An early-stage company may be tempted to think its most difficult work is done once it has developed its product, identified its market fit and secured investor funds to scale and take the product to market.

But a critical and often-mismanaged next phase awaits, and understanding it can make the difference between the success or failure of all that has gone into creating the business in the first place.

This is the demand generation phase.

It is during this phase that a growth-stage company:

• Creates a marketing infrastructure identifying customer segments and targets.
• Analyzes the costs of acquiring various customer segments vs. their lifetime value as customers.
• Then, develops the strategies and tools needed, and executes relentlessly to create demand among those potential customers.

Every marketing and sales team understands the demand-and-sales "funnel." In B2B and B2D situations, leads are generated from a website or elsewhere, and those filter through to become marketing qualified leads, sales qualified leads and ultimately a closed sale – the “win.”

But the scope of "demand generation" is more expansive than that. It begins before you even begin talking to potential customers and it continues after the sale and through the full life cycle of the customer.

• It starts with product positioning up front, including everything from identifying customer personas, your branding, your presentation to the press, your elevator speech – all that goes in to defining "what can you do for me?" – before you even talk to people about your product.
• Next, it systematically identifies how and where that product positioning is reaching your target audience. A website alone is nowhere near enough – you need to know where prospects can be found, and how to cost effectively reach them – through organic media, paid media, partnerships or other means. Media isn’t static, and this needs well-thought-out, yet flexible targeting, creative optimization, media spend allocation, and social, digital and content strategies.
• Then it looks holistically at every possible prospect or customer touchpoint, ideally, that you’re driving to – the website (usually in multiple places), apps, product trials, partnerships, referrals, viral loops or inbounds, and identifies objectively the potential upside from improving each of these touchpoints.
• Finally, it requires mastery of the "science" of funnel optimization, including the A/B testing of products and exposures, and continuing through to life cycle and outbound sales management.

In short, it is everything that gets a brand new user through a series of interactions with the website, the marketing funnel, or the product itself, until they become a paying and engaged user.

This is complex work, and for early- and growth-stage companies, it is often tackled by employees who lack the necessary marketing expertise. 

The CEO may intuitively recognize this. He or she will know the importance of understanding customer acquisition cost (CAC) vs. the lifetime value (LTV) of a customer, but they may lack a marketing leader with the sophisticated and current demand generation experience required.

Those that succeed will be those that master the following Best Practices:

1. Establish rigorous instrumentation across the entire funnel.
2. Establish a high cadence at culture of testing across media, the website, life cycle management and any other interaction points.
3. Give continuous attention to customer segmentation and tying it to media targeting, creative optimization and website messaging. 
4. Allocate sufficient technical resources to the marketing and growth function; without full-time or dedicated technical support, marketing can’t move. 
5. Commit to reaching a detailed understanding of the CAC and LTV of different segments, personas and media channels. Never use averages.
6. Demand crystal-clear communication between marketing, sales and product. They are incredibly interrelated, but easy to silo unless deliberate effort is made.