Time For Next-Gen Demand Generation

Here's a shocker. One tenet of any MBA course is that you need to spend money to make money. When you apply that adage specifically to solution providers, research from the Institute for Partner Education & Development (one of CRN's sister organizations within our parent company CMP Technology) finds that VARs that are best-in-class spend more on marketing, training and infrastructure than do solution providers on average. But the best-in-class group actually spends half the industry average on marketing activities, or roughly 1 percent of total revenue.

HEATHER CLANCY Can be reached via e-mail at hclancy@cmp.com.

Quelle surprise! Before you go shutting down your marketing budget, though, there's a whole lot more to this finding than meets the eye. It's how that money is spent that is particularly important. Consider that the best-in-class solution providers, on average, devote 38 percent of their market development funds to true marketing and demand generation, while the typical solution provider spends 33 percent. Conversely, the best-in-class group only spends 4 percent of MDFs on premiums vs. the 10 percent of MDFs allocated by their peers.

Taken alone, this is compelling evidence for rethinking demand-generation activities. But here's another piece of data to digest: A survey of marketing executives and owners at more than 700 professional services firms by Wellesley Hills Group and its publishing arm RainToday.com (not necessarily all of them technology-focused) found that nearly two-thirds of the ones who consider themselves "very well-known" within their target market also consider themselves to be "good" or "excellent" at generating leads. Less than half, or 44 percent, of those that didn't think they had strong name recognition said the same thing. The scary thing is that only 30 percent of the survey respondents stated that they were very well-known to begin with. Which means, only 20 percent of the survey respondents feel they are doing an effective job of marketing themselves enough to bring in a good stream of leads. By the way, the most effective lead-generation tool for this group after referrals? Cold calling.

So maybe it's time for you to look at marketing and demand generation in a different way. Instead of getting hung up on whether your people know all the coolest advertising or events or search engine optimization tricks, worry about whether your entire team—from receptionists to salespeople to technical personnel—can speak fluently about your firm's value proposition. Then use marketing funds wisely to support that simple message. My trick question when I meet a new solution provider is to ask for their "Starbucks coffee line" pitch. The shorter, the better. And keep it personal, i.e., useful for my individual worldview. If it's filled with lots of buzzwords from vendor press releases, I tend to stop listening after the first 30 seconds or so. But I might listen harder if you use a buzzword particular to my own industry.

What's your most effective demand-generation activity?
CRN Editor Heather Clancy welcomes letters at hclancy@cmp.com.