It’s been quite awhile since I’ve last posted and I finally set aside a day to write an article about something I’ve been learning a lot about recently. Many internet entrepreneurs do not understand the distinct differences between lead, demand and relationship marketing, so I’m going to summarize each to clarify any confusion.
Lead Generation Marketing is when you identify your potential marketing and target your advertisements towards your demographic who is actively seeking your product or services. If you sell shoes, and someone searches “shoes” in Google, you would bid on this keyword and offer your services. It has the most advertiser competition since it’s the most effective, and also often yields the highest conversion rate. If you are in an established industry or even a niche, lead generation works great because customers are seeking your services, all you have to do is guide them in a frictionless experience towards your conversion goal. Paid search marketing is the most common approach, yet its also the easiest to have a negative return on investment because of saturated advertising networks such as Google Adwords, especially in popular industries such as electronics. Exploiting long tale tactics such as bidding on thousands of less popular keywords, synonyms, and typos, is the best approach to reach a positive return on marketing investment.
Demand Generation is much different and consists of identifying your potential market, and targeting potential customers even though they are not actively seeking your product or service. Cold calling is a classic example: a sales person will often have a list of potential customers and he or she will contact each pitching the companies product or service. The customer has been identified, but has no immediate need or desire for the product, and you must tell them why they need your product if they do not have anything like it, or why you are better than the competition if they already have a rival product. This type of marketing focuses on the businesses unique selling point, and its an uphill battle because each customer must first believe that they need the product, and than they must be converted to a sale. Banner advertising is a common example, and averages .3-.8% conversion rate, which is much lower than paid search marketing which hovers around 1-3%.
Relationship Marketing is considered the new darling of the internet marketing space, and focuses on engaging customers who might not be ready to purchase, but have potential to purchase. Relationship marketing often takes months, or sometimes even years, for the engagement to result in a sale, and is reserved only for those who are willing to consistently invest with little upfront return. The most common form of modern relationship is social media marketing, where advertisers focus on strong content and engaging media to keep potential customers interested long enough until they have converted to a customer. Facebook advertising is considered both demand and relationship marketing, which is why companies have found slow success and often quickly give up. Successfully advertising on Facebook requires engaging content, steady time and monetary investment, and implicit conversion tactics. Relationship marketing’s successes are measured much differently than both lead or demand – if a potential customer interacts with the companies brand in any way, its considered a conversion. With Facebook, any “Like”, wall comment, or new fan of the companies Facebook page is considered a conversion.
After building a target customer profile, businesses must then find which strategy fits their business. At that point, marketers should then delve into the various ad networks and build micro strategies around each platform. Hope this helps and let me know if anyone has questions!
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