Demand Generation: How It Works

3% Rule: How to manage demand generation

(I have received several requests to share more articles on the topic of demand generation. For the next 3 posts I will run a series on demand generation. Today’s article starts with the big picture.)

Nothing relieves pressure like sales. This has been my mantra throughout my career. Whenever the business has been going sideways or I’m feeling stuck in a rut, I remind myself, “Nothing relieves pressure like sales.”

But getting the phone to ring consistently is easier said than done. Cold calls, trade shows and campaigns may generate some short term sales activity, but without a multifaceted program you will find yourself grappling to attain a steady flow of prospects.

Demand generation is a process.

The 3% Rule

At any given time 3% of your market is buying, the rest are not.

The 3% Rule is a rule of thumb like the 80-20 Rule. It helps to focus your demand generation activities. A portion of your program will focus on the prospects and customers who have a need for your services now, and the rest of your program will work to build relationships with future customers.

The 3% Rule demonstrates that there are 2 modes of demand generation:

  • The Top 10%. Making your brand top of mind and top of search when your customers are ready to buy.
  • The Bottom 90%. Building and scaling relationships with prospects, clients and centers of influence long before there’s a need for your expertise.

The Top 10%

The Top 10% of the Triangle are sales leads. These prospects fall into two categories:

  1. 3% are Active Buyers. They have a defined and active need, and are qualifying products and suppliers.
  2. 7% are Passive Buyers. They have a need, but they aren’t seriously shopping the market.

Sales people know how to work with companies in the Top 10%. They kick into sales mode: qualify the prospect, understand their needs, develop rapport and engage them in a sales cycle.

The most effective way to capture leads in the Top 10% of your market is by placing your brand in the Path of Search. We will discuss Path of Search further in the next article in the series.

The Bottom 90%

90% of your market aren’t shopping right now. This segment of your market divides into three categories:

  • 30% have a need, but it’s not enough to act upon it.
  • 30% are satisfied, and aren’t considering any products or services.
  • 30% aren’t interested in your company, and there’s not much you can do about that.

This Bottom 90% of the Triangle are challenging, because they aren’t interested in any traditional marketing messages. They don’t care about benefit statements, value propositions, features, product innovations, industry gossip, or why your company is great.

Unless you’re like Apple and everyone wants to know what you will do next, nobody cares about your marketing when they don’t have a need.

Even though the Bottom 90% don’t have a need for your services, it doesn’t mean you can’t have a relationship with them. This is your golden opportunity. Bring them value even when they don’t need you.

Demand generation in the the Bottom 90% is a content and database play focused on creating a First Call Advantage. Build relationships early and often so your clients choose you first when they’re ready to buy. We will explore this topic in the third article in the series.

Action Item

As a starting point, educate your sales team on the 3% Rule, and get your reps to qualify where their prospects sit in the Triangle. Are their prospects Active, Passive, Future Need, Satisfied or Never?

Get them to qualify if their prospects are in the Top 10% or the Bottom 90%. Once you know where their prospects sit you can strategize on the best ways to engage each account.

Stay tuned

Demand generation is a big topic with several moving parts. We will explore the two-modes of demand generation, Path of Search and First Call Advantage, over the next two articles.

Let me know what you think. And feel free to ask questions in the Comments.

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Jeremy Miller is Brand Strategist, Speaker and the President of Sticky Branding — a strategic branding and business development consultancy that helps companies stand out, attract customers and grow sticky brands.

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  1. [...] (Today’s post is the second in a three-part series titled, Demand Generation: How It Works.) [...]

  2. [...] (This post is the third installment of the Demand Generation: How It Works series.) [...]