business language, understood by non-marketers, and keeping us grounded in the commercial impact. It directs behaviour and has tactical implications that affect how we go to market all the way through the funnel.  

Being on the top of the mental shortlist is only part of the job. It is a useful proxy to remind us of the power and importance of salience. But we must also ask what shortlists we want to be on and, for the complex sale, how we get ahead in the race from shortlist to successful deal.

This is perhaps the area of B2B marketing least well understood. But, whether you label it as ‘demand generation’ or, as I’d prefer, see it as applying the classical tools of marketing at a different scale, it remains important to the volume, value and velocity of the revenue you ultimately generate.