Earlier today we shared the ugly state of B2B sales and the unfortunate lot of most B2B salespeople. Let’s examine what you can do about this problem.

This article, by the CEO of Marketo, Phil Fernandez is timely. He discusses the growing importance of demand generation in companies today and how that new role is continuing to evolve into a “revenue marketer” role.

We also invite you to learn more about demand generation at this earlier blog post:

3 Superb Ways to Learn B2B demand generation

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Emergence of Demand Generation Role Drastically Alters Marketing Landscape

by Phil Fernandez, CEO of Marketo

Today, the role of demand generation as a discrete and increasingly vital part of the marketing function is well accepted amongst corporations (especially B2B companies). It is more and more common these days to see a director of “demand gen’ working alongside of counterparts who manage closely aligned departments such as marketing communications and corporate communications. Indeed, this is exactly the structure we have at my company, Marketo.

But, this was not always the case, even in the relatively recent past. I was talking with a colleague the other day about the emergence of the “demand gen” specialty in marketing departments. Neither of us could pinpoint the exact time-frame when the term started to appear with some regularity. One thing is certain: The demand generation role is a pretty new phenomenon in business and marketing.

Of course there are many things that go into demand gen – data analytics and management, search, webinars, demos, content marketing, customer referral programs, and the like – but probably the central activity of this crucial marketing function is lead generation. Generating more (and better) leads for sales is the most important role of the demand gen team. And, the importance of this role to business growth and success cannot be overestimated.

The emergence of demand gen clearly coincided with the growing recognition of the “Demand Chain” as the less well known (but equally important) half of the business “Value Chain.” The other, better known half is of course the “Supply Chain.”

Before we even started talking about the existence of a Demand Chain, the Supply Chain had already been re-engineered and dramatically improved through technology and signature process analysis strategies such as Six Sigma. The demand side of the business value equation has lagged in the reinvention department, but that is now starting to change, and rapidly so. It’s certainly about time.

Technology Spurs Emergence of Demand Generation

Just as technology has been a critical factor in the reinvention of both the supply and demand chains, it has also been the indispensable catalyst in the emergence of the demand gen function in marketing. So, as my colleague and I debated when (and where) the demand gen term started to be commonly used in the marketing mix, technology provided the clues that helped us narrow down the timing question.

The seeds that eventually grew into the demand gen function were likely planted back in the late eighties. That’s when new technologies such as data-mining and sales force automation (soon to be called CRM), started to make their presence felt in business. Like with so many other nascent technologies, data mining and sales force automation were expensive and complicated in those early years. These functions were so new and complex that companies typically outsourced them to a growing cadre of experts who charged dearly for their “black box” expertise.

Because of this high cost and complexity, data mining and analytics was mainly for the big enterprises back in those days. It would have been essentially impossible for a smaller, growth oriented company to afford the ticket to the marketing benefits created by these sophisticated data tools.

In fact, before co-founding Marketo in 2006, I helped to lead Epiphany, which emerged as the next generation of data mining and marketing analytics companies that expanded on the work of those early players. At Epiphany, most of our customers tended to be large enterprises.

As is usually the case with technology, as the data management, analytics, and CRM capabilities continued to evolve and improve, these technologies became more accessible to more companies. The price also continued to drop, which follows the classic scenario as computing power grows (e.g., Moore’s Law). At that point, the old data management black box was no longer necessary, as companies adopted a broad range of powerful and increasingly affordable technologies in-house.

At the same time, hosted software (soon to be known as Software as a Service/SaaS and eventually Cloud Computing) came into being. That historic computing development rendered the mainframe computer – the ultimate black box – to be yet another relic that was no longer vital in modern business environment.

The Rise of “Left Brain” (AKA Data Driven) Marketing Practitioners

These changes were opening up the possibilities for marketing departments to start to use data and analytics more easily and effectively in managing customer contact data-bases, deploying lead management programs and campaigns, and measuring everything. The old school, “right brain” marketing types (creative and intuitive and, more often than not, focused on brand, communications, and awareness building), were not necessarily well suited to the data- and analytics-driven activities of the emerging demand generation marketing role.

A new generation of “left brain” marketing specialists emerged to fill this need. They were comfortable with the numbers crunching, measurement, and technology that were at the heart of the demand gen function. The “left brainers” saw the fast growing opportunity and jumped into the business to manage the new demand gen programs. A critical new marketing role was born.

The mid-nineties saw the launch of the World Wide Web (remember when we actually called it that?) and the world was forever changed – especially the interconnected worlds of media and marketing. If anything accelerated the shift to a more data- and technology-driven marketing approach, it was the Internet. The web ushered in an age that would put information – the ultimate power in business and marketing – directly into the hands of buyers. These newly empowered buyers no longer needed to rely on the product information that formerly was closely guarded by the sales department (the sales equivalent of the “black box”).

All of these changes hastened the shift toward corporations treating lead and demand generation as actual processes. This was a deceptively big shift in business strategy and management. Companies finally understood that the demand side of the value chain could be improved and optimized just like the supply chain, manufacturing, and finance were in the past.

In just a couple of decades an important and influential new marketing role was created to capitalize on and drive the powerful new technologies and methodologies that were revolutionizing sales and marketing as we had come to know them. Even more significant, the rise of demand gen represented an historic shift in the way that companies went about the business of creating, managing, and accelerating revenue.

Where does demand gen go from here? Just as the more traditional lead generation evolved into the more robust demand gen approach, the next generation role encompasses an even broader, more integrated view of the entire revenue process. This new role, which is focused on Revenue Performance Management, is well positioned to deliver even stronger results for the companies that are embracing it in growing numbers

In many ways, the advent of this re-imagined and expanded marketing role has helped to catalyze and inspire the revenue revolution that is just now starting to take hold in corporations across the globe. That is a milestone worth noting – and celebrating.

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Thanks for a great and cogent article, Phil. We agree with you than Marketing needs to step up its game and foster the “revenue revolution” of which you write.