So, your sitting in a meeting and someone starts dropping acronyms like there's no tomorrow... You're reading the P&L, making sure you've got enough ROI on your SEO, and your COO starts talking about Q2 returns YOY, and how your MQLs have been outperforming your SQLs while your COS is climbing.
So, basically, there is a ubiquity of information, and part of the struggle is the abbreviations that are supposed to help us focus on the right things, can be a bit distracting at times. This isn't just true in a general business sense, as there are lots of terms in marketing that sound the same but are unique as well.
Words like lead generation and demand generation can be thrown around a lot in the marketing world and are sometimes get used interchangeably. Acronym newbies might confuse MQL and SQL could easily get confused with a MySQL database. However, all of these have very distinct meanings and implications. Having a clear understanding of what each is and what it does for your company is vital to promoting a healthy marketing strategy, rather than just being on point with your acronym game.
While the terms may sound a bit confusing, they have clear, marked differences that set them apart. That's why today we're going over precisely what demand generation, lead generation, marketing qualified leads (MQL), and sales qualified leads (SQL) are, what the differences are, and why you need to understand them for a successful strategy.
What is the sales funnel?
All of these terms are integral parts of what is often referred to as your sales funnel. A sales funnel is a simple piece of industry jargon for the process that a person goes through as they transition from potential prospects to paying customers. The analogy of a funnel is used to indicate a broader cast net at the top, which becomes more narrow as it progresses towards the desired outcome. Both demand and lead generation are two different steps within this funnel that produce MQL and SQL.
As methodologies of Outbound and Inbound efforts streamline, the burden of results has changed in recent years. For a long time, marketing was seen as the JV squad for the sales team. It was a learning ground, where people who couldn't close but had personal interaction skills, could still provide value to a sales organization. Quite a role reversal has taken place with digital marketing, as now roughly 70% of the actionable engagement inside of a sell from the marketing team and not the sales team.
In today's economy, people like to be prepared before having a conversation with a salesperson. Research is done on the internet; prices checked, options known, and value assessed, long before having to talk to a salesperson. Before, the salesman was the dispenser of all of that information, and the pipeline to what was available. Now they are the concierge to the deal.
Now that we've talked some shop on the funnel, and what some differences in sales and marketing, let's take a look at these focus terms individually.
What is Demand Generation?
Demand generation is any endeavor you take to create awareness around your company. If it helps, think of this as demanding attention. Its objective is to make people stop and notice your company, whether it's introducing them to what you do for the first time, or just keeping your business top of mind. Demand generation exists to hone in on your target audience, build trust, and ignite interest.
One of the most important things to remember about demand generation is that it's always free. Since it's one of the first steps in the sales funnel, demand generation requires nothing in return from your clients. It's merely free information that you create demand for the next step, to get in front of potential customers and help them become comfortable with your company and what you do. Some good examples of what this looks like would be:
- Blog posts
- Social Media posts
- YouTube videos
- Raffled Giveaways
None of these resources require the user to exchange anything for them. The content is "free," so to speak, completely accessible to anyone who may desire it.
So Then, What is Lead Generation?
Think of lead generation as the next step to demand generation. Once you've gained people's interest and have established trust with them, it's time to capture their information so that you can begin to nurture them down the funnel into a paying customer truly. This means providing resources that require the prospect to give up a little something more in exchange for the information. The reason this is important is that it helps to qualify your prospect. What does that mean exactly?
Let's look at it in practice. If you release a YouTube video and it gets 1,000 views, not all of those views are created equally. Maybe someone watched the video only to decide that it was the wrong content, or perhaps they didn't even like the video. Maybe they enjoyed it but didn't find it useful to their particular needs. Now let's say you release a tutorial on the same content that users are required to exchange their email for. With it, you include a detailed outline of what can be found in the video and what the user can gain from the information. All they have to do is enter their email address, and the tutorial will be sent to them. The prospects who send you their email are much more qualified than the random user who accidentally clicked your YouTube video and couldn't be less interested in what it is you're talking about. One is showing signs that they are more likely than the other to become a potential paying customer.
Creating gated content that requires the user to give up some sort of information helps you to narrow down the field and focus on the people who are a little more serious about your products or services. While the number may decrease, each has a higher value. This is what it looks like to move down the sales funnel. Some examples of the gated content you could create are:
- Tools or information like Content Offers, Templates or Courses
- Newsletter Subscriptions
- Free trials
- Event Sign-ups
Whether it's an email, a phone number, or an old school address that you get, the information you capture prepares you to qualify and quantify the lead that follows. The simple act of exchanging contact info for what you have offered as valuable information shows you that they are more serious about engaging with your company.
MQL vs. SQL
Now we transition in the tiers of the funnel to leads. MQL refers to a lead that is more likely to become a customer in light of those who are just digitally browsing. Lead scoring, closed-loop reporting, and identifying win percentages for specific markets or personas drive the action items inside an MQL. SQL takes it to the next step of the funnel, in that the sales team has qualified this lead as a potential customer.
Many times, we see three tiers of leads that fall within these stages. Someone might be gathering information, ready to ask questions, or decided on details and prepared to purchase. Getting people down the sales funnel is about meeting them at the place they are, with the right information. That's why Marketing does 70% of the load. The SQL is the decision making in the buying cycle, and the MQL is for every stage where the buyer is not quite ready for that purchasing stage just yet. As you can see, we've come a long way from the used car sales lot, and it shows.
What's the Bottom Line?
For those who had to experience the Salesman / Solutions Consultant / Business Development Professional as the fulcrum of the sales cycle and the driving force of the sales funnel, there's a better way to get this done. A loss of trust, based in the smarmier salespeople and a system that lacked transparency, has overwhelmed the marketplace, specifically with the consumer to the corporate entity. The unfortunate reality is that there are millions of companies vying for their time and information, which has resulted in prospects being stingy with those valuable assets.
Now that staged, and softer approaches to the sales process have allowed marketing strategies to lead the way, partnerships personify the process more than providers. What this means is that before you can ask, you've got to give. You can't deliver a solution with your perspective as the validating factor. You can't offer a product with an unresearched, "better than the rest." You have to open a conversation that leads to engagement.
The only way to establish trust is not only by getting in front of your prospects over and over but offering them something of value to help them with their decision. It speaks to the idea that you care about their success and are more interested in helping them than simply taking from them. We highly suggest following the 80/20 rule: giving 80% of the time and asking for the remaining 20%.
While it sounds simple, it's surprising how many companies don't follow this model. If you come out the gates asking for your prospects to essentially do you a favor by giving over their goods, odds are your percentages won't be great. But if you take your time and strategically plan out a campaign that offers more value than it seemingly asks for, you'll be pleasantly surprised at the qualified results you get in return.
Hopefully, you understand some of this type of marketing jargon that makes a real difference in how you approach your customers. If you are looking for more tips, click here to subscribe to our blog. If you have hit a wall with time or ability to drive your sales funnel goals, let's talk. At PRIME, we partner with our clients to make an impact. We're here to answer any inquiries you have! Ask us in the comments below.