All right, today I want to talk about the demand gen death spiral.Recently, we were brought in to do an assessment for a B2B SaaS client.
When we took a look at their data, we quickly realized they're in what I like to call the demand gen death spiral.That sounds ominous, doesn't it?Well, it should.
I intentionally came up with that phrasing to help convey how dangerous a situation this is for companies to be in.It's a situation no company wants to be in, yet many find themselves there.
When we go in and do an assessment for companies and we see that they're in this death spiral, it's kind of like watching a horror movie where you see the characters go down the basement stairs.You're like, why are you doing that?
You know the situation is going to be dangerous.And it's the same thing with these assessments.It's like, why do you continue to invest in the strategy when it's not working? So what is the death spiral?
The demand gen death spiral happens when companies divert resources from effective strategies to double down on ineffective demand generation tactics.
This reallocation causes performance decline even faster, while marketing teams and agencies justify the increased investment by cherry picking data points that look very positive.
The selective view hides the bigger picture of the overall performance decline. There are a number of warning signs that will help you know if your company may be in this death spiral.
The first one is just fundamentally, are you missing your revenue targets?Two, are your branded search impressions down on a year-over-year basis?Three, is your direct traffic down on a year-over-year basis?
Four, if you look at your paid search revenue, is a large percentage of it coming from branded search terms.Five, there's a rising cost per click and an over-reliance on PMAX campaigns.
And then finally, you're spending across multiple channels that drive a high volume of leads, but they're very low quality.I mean, when you see these leads, a lot of times the sales team's like, can you stop sending these to us?
You're just wasting resources. Unfortunately, many B2B SaaS companies find themselves in this situation.But how do you escape the death spiral?Well, you need to get back to fundamentals.
Just stop doing this, reassess, and return to your marketing fundamentals.Shift your focus to understanding core performance metrics and building a strategy grounded in true value creation.
That's how you get out of that death spiral and there's no quick fix for it.A lot of people pitch quick fix, maybe like switching agencies or trying a new channel or a common one right now is investing in brand awareness.
Those things may not be a bad idea, but fundamentally it will not get you out of the death spiral.You really need to get back to the fundamentals.
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