Mastering the Demand Generation Funnel: A Step-by-Step Guide

Converting prospects into paying customers in B2B can be an exceedingly challenging endeavour. Several reasons may contribute to this. For example, B2B sales usually entail a long and complex sales cycle. 

This is because the cost of B2B products and their potential impact typically require extensive R&D, as well as thoughtful consideration. In turn, this typically translates into a prolonged decision-making process for prospective buyers.

Furthermore, increased competition amongst global players nowadays allows prospects to easily access and compare product offerings from various companies. Consequently, these B2B limitations dictate the strategic deployment of mediums like demand generation funnels. 

This article seeks to unpack how the demand generation funnel drives successful customer acquisition. Furthermore, it aims to offer a step-by-step guide on exploiting it effectively in the B2B landscape. 

What is a demand generation funnel?

Before we go far, it is prudent that we first define demand generation. Demand generation is any marketing approach that leverages technology to induce interest and generate awareness of B2B products and services. It’s essentially all about adding value to the customer whilst ensuring a need for one’s B2B product is generated.

A demand generation funnel is a marketing process that encompasses different stages that B2B marketers go through to convert prospects into paying customers. In practice, its core goal in the B2B sphere is to create demand for a product or service rather than pushing it.

It is typically portrayed as a visual representation of how demand generation tactics fit into the sales and marketing funnel. A demand generation funnel can be divided into three critical stages:

  • TOFU (Top of the funnel): This stage solely focuses on creating awareness and capturing the attention of potential customers.
  • MOFU (Middle of the funnel): This stage entails research, consideration, and interaction with prospects.
  • BOFU (Bottom of the funnel): This stage principally focuses on the purchase decision, conversion into a customer, and the development of buyer intent. 

In the B2B context, a demand generation funnel helps businesses appreciably reduce the sales cycle whilst adapting to the modern buyer’s journey and targeting the right audience. This consequently enables B2B businesses to stand out in a saturated market. 

Why do you need a demand generation funnel?

In the B2B marketing landscape, a demand generation funnel is vital in customer acquisition. This is because, due to market saturation, modern day customer acquisition costs are rising. Furthermore, B2B buyers prefer not to directly talk to sales teams.

A demand generation funnel counteracts this market behaviour by placing much more emphasis on providing value. It achieves this by shortening the sales cycle whilst providing the right information at the right time to potential customers, consequently increasing a brand’s market reach and revenue. 

Additionally, a demand generation funnel helps B2B marketers streamline their demand generation strategies in a proper funnel. This, in turn, enables them to better target potential customers. 

Moreover, a demand generation funnel facilitates demand generators to identify “leaky” stages where prospects might be getting stuck. This insight consequently helps in optimising the B2B sales strategies to improve conversion rates. 

B2B demand generation funnel stages

Generally, the demand generation funnel operates as a dynamic framework that aligns with the evolving buyer’s journey. 

Fundamentally, it prioritises building trust and credibility in the early stages, thereby, acknowledging that B2B purchases often involve intricate decision-making processes. 

As such, this customer-centric approach resonates with modern B2B buyers who prefer to engage with brands that understand their challenges and provide meaningful insights. 

B2B demand generation funnel stages revolve around building awareness to identify customer intent and capturing that demand. It ultimately works by converting leads into customers. These stages can be illustrated as: 

Step 1 – Define your objectives

The first step in establishing a demand generation funnel is to define clear objectives. These objectives should align with the broader business goals. For example, increasing market share, expanding the customer base, or even launching a new product/service.

Step 2 – Create buyer personas

It’s essential to develop a funnel model specific to your business goals whilst understanding your target audience. 

Building comprehensive buyer personas is vital for understanding the target audience in the demand generation funnel. A detailed buyer persona should encompass demographics, behaviours, and pain points. This can enable B2B marketers to tailor their marketing endeavours to resonate with the specific needs and preferences of prospective customers.

Step 3 – Creating awareness

The next stage entails creating awareness and increasing brand visibility at the top of the funnel. B2B marketers can achieve this via content marketing, social media engagement, and SEO strategies.

These strategies can help in targeting the right audience to ensure that the brand message reaches those who are most likely to be interested in the products or services offered.

Step 4 – Generating interest

To generate prospects’ interest, the next stage focuses on providing educational and informative content. Email marketing, webinars, and participation in industry events are effective strategies to execute this. 

These mediums can be exploited to deliver value-driven communication that addresses the audience’s pain points and challenges. Thereby, positioning the brand as a valuable resource.

Step 5 – Fostering consideration

The next step revolves around nurturing leads whilst encouraging consideration of one’s B2B product or service as a solution. In this step, marketers can employ targeted content, case studies, and personalised email campaigns that best illustrate the company’s value proposition. 

These targeted tactics should focus on understanding and addressing customer pain points. 

Understanding customer pain points is crucial as it allows businesses to tailor their messaging to directly address the specific needs of potential customers.

By nurturing potential customers through informative content at the top of the funnel, marketers can foster a receptive environment. It further helps the prospects actively seek solutions rather than being coerced into a purchase.

Step 6 – Cultivating intent

In the following stage, it’s imperative to identify and engage with leads showing purchase intent. Marketers can do this by utilising lead scoring, marketing automation, and compelling calls-to-action that encourage prospective clients to take the next step in their buyer’s journey. 

Lead scoring and marketing automation play a mission-critical role in efficient lead management. This is because they help businesses identify high-quality leads, prioritise follow-up efforts, and improve the efficiency and results of lead generation. 

In practice, lead scoring attempts to measure the readiness of a lead to move forward based on their engagements with a brand. It allows businesses to assign scores to prospects based on levels of engagement and identify those showing purchase intent. 

Step 7 – Facilitating evaluation

During the evaluation step, B2B prospects tend to scrutinise every inch of the product or service to determine whether it’s a perfect fit for them. This next step involves the deployment of tactics such as product demos, free trials, and customer testimonials by sales teams. 

In essence, the core role of B2B sales teams during this phase is to provide additional information and guidance to prospects. 

Step 8 – Closing the purchase

The final demand generation funnel step involves converting leads into customers. During this step, excellent customer service, a smooth sales flow, and effective follow-up are essential. 

Particularly, a smooth sales flow and excellent customer service are indispensable in the demand generation funnel as they contribute to a positive customer experience. This is essential for customer retention, encouraging repeat purchases and fostering brand loyalty. 

Furthermore, feedback mechanisms should be put in place to inspire the confidence of prospects. Generally, closing the purchase marks the successful culmination of the demand generation funnel. Therefore, leading to the acquisition of new B2B customers and business growth. 

Measuring and optimising the funnel

A structured demand strategy enables B2B marketers’ efforts to be more successful. Furthermore, a customer-centric demand generation funnel enables B2B marketers to effectively track the successes or failures of a demand strategy, at every stage of the funnel. 

Thereby, determining where a prospect stands and what needs to be implemented to move them down the funnel.

The core metrics and KPIs to measure the effectiveness of the demand generation funnel are: 

  • Cost per lead 
  • Conversion rates per stage of the funnel
  • Customer lifetime value
  • Number of marketing-qualified leads (MQLs) generated
  • Sales cycle length
  • Cost per acquisition
  • Average deal size
  • Lead volume

To track and analyse these metrics, businesses can leverage analytics tools like Google Analytics, SEMRush, Leadfeeder and HubSpot

By monitoring these metrics, businesses can continuously optimise their demand generation funnel to increase conversion rates and drive growth in their B2B marketing efforts.


In the dynamic B2B ecosystem, the demand generation funnel represents a strategic shift from traditional push marketing to a more customer-centric approach. 

Unlike traditional B2B sales funnels that focus on pushing products towards potential customers, the demand generation funnel is designed to pull in and create need organically. 

This ethos is exemplified by its emphasis on creating awareness, building relationships, and providing educational content that addresses the specific challenges of the target audience. 

Overall, the demand generation funnel empowers businesses to create a demand-driven ecosystem, nurturing prospects through personalised interactions. It ensures that when the time comes for a purchasing decision, the business is top-of-mind as a trusted and reliable solution provider.

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