#004: Demand generation equation
The first demand programs I launched as a marketing lead were tragic.
I would have avoided so many mistakes if I understood this equation.
A company’s long-term demand potential is a combination of its ability to both cultivate and capture demand.
Card # 003 (95:5 rule) lays the foundation for a market phenomenon where only 5% of B2B buyers are “in-market” at any time, and 95% are “out-of-market,” which means they won’t be ready to buy for months or even years.
Executives without marketing backgrounds tend to over-index on short-term, highly attributable demand capture programs.
This equation is a practical model for articulating the value of long-term marketing in those scenarios.
To be clear, this is not a scientific or empirical equation—it’s a theoretical overlay of John Dawe’s 95-5 rule that’s grounded in marketing principles:
Potential demand = (1) Cultivate demand + (2) Capture demand
(1) "Cultivate" demand: Long-term, sustainable, compounding efforts
Generate awareness & interest from “out-of-market” buyers (~95% of the market).
Plant and cultivate seeds to harvest in the future
Create mental availability and trust for out-of-market prospects so you’re top-of-mind when a business challenge moves them in-market
(2) “Capture" demand: Short-term, quick wins, zero-sum efforts
Identify and convert existing interest “in-market” buyers (~5% of the market).
Find orchards with ripe fruit to harvest
Identify in-market buyers that are actively searching and comparing solutions and get included in their consideration process.
Demand cultivation programs are great long-term plays for building awareness, generating interest, and shaping market perception, especially in emerging or less-defined categories.
While that’s great for next year’s pipeline, you’re unlikely to survive until then if you can't turn existing market demand into paying clients today, which is where demand capture programs play an important role.
In the same light, relying solely on demand capture is unsustainable in the long term since growth is limited to in-market buyers—a tiny minority of the market.
The ideal marketing mix blends cultivation and capture programs. The exact balance depends on your resources, product, and category maturity.
