Chris outlines the differences between lead gen vs, and the benefits of switching to demand gen.
Chris Walker, CEO of Refine Labs, is on a journey to help companies optimize their revenue model. He’s spent the last six years perfecting the process at rapidly growing early- and growth-stage companies. The final product, our Revenue Engine Optimization formula. Its a unique combination of Revenue Operations, Growth Marketing, and Buyer Enablement, which has been proven to accelerate business growth and new customer acquisition with a focus on pipeline velocity.
Chris Walker 0:09
Billy, awesome to be on the show, man. Thanks for having me. I’m looking forward to diving into this one today.
Billy Bateman 0:14
Yeah, I’m really excited. I think this is gonna be a really interesting topic to a lot of people. And we’re really gonna dive into what’s the difference between lead gen demand Gen. And then how do you make the shift? But before we really hop into that, you’ve got a really interesting backstory. And I love you to just share, like, how did you get into marketing? What was your journey? And then what is refine labs? Yeah, awesome.
Chris Walker 0:40
I’ll try and run through this real quick. And so I studied engineering in college. I actually thought when I was in college, that I was going to divide design medical devices. So I got out of college. I got into a lab designing electronics, writing software for electronic hardware products.
And within six months of being inside of that company, they were looking for me in the lab. And I was out and talking to customers. So through that process, I basically started to figure out about myself. I cared a lot more about how the product or the application was impacting customers. And how they were going to use it, versus the actual building of it. And so the company leaned into that and allowed me to transition into a product management role, which is full upstream and downstream.
So a lot of what I would call Product Marketing are also known as marketing fundamentals, understanding customers deeply doing qualitative market research, messaging, and positioning products pricing. And so I worked through that for three to four years. At the same time, I also started to ecommerce companies, we sold through my from my bedroom on my own. So we sold through Shopify and Amazon. One that I grew to mid six figures when I was like 25 years old, which is pretty cool. And during that part of the process, I basically learned how to run profitable digital advertising with direct transaction revenue. I understood the nuances of attribution, because I saw it in the in the data of our own products.
Then I and then I moved into my first venture funded company around 2016. And when I started to look at how the company was going to market, which was sales driven marketing, being more of like, sales assistant, putting together trade shows doing a lot of product strategy and things like that. Yeah, I just looked at the business data and was like, why are we going to market like this still, like, it’s 2013 marketing can easily communicate directly with all of our customers to drive demand for the product that gets people ready and wanting to have a conversation with our sales team versus just having our sales team try and book meetings with people that don’t want to buy right now.
And so I went through that endeavor for two years, where I built this, the core system that we run into at refund labs today. And because I was in a company that didn’t really understand demand, Gen, I didn’t have a lot of the constraints that a lot of other marketers that work in SAS companies have like the need for attribution, the misguided mq l metrics.
They just the general mindset about what marketing should do in a company. And so I was able to start with a blank slate, and build something new that was optimizing for pipeline and revenue and sales efficiency metrics that are aligned with the sales team’s goals. Think I created something pretty special.
And so after that company IPO day, I started this, this business called refine labs versus a consultant. And we’ve been able to scale rather quickly. So we’re after two years where 35 people we work with 30 Enterprise SaaS companies throughout North America, me and APAC with the core goal of transforming their demand generation programs away from high volume mq ELLs into driving demand that brings more buyers in down that actually buy as well as augmenting outbound performance.
Billy Bateman 3:44
Awesome, man, awesome. You know, I love how you’re talking about, you know, we’re just trying to set a lot of people, it’s just like, let’s set meetings for the sales team, who cares if they’re ready to buy or not? And I remember when I was in marketing, like, that was kind of what we were tasked to do, like I they just said, Hey, here’s a pay per click Google Pay Per Click AdWords account, you need to figure out how to get as many people to click through and fill out a form as possible.
Then the sales guys are going to call them back and and try to see you know, like, Can we sell like, that was, you know, the marketing program would have been 2009. And then we left marketing for a lot of companies today. Yeah, yeah. No, still it works, you know, like it. I mean, it depends, you know, it works. You get some results. It’s not the best but you know, it works. It’s you know, you’re not driving a Beemer with that marketing program. But you know, it’s a it’s like a Kia. Yeah, nothing wrong with the gear. But yeah. So let me ask you this. What do you think the difference because I think that’s just a lead gen is what that is. But what’s the difference between lead generation and debate Generation,
Chris Walker 5:02
I see lead generation, comparable to performance marketing, which is attribution obsessed, top of funnel volume obsessed, not conversion rate obsessed, which actually creates lots of misalignment with your sales team when you execute this way. And generally short term transactional focus. And so I’m going to put something that I want something back right now, those components, I think, are really what make up lead gen, which lead to a high volume of buyers that don’t want to buy that get thrown over the wall. So to speak to the sales team, the sales team has to go and call them and maybe 1% of those convert into some type of opportunity.
And then you win those opportunities at a pretty low rate. And generally what we see in the lead gen model, because we’ve audited about 15, SAS companies that do this historically, with high spends, that you’re going to win point 1% of the leads that you generate this way, which would be 1000.
I personally don’t like that efficiency metric. I think any executive wouldn’t like that efficiency metric, when those people are going to a sales human that actually needs to do work around that, around that component. And the ones that do get through to your A’s are gonna win at a really low rate. And generally, I think it’s a really bad model. The challenge with companies is they don’t they don’t actually see it. They’re so data obsessed.
And so data driven yet they don’t see what’s happening in the data here, which is that there are they put all of their MQLs into one bucket, and they don’t look at where they came from. And they’re running all these programs to generate MQLs that don’t close. Meanwhile, there’s some type of organic demand or word of mouth in the market that’s driving people onto their website. This is hey, I want to talk to your sales team. And those people actually do convert, because they mix them together. And they see all mq is equal, which they definitely are not. They don’t see that effect.
Billy Bateman 6:45
Yeah. Yeah. So now maybe you’re going to get into this a little later. And if so, like, we can just circle back to it. But you know, you’ve got that conversion rate at like point 1% for lead gen. If you were to make the shift and be more demand Gen focused. What do you guys see is typical conversion rates.
Chris Walker 7:05
So this is in your data already, right? So lead gen, just to be clear, for everyone lead gen, we typically see 0.1% conversion rate from a lead to customer. And in a demand Gen focused model, you’ll see anywhere between four and 12%.
And so 40 to 120x, better conversion rates from lead to customer and adding your data by just if you split off between low intent lead gen, which is what most of your leads are, and high intent leads that are driven through another source that converted that rate, then you’d see the exact same pattern in your data that I’ve seen in 50. companies.
Billy Bateman 7:41
Okay, so why do you I mean, that I think gives you a good reason for why you would make this shift from just lead gen to demand Gen. But are there other reasons why why you would make that shift.
Chris Walker 7:53
As a company, demand Gen is focused on later funnel metrics and optimize against qualified pipeline and revenue. And that’s the core reason to make the shift like it’s when you shift to this model, and then you ran your current programs, and you audited them against a different metric, you’d realize that they’re not working, but companies don’t measure it against that metrics, they don’t see it. So the reasons to move to a demand focus model is one truly far better alignment with your sales team. significantly better conversion rates, better scalability, with spend, as well as just long term brand building.
Then just I also see in the data, that it impacts the effectiveness of outbound up to forex better conversion rate to meetings on outbound after executing this model for at least 12 months. And so those are some of the reasons why but the at the core, and how I got here is, is one business metrics, optimized for metrics that matter to the CEO and the CFO.
The second thing is match the way that you’re selling to how your buyer wants to buy, how you’re selling and marketing to how your buyer wants to buy, there are no buyers out there that want to get hit with a performance marketing ebook on LinkedIn and then get a cold call from your SDR later or go through some shitty nurture program. And that’s just what most companies run today.
Billy Bateman 9:17
Yeah, I know, a lot of companies run that play for sure. So what’s the what’s the right play that, you know, like? You’re making content? I think I think content, you know, it definitely helps with that demand Gen. But, you know, how aggressive should you be after somebody views the content?
Chris Walker 9:33
Yeah. And so the goal here is to split in your mind between capturing demand and creating demand. Most companies only capture demand and then they spend all of their money trying to capture demand and channels that don’t have intent. And that’s why the Legion focus doesn’t work. And so capturing demand is places where people have clear intent to buy what you sell.
The main ones are Google search, lead aggregators and review sites and on the internet. those are the three places you could You could probably put intent data into that category as well as a surrogate to outbound. Yeah, we have those four things in capturing demand, what companies do not do it. And then what they need to do is they need to change their mindset when they go out and create demand. When you’re creating demand, you need different metrics and a different mindset, a different content strategy and a different content distribution strategy, in order to make that really effective.
And so when we think about creating demand, we’re doing it in in channels where there is not a lot of intent, or no intent. So I would say LinkedIn, Facebook, Instagram, a podcast, a community events. yeah, like all of the things that I think a lot of people just listen to me here, rattle those off, those are the most effective things to do in marketing today. And so all of those different things, but we need a different mindset about what we’re trying to do. We’re trying to educate people and inform them. about our category, our narrative, our our build affinity to our brand for people to understand the differentiated features or parts of our product.
So that when they move into a buying cycle, perhaps they already know what features that we have, and they start to spec those into what they need inside of their company are because we’ve been educating them on the category, they’re more aware of the pain points that the product solves. And therefore they move into a buying cycle more quickly. Yeah, and, or perhaps because we’ve been able to market to them.
And they know that when our outbound team reaches out, they’re more receptive to just entertaining the call. And so those are some of the things that I’m thinking about in terms of creating, creating demand. Right. And as Yeah, that I think there’s a broad spectrum of good execution of that versus poor. I think that spectrum is very large. And I think that that spectrum makes all the difference.
Billy Bateman 11:55
Yeah, no, I agree. Like you should be looking at like review sites, Google search, that that definitely shows some intent. One question is, I think those are more on the outbound side. like he said, but where do you wait just like the website visit. you know, like whether you’ve got somebody cookied. Or you know, you’re using a sixth sense command base to do reverse IP lookup and just know what company they’re from? Where do you wait, that and your, your intent model?
Chris Walker 12:23
Yeah, so the way that I split this off is between declared intent, and some type of measured or inferred intent, and so six. And then data and different things like that I consider inferred intent to buy, right? Just because they want to, that doesn’t mean that they’re interested in buying or want to talk to our sales are up right now we’re inferring that.
versus somebody that comes in and says, Hey, I want a quote or I want a demo right now to talk to your sales rep, which is declared intent. When you look at those two separate streams, you will see dramatically different conversion rates. And through the the entire system as well, just because the buyer has clearly stated that they want to buy. And so that’s how I think about intent.
Now, when we’re optimizing this mix of right, like capturing demand, but also in what we’re doing on LinkedIn, organic or paid, and all the other channels around, everything is optimized for someone coming to your website saying, hey, I want to buy stuff, because I know a lot about your product. And now I’m ready to buy. So that’s what we’re optimizing. we’re optimizing for that high intent conversion or declared intent conversion on the website. And so the website sort of becomes the transition point between someone that might be looking to actually engaging in buying.
Billy Bateman 13:36
Okay, okay, I love it, man. So what should we What should we be measuring for demand? Gen, and like, it’s probably not just form fills and content downloads, what what should we be measuring?
Chris Walker 13:47
Yeah, so the ultimate measures here to look at our qualified pipeline. That could source through your website. And the revenue created off of those two are the two main metrics. Addition to that you’re gonna have cost efficiency metrics of cost per sq O. And custom marketing customer acquisition costs on top of those primary metrics, we’re obviously going to need leading metrics to understand where we’re going from there.
And so the next step is to redefine what a lead is. I would argue that someone that downloaded a piece of content is not a lead. It’s a contact. We have an email address. And so we find what a lead is to someone that match it firma graphically matches your ICP for both account firma graphics and persona demographics. and has created a high intent conversion that we know based on historical data is going to win at greater than 3%.
If you make those two cuts, then most of your lead sources will get completely thrown away, because of that. So redefine a lead. And then if you’re looking further up, like the quote unquote funnel are further up in the in the system, you need to start looking at performance at at each individual channel level.
And so at each individual channel, some things that we’re looking at is like if we’re running LinkedIn ads, like how many demos are getting driven through our LinkedIn ads that are highly targeted? How much does it cost us to do those demos? What is the engagement rate? How long are accounts staying on our website? What accounts are they?
So that would be like an example on LinkedIn. Another thing that we’re going to look at is generally branded paid search direct traffic and organic traffic that comes through landing on the homepage. That would be one metric that we’re going to track over time. And then how much of that traffic immediately flows into our high intent conversion. For SaaS companies most likely request a demo.
And so that’s kind of how we’re architecting and building the measurement model. Some people get scared of this, because they don’t have direct channel attribution. Marketers have been trained by attribution vendors for a very long time. And if you want to get handcuffed by attribution, then keep running performance marketing.
As buyers move in a different direction, and it’s going to continue to get less and less effective. And so I didn’t, I didn’t want it to be this way. Right? Like, it would be easier if we could directly attribute every channel and just put more money in and get more stuff out. Unfortunately, it’s not what buyer that’s not how buyers are buying. And so it’s our job as marketers to adjust how we’re marketing and selling that matches how buyers want to buy.
Billy Bateman 16:11
For sure. The buyers journey, we’d like to think of it as the straight line. But man, it is not at all. you know, they’re they’re going forwards, backwards places we didn’t even think they would go before they’re gonna say, Yeah, I want to talk to somebody.
Chris Walker 16:26
Yeah, and just acknowledging that during that journey. That’s all in different directions that a majority of the most effective parts of that system cannot be tracked by attribution software, namely, word of mouth communities, organic social, there’s plenty of places that will never get tracked there as key touchpoints. And so I just like to call that out.
Because a lot of people don’t realize that. I realized that a lot when I was running the e commerce business where I would turn on Instagram ads. And I would see no checkouts directly from Instagram ads, but then at the same time would see a bunch of organic and direct conversions directly to check out. And then when I would turn off the ads, those would stop. Then I would turn them on, and they would go back on. So what I saw is like, Hey, what are what’s happening is our ads are influencing someone to consider our brand to go to our website, and potentially most likely on a different device, and then buy there. And the exact same thing happens in SAS, especially on paid social,
Billy Bateman 17:22
for sure, man. So, I mean, what we’ve talked about, what do we measure here? One question, though, is like, hey, you’re if you’re a young company. like you don’t have a ton of website traffic, you don’t have a ton of leads, but you’ve got a sales team. You know, if you’re not having them reach out to every every lead that comes in, what should we be having the sales team do.
Chris Walker 17:47
So there’s two components of this. There’s a common mistake that I see in scalings, early stage SaaS companies, which is called scaling sales before product market fit. And scaling sales before enough demand is in the market. And so when you have that I’ve been in the situation before, as a marketer, I’m sure a lot of people listening to this situation are, is when you have one marketer, and 12 sales reps and 800k arr. You can’t close any deals because you don’t have product market fit. You don’t know who you’re selling to or how to message it. And you don’t have a repeatable process.
It’s just yeah, and then you have unrealistic goals to go and try and find a Series B, and it’s just complete disaster. And so that’s the, that’s the generally the root cause as an all so if we remove that as a as a root cause and we go to what companies could do. One is scale sales appropriate to the amount of market demand and product market fit that you have would be one.
And secondarily, to trigger outbound actions based on something other than a mql, low intent lead form. And so the most likely transition that a lot of smart companies I see making right now is moving to some type of intent data based on accounts. Then running out bound that way, as opposed to some type of low intent form fill.
Billy Bateman 19:04
Okay, okay. I like it, man. So, one more question here. What do you see, you know, people try to make this transition. What have you seen in the biggest reason they fail when they’re trying to go for more of a lead gen to demand Gen? Like, what are the what are the pitfalls that that we don’t know about?
Chris Walker 19:23
This process will most likely fail due to lack of executive buy in and alignment. Because what’s going to happen is you’re gonna be like, Hey, we’re going to make the transition from lead gen to demand Gen. What we’re going to do is we’re going to stop measuring on MQL’s, and we’re gonna start measuring on sales qualified opportunities. And then we’re going to go out and start executing and then the next month when your sales qualified opportunities go from 50 to 50. that everyone’s new nr Jr. leads are down 80% they’re like, Oh, this shit isn’t working, but it is your your Sq O’s are going up.
But because company executives have been so ingrained with this lead mindset as leads converted the same rate all the way to revenue and leads equal revenue, which they don’t. That is, that’s the core challenge about being aligned across the entire organization. The second part is having a different thing for your outbound team to do than follow up with shitty leads. So those are two things.
And the third one that I’m going to say is that just because you decide to make this transition does not mean that you’re going to be successful. There’s a lot of work talent that’s required to make this actually work. And so just by saying, Hey, we’re gonna go from Lead to demand Gen, and then not have a comprehensive strategy about how to execute with a different, completely different framework. Those three reasons are probably why most companies fail and regress back to lead gen.
Billy Bateman 20:40
Awesome, man. Yeah, it makes sense that that would be that’d be some of the reasons why this doesn’t work. If you’ve already got a big sales team, and, and they just nobody likes to sit around and not have anything to do, like, get out. Even if they’re doing the right things, and they’re being technically more productive. People don’t like to just say, hey, well, I’m here and I don’t have anybody to call or email or, you know, right now, and I, you know, what do I do?
People don’t like that. And then I’ve seen a lot of people very focused, especially old school, on what are the what’s the lead count? What’s the lead count? What’s the lead count? Yeah. And, and that’s how they think about marketing. And then, you know, ultimately sales to like, do we have enough leads for the sales team, when you
Chris Walker 21:23
look at this, this is a, this is a go to market strategy change. For an enterprise SAS most and this is not just marketing, changing stuff that they’re doing, it’s going to downstream have impacts on sales companies need to be aligned on what they’re what they’re getting into when they do it. But if you can get through it, the whole the major part where this will fail is within the first six months if you can get through that. You got a way better business afterwards. I agree. The lead and the lead mindset is completely ingrained by the series decisions demand waterfall. That started in 2007, and has barely been updated since and I would just argue that the world’s quite a bit different now than it was in 2007.
Billy Bateman 22:06
Yeah, it is. Oh, hey, man. Well, Chris, thanks so much. If people want to get a hold of you and continue the conversation, what’s the best way that they can reach out to you?
Chris Walker 22:16
Awesome, yeah. So if you want to learn more, I produce content for LinkedIn every day LinkedIn, Chris Walker. Also we have a podcast called the state of demands on podcasts which 15,000 marketers listened to. And so if you’re interested in checking that that out that’s available on Apple and Spotify.
Billy Bateman 22:31
Awesome, Chris, thank you again, and we’ll chat later. Thanks, Billy. Good to see you.