Lead generation: Does it work anymore?

Are you seeing the performance of your lead generation marketing efforts dip? As prospect buying behaviors evolve, many tried and true marketing methods aren’t driving the results they once did. We’re hearing it from fellow marketing colleagues and we’re experiencing it ourselves. 

In this episode, we talk through why gated content and more aggressive lead generation strategies aren’t as effective for prospects who want more control of the B2B buying process. Listen now to learn ways to adapt and improve your results.

00:57 Why traditional lead generation isn’t as effective anymore 
01:14 Comparison of lead generation and demand generation strategies and a short-term vs. long-term approach
05:36 Why evolving prospect behavior is changing everything 
10:43 How is demand generation marketing different?
14:40 The drawbacks of using lead capture forms with today’s prospects
16:34 How to use lead generation marketing as part of a demand generation strategy for more traction and growth

The Demand Gen Fix is hosted by Deanna Shimota, CEO of GrowthMode Marketing. Listen to our team of marketing experts and featured guests drop knowledge on how HR tech companies can maximize the success of their marketing for today’s B2B prospects. Learn more at www.growthmodemarketing.com.

Chapters

• 0:00 Episode 47 - Greg Padley
• 1:02 aMarker

Transcript

(00:00:01) - Hey, everybody, it's Jenni from GrowthMode Marketing. You're listening to Demand Gen Fix, the podcast where our team of GrowthModers and our guests discuss the ins and outs of demand generation, and why we believe it's the key to long term sustainable growth, especially in the HR tech industry.

(00:00:21) - Hi everybody, it's Deanna and Greg back for another episode of The Demand Gen Fix. So, as the buying behavior of HR tech prospects and B2B buyers in general has evolved, we're finding many tried and true marketing tactics are becoming less effective. Not only have we seen this ourselves, we're hearing this from many marketing teams out there that the strategies that worked well in the past seem to have dwindling performance, and this is contributing to the challenge of hitting revenue targets in this already tough selling environment.

(00:00:57) - Yeah, and given that reality, we thought we'd spend some time today talking about the traditional lead generation strategy, and why it might not be working as well these days as what you had seen in the past, and how we can evolve marketing to support today's prospects in the way that they're buying.

(00:01:14) - So, many say lead generation doesn't work anymore. Is that a true statement?

(00:01:19) - I think lead generation is focused on covering the buyers that are in the market right now. It's more of a short term strategy, and its focus is on finding people that are ready to talk to sales.

(00:01:30) - I would say it's definitely a tougher game to play. A couple of the reasons why. Only 5% of companies in your total addressable market, or with your ideal customer profile are actually in market to buy at anytime, and I think the reality is that given the economy these days, even less are in market than that 5%. I've seen estimates as low as 1% are in market, and those in the HR tech field that survived through 2023, and are now one month into 2024, you've seen it, there's not as many companies out there buying. A lot of them have pulled back their budget on things, which certainly makes it a tough selling environment, and the reality is you can't convince someone to buy if they're not already in market, or pretty darn close to being in market.

(00:02:22) - With lead gen, you're chasing them or you're chasing this prospects, so they haven't necessarily expressed any interest. You're working off of a cold list, or a list of contacts who would fill out a form on the website to get a gated content, where you're looking at lead scores and trying to piece together something to chase somebody down that likely doesn't have a reason that they're looking to buy right now.

(00:02:43) - Right, and when you're looking at lead generation strategies, a lot of times you're reaching out to companies. There's some ways you could say you're making an assumption when you do this that they are already in the market. Now, of course, as a marketer, we know not everyone you reach out to is already in market, but you're trying to find those needles in the haystack. The people who are ready to have a conversation with a sales person, and a lot of times if you have a BDR team, for example, who is following up on your marketing leads, they're going out and they're reaching out to individuals, and they're essentially asking buyers to have a meeting with your company. 

(00:03:20) - So, those buyers, or maybe buyers is not the right word, those prospects aren't necessarily raising their hand. It's a bit of a chase. I think a lot of people are probably sitting there and thinking, okay, but these programs have worked well in the past, so I hear what you're saying, Greg and Deanna, but you can't tell me that lead gen is not a real good strategy because we've been using it and for years, quite frankly, it's been the standard playbook in B2B tech.

(00:03:48) - You're right, everybody's using the same playbook, right? The lead gen playbook has been around forever, which is interesting, right? If you think about it, if everybody's using the same playbook, then the prospects know what the playbook is. So they know, right? I go to a website, I want to read something. I got to fill out a form and they know what's going to happen when they fill out that form. So, alot of times they just bounce, and everything's available on the internet. If you just look a couple more searches and they'll probably find the information they were looking for. Anyhow, once they start getting those emails and phone calls because they played by the old game, then they start getting overwhelmed with emails , and phone calls, and all these crazy messages.

(00:04:24) - And now it's getting even worse because AI can do a lot of that contact and writing things, so just like exponential amount of stuff rolling in doesn't really help them because they weren't even really ready to buy anything anyhow. Probably just makes them mad.

(00:04:38) - Yeah, we know the HR tech market is very crowded. These prospects get hit up a lot. In fact, I truly believe that in the HR department, those roles get hit up more than almost any other role within an organization. Maybe IT gets hit up even more because they're also making technology purchases, but imagine being on the other side, and some of you listening probably have been on the other side before where they're getting so much outreach, and it's not just emails, they're getting online content, they're getting DMs on LinkedIn, they're getting those phone calls. All of those things are happening, and what happens is they start to ignore everything, right? Because there's too much to pay attention to, and because of the standard playbook that B2B tech companies have been using for many years, a lot of organizations have built up this pretty extensive marketing technology stack.

(00:05:36) - They probably have a BDR team, so going and following up with marketing engagements that people are having, trying to turn those people into appointments for the sales team. And of course, we've built everything around marketing qualified leads and sales qualified leads. It's worked in the past, it really has, but I think prospect behavior has evolved, and that is the real reason why we are seeing that some of the marketing tactics, specifically around lead generation programs, are less effective than they have been in the past, because not only are they getting bombarded and they're overwhelmed, they don't want to operate that way anymore. These buyers are going and doing their own research, and they're coming to the table armed and well-informed, and I think, in reality, like they want to be in control of the buying process. They don't want to be a part of your sales process. They want to invite you into their buying process when they're ready, and doing it on their terms and on their time, and the research from Gartner has said they're making up to 80% of that purchase decision before they're willing to engage with a sales rep. 

(00:06:52) - The numbers up to 75% now, that would prefer to have zero interaction with the sales rep, so the reality is they're trying to avoid talking to a sales rep. It's also taking on average, according to Gartner, 66 touches to book a sales appointment. So, you think about those BDR teams who are held to metrics, and personally, as a marketing leader, when I was on the corporate side, I worked at two different organizations where the BDR team reported in to me in marketing, so I know the drill; I know how hard that job is, but we would hold them accountable to you need to send this many emails a day, you need to make this many calls a day, and doing the math backwards to say, if you do all this activity, you'll get to 20 appointments per month per sales team, and they were doing that. BDR teams are finding it a lot more challenging now because it takes 66 touches for them to be able to convert that person to an appointment, and that's an average. Sure, there's some times where you get lucky and it's only 15.

(00:07:51) - There are other ones where it's 237, 66 is the average, but the point is the way that these buyers are reacting to marketing, or just not reacting and ignoring it is the reality. And that's why from a lead generation standpoint, by no means are we saying you should throw lead generation out the door. You've got to do things for short term strategies to try to bring leads in the door. Absolutely, especially if you're working on building out a demand generation engine, and that takes time for that to really get the traction you need for that to be your primary way of bringing leads in the door, but you can't do just lead generation because you're going to have a really hard time getting enough traction in the market, especially this really, really crowded HR tech market, to be able to hit your growth goals in many cases.

(00:08:43) - Yeah, you've heard the pushback already, right? With our clients, and it's still like, well, yeah, I get it, but we still need leads. We still need to get those leads in the door.

(00:08:52) - So, I think, demand generation is definitely part of the solution, but you are saying, Deanna, it's not the only thing, right? It's like I'm planting seeds, but I got to wait two months, or whatever the period of time is for them to grow. What do I do in the meantime? I still got to eat, so I think it's got to be a bit of a mix of the two until you can really get that demand generation engine running and humming. A lot of people think lead generation and demand generation are the same, but they're two different things. 

(00:09:16) - They are two different things because lead generation really is a short term strategy. It doesn't mean you do it for the short term. You could be doing it for five years straight, but it's still like what you're trying to do from a short term perspective is bringing leads in the door now, right? Demand generation is a long term strategy because if you're starting up a demand generation engine, depending on where your organization is at, how well known you are as a brand in the industry, but it can take anywhere from 6 to 18 months to get real, meaningful traction.

(00:09:49) - And lead generation and demand generation, I think we can walk through like comparisons. Okay, if you're doing lead generation, these are the types of activities you're doing. If you're doing demand generation, these are the type of activities you're doing, and looking at it from a long term growth perspective we can talk about what issues you might have with demand or with lead generation, so you can understand why you want to have both lead generation and demand generation in the mix because there are big differences between the two programs, even though I think a lot of marketers actually still define lead generation, and demand generation as the same thing. There's probably 50 different definitions out there of what the two are, but from our perspective, they're absolutely different, and one’s short term, one’s long term, and so, you have to meld them together to be able to hit those growth goals. 

(00:10:43) - So, there definitely are big differences between lead generation and demand generation. With lead generation, you have to explain who your company is in advance. Persuade the people; persuade your prospects to consider your product or service.

(00:10:56) - It's an issue because you're trying to bring them into your sales process, instead of allowing them to bring you along in their buying process. It's a dumb analogy, but if you're single and you want to be in the dating world, right, do you just buy a list of other single people and just start calling them up and say, do you want to go out with me? Why don't you meet them? Get to know them a little bit. Maybe you end up being friends on social media, and get to know each other a little bit before you say, do you want to date me? In that analogy that’s not going to work, right? You're going to call somebody up and just go, hey, you want to date me, that doesn't even know who you are.

(00:11:29) - The blind date. That was such a good cultural reference analogy. Now put it into perspective for people. If you really think about lead generation, if they don't know who your company is and you're reaching out to them, and you do have to explain who your company is when you're calling them, you have to persuade the prospect to consider your product or service.

(00:11:48) - And this is an issue because you're trying to bring them like you said, Gregg, into your sales process instead of bringing them into your buying process. And on the flip side, if you look at demand generation, which really is about how do we build out brand awareness, credibility, and trust in the market before they are even in market to buy because we know they're making decisions and engaging so late in that decision process with a sales rep that they know who you are and what you do. They've followed along and bought into your organization's unique point of view. They actually want to talk to you, and sales gets involved on the prospect's timeline. So, acting as a partner in their buying process for the best fit solution versus when you're doing lead generation, you're reaching out to them before they may be ready. And I think a lot of times organizations will see this where someone may even agree to come see your demo, but then you look at your conversion rates of your demos, and a lot of them are not turning into anything.

(00:12:53) - And I can tell you, yeah, sometimes they even raise their hand and say, let's have a conversation, and then you never hear back from them and they don't respond to anything. And even though they seemed really interested in whatever, it wasn’t actual buying intent, but with the lead generation type of work, something you said may have piqued their interest, so they wanted to learn more about it. They just weren't ready to make that buying decision, and so, they weren't actually in market when they came to your demo. You don't always know that coming into it, right? And it's probably very frustrating for sales professionals who are trying to meet their numbers, and think like, here's a real opportunity, and it turns out it wasn't a real opportunity for them. 

(00:13:30) - Yeah, that's a nice thing, right? With demand gen, they've bought into your story, and they're interested in what you're doing, and they know about you, and then it makes the sales cycle shorter because they've already done the homework. They already know a lot about you.

(00:13:43) - And then when they're ready to buy then they call you up, and it's a lot quicker to turn that into an actual sale instead of trying to convince them all the time that they need something that they don't even know about yet.

(00:13:53) - Another way to tell if it's lead gen versus demand gen. Let's talk about forms. So, a lot of times with lead generation, you put content out there. Maybe you're doing content syndication. You're putting forms out there because you want people to fill it out to access the information, so that you can take those contacts back into your organization, and a lot of people will take that and be like, all right, let's put our BDR team on this; start working these leads. Whereas demand generation lead collection is done fundamentally by good marketing, right, that creates awareness and interest in your product, so you're not actually gating the content, you're giving it away for free and not asking for anything in return with the mindset of I really want them to see this content, and the more content they read, the more trust it will build with us.

(00:14:40) - When they're in market, we'll have the opportunity to actually make their short list, right? I think the drawback with the lead gen forms prevent potential buyers from consuming the content you want them to read; view; listen to. I feel like it really defeats the purpose, because a lot of times you create this content and it's really good. You want them to read it, and the moment you put an obstacle in front of it, and I saw a statistic lately that said 75% of people will not fill out forms, so you've got 25% who potentially may decide to do that, but let's say you have a thousand people that come to your landing page. I guess that's pretty good numbers if you get 250 of them to give you their contact information, but there were 750 who wanted to read your content, or watch your video, or whatever it was, who just bounced because they're like, screw that, I'm not filling out that form.

(00:15:35) - Yeah, so definitely with demand gen it's better because the prospects come along on the journey that's based on their time.

(00:15:40) - It allows them to do their research, and follow, and buy on their own timeline. Just creates a better experience on both sides, right? They don't even feel, they just leave, so their experience is not any experience with you at all, and then when they get a call from a rep, what kind of experience is that for them? They don't want to get any phone calls or emails from sales. They want to reach out, so that's just not a really good experience for anybody, right? For the brand or prospect. 

(00:16:03) - I think summarizing this conversation, there is still a place for lead generation. You've got to focus on short term stuff. It shouldn't be your only strategy, especially because we're seeing across the industry that a lot of the tactics that previously brought a lot of leads in just aren't as impactful as they used to be, so I think you've got to have realistic expectations going into it. It's getting tougher and tougher to achieve high growth with only a lead generation strategy, but it can help you uncover the low hanging fruit.

(00:16:34) - The key is really to hit the right person with the right message on the right day. If your message goes out and there's that one person who they actually are in market, and they're just starting out researching options and you hit them on the right day, sometimes you get lucky and you find those opportunities. Demand generation, on the flip side, it does fit into the buyer's process. First, building that brand awareness, then that brand loyalty, and ultimately building interest in prospects to choose you, but it is a long term strategy. So, it's not like you can just say, screw lead gen, I'm shutting it off. Today, moving forward, all we're going to do is demand generation because like we said before, it could take 6 to 18 months to really get some traction. So, you really do need a blend of demand generation and lead generation to be able to grow these days.

(00:17:29) - Thanks for joining us on the Demand Gen Fix, a podcast for HR tech workers brought to you by GrowthMode Marketing. I sure hope you enjoyed it. Don't forget to subscribe for more perspectives on demand generation and B2B marketing strategies. Plus, give us a like, tell your friends We’ll see you next time.