The Demand Gen Delusion: Why You Can’t "Generate" What Doesn’t Exist

The spreadsheet doesn't lie, but it does hide the truth.

If you are a B2B SaaS founder or CMO, you may know the sinking feeling and anxiety surrounding the Quarterly Business Review (QBR). 

The marketing team presents a slide showing "Lead Velocity" is up 20%. The "MQLs" column is green. The "Cost Per Lead" (CPL) is stable.

But then your CFO kindly points to the only metric that matters: Revenue Efficiency. 

Revenue efficiency measures how effectively a company converts its sales and marketing investments into revenue, indicating whether a business is driving growth sustainably or wasting capital. It is calculated by dividing net new Annual Recurring Revenue (ARR) by sales and marketing costs, often used to determine the ROI of growth strategies.

So, despite the "green" marketing metrics, your customer acquisition costs (CAC) are climbing. Sales cycles are elongating. 

The leads your marketing campaigns generated are ghosting your SDRs after one email. In the end you are spending more money to stand still and potentially burning through that Series A, B or C funding faster than you would like.

Why do companies keep doing this? Because for the last decade, SaaS companies have been sold a comfortable, expensive lie: that you can "generate" demand at will.

The big mistake that many in the tech industry make is treating demand like a faucet, you twist the valve (spend more on LinkedIn Ads), and the water (revenue) flows. 

But unfortunately for us market mechanics are not plumbing. They are a mix of psychology and economics, and they obey a strict limit that no amount of ad spend can bypass.

The uncomfortable reality is that you cannot force a CTO to buy cybersecurity software if they don’t have a security problem today. You cannot "nurture" a VP of Finance into changing ERP systems if their current one works fine even if they are your core ICP.

Most of the time you cannot generate pure market demand. You can only engineer and influence brand preferences. (Unless you are creating a new category but we will cover that later).

When we confuse these two things, we burn capital trying to force a harvest out of season. We end up annoying 95% of the market to get a 0.1% click-through rate from the 5% who might be ready - nevermind the thousands of AI engineered outbound campaigns.

It is time to stop paying to shout at people who aren't listening. It is time to look at the mechanics of how B2B buying actually happens and build an engine that works with the market, not against it.

The Physics of B2B Buying (The 95-5 Rule)

If we believe marketing is engineering (which we do), you have to respect the physics of the material you are working with. In B2B SaaS, that ‘material’ is the buyer's intent. And the physics are immutable.

According to research from the Ehrenberg-Bass Institute (the gold standard for marketing science), at any given moment, 95% of your Total Addressable Market (TAM) is not in the market for your solution.

Read that again.

Only 5% of your potential buyers are currently experiencing the pain acute enough to allocate budget, research vendors, and sign a contract. 

The other 95% are satisfied with their current solution, stuck in long-term contracts, or simply dealing with other fires - they have other stuff going on, you know.

This is where traditional "Demand Gen" breaks down.

Most B2B SaaS strategies are built on the assumption that we can force the 95% to act like the 5%. We blast cold emails, run "Book a Demo" ads on LinkedIn, and gate every piece of content behind a form, hoping to squeeze a lead out of someone who isn’t ready to buy.

When you try to "generate" demand from that 95%, three things happen and none of them are good for your efficiency metrics:

1. You Manufacture "Fake" Leads: A junior employee downloads your whitepaper because they are curious about the topic, not because they have budget authority. Your SDR calls them immediately. They don't pick up. You just paid $150 for a "lead" that was never a prospect.
2. You Destroy Brand Equity: By treating every interaction as a transaction, you train the market to ignore you. You become the "annoying vendor" in the feed, not the helpful expert.
3. Your CAC Explodes: You are spending 100% of your budget to fight over the 5% of buyers who are currently active in a "red ocean" where CPCs (Cost Per Click) are highest. Meanwhile, you are ignoring the 95% who will buy next quarter or next year.

To use an apt farming analogy; you cannot harvest a crop that hasn't been planted yet.

Most SaaS "Demand Gen" campaigns try to harvest all year round. It ignores the seasons of the buyer's journey.

An engineered approach accepts that for 95% of your audience, your only job is to stay in the memory, not conversion. You need to be the brand they remember when they inevitably slide into the 5%.

The Nuance: Category Creation vs. Category Capture

But wait, Didn't Slack generate demand for team chat? Didn't HubSpot generate demand for Inbound Marketing?

Yep that is true. But unless you are launching a fundamentally new behavior like replacing email with channels or replacing outbound cold calling with content you are not Slack. And you are not HubSpot, don't measure yourself against the outliers.

One of the biggest mistakes SaaS companies make is about being honest about the difference between Category Creation and Category Capture.

Category Creation is the act of educating a market on a problem they didn't know they had.

• The Goal: Make them realise the old way is broken.
• The Cost: Massive. You are paying to change human behavior. You are essentially doing R&D for the entire industry.
• The risk: You spend millions educating the market, only for a competitor to swoop in and capture the demand you created with a cheaper, faster clone - the risk of being first.

Category Capture is from our experience where 99% of B2B SaaS companies actually live.

• The Reality: You are selling CRM, HR Tech, Cybersecurity, or DevTools.
• The Buyer: They know they have a problem. They know solutions exist. They might even have a line item in their budget for it.
• The Goal: You don't need to convince them "why CRM matters." You need to convince them "why your CRM is the only logical choice."

The "Demand Gen" Trap in Established Markets

From our years of experience the mistake most SaaS companies make is trying to run "Category Creation" in a "Category Capture" market - it usually happens when they mistake positioning or new features with category creation.

They waste budgets pushing a “new category” and a problem that doesn’t exist or isn’t a big enough problem to warrant a new way of doing things.

In an established category they just need to know why your payroll software handles multi-state tax compliance better than the incumbent they already hate.

If you are in an established category (and you almost certainly are), you cannot generate demand for the category, that is the truth. That demand exists independently of you. The river is already flowing.

In this very common scenario your job isn't to make it rain. Your job is to dig the most efficient canal to divert that river to your mill. That is all about brand preference and positioning.

Re-Framing "Brand" for your CFO

Ok so if you walk into a board meeting and say "We need more budget for brand awareness," and watch the CFO’s eyes glaze over.

To a finance leader and to be honest a lot of marketers, "Brand" sounds like a black hole. It sounds like Super Bowl ads, expensive logos, and nebulous "vibes" that cannot be tracked in your CRM. In the era of growth efficiency, "untrackable" usually means "cuttable."

Most of the time this is a messaging failure by marketing, not a listening failure by finance. 

We need to stop talking about your "Brand" and start talking about your audience's Mental Availability.

Think of Mental Availability in marketing as the speed at which your solution is recalled when a specific trigger event occurs. You need to be top of mind and tip of tongue.

• Trigger: "Our API just failed during a traffic spike."
• Low Mental Availability: The engineer Googles "reliable API gateway" and clicks on AWS because they are first. You pay $20 for that click and compete with 10 other vendors.
• High Mental Availability: The engineer thinks, "Team 4 handles high-throughput APIs," and types team4.agency directly into the browser. Cost: $0.

The "Zero-Click" Reality (Dark Social)

The reason CFOs struggle with this is the modern Attribution Gap. Ten years ago, the buyer journey was linear: Click Ad -> Visit Site -> Fill Form, boom you have a neat and tidy report.

Today, the buyer journey is becoming even more fragmented and invisible to marketers.

Buyers are consuming your content on LinkedIn, discussing your product in private Slack communities, and asking peers in WhatsApp groups, nevermind subreddits. They are listening to podcasts while commuting. The list goes on.

They are building preference for your brand without ever clicking a link.

When they finally are ready to buy (entering the 5%), they come to your site via "Direct Traffic" or "Organic Search."

• HubSpot says: "Google Search generated this lead."
• The Reality: Your podcast, your founder's LinkedIn posts, and that "untrackable" brand campaign generated the lead 6 months ago. Google just collected the toll.

Brand isn't fluff. Brand efficiency and a much lower CAC.

When you strip away the jargon, Brand Marketing is simply "Future Demand Gen." It is the act of planting seeds in the 95% so that when they become the 5%, you don't have to pay a premium to acquire them.

If you cut brand spend to focus only on "performance," you are choosing to pay the highest possible price for every single customer, forever. You are choosing to rent your growth instead of owning it.

The Solution: Building the Preference Engine

Ok so, if you can’t generate demand, what can you do? 

It is still true that inbound marketing and organic search can still provide great ROI and you can use our Reverse SEO funnel strategy to prioritise in-market buyers and target that 5% without paying crazy amounts of money - but what about the long-term and planting the seeds in the 95%?

You need to build a Brand Preference Engine.

A Preference Engine is designed to do two things simultaneously:

1. Build Mental Availability with 95% (Brand).
2. Capture High-Intent Traffic from the 5% (Inbound).

It requires a fundamental shift in how you deploy capital and content.

1. From "Gate Everything" to "Give Away the Farm"

Traditional Demand Gen hides its best value behind a form to force an MQL.

• The Engine Approach: Un-gate your expertise. Your goal is for the prospect to consume your worldview, not just your PDF. If your content is good enough to change how they think about their problem, they will remember you. If it’s behind a gate, they will never see it. This doesn’t mean un-gate everything but it doesn't mean being more open with your expertise.

2. Optimise for the "Answer Engine," Not Just the Search Engine

The modern B2B buyer isn't just Googling keywords; they are asking AI models (ChatGPT, Claude, Perplexity) for solutions.

• The Engine Approach: You need Entity Authority. You must ensure that Large Language Models understand who you are, what you solve, and why you are the best. This isn't about keywords; it's about being cited as the factual standard in your industry.

3. Measure "Echoes," Not Just Clicks

Stop measuring the success of your brand efforts by immediate demo requests. That is like measuring the success of a gym workout by stepping on the scale five minutes later.

Our recommendations:

• Brand Search Volume: Are more people searching for your brand?
• Direct Traffic: Is the percentage of users typing your URL increasing?
• Qualitative Attribution: Put a text field on your demo form asking "How did you hear about us?" You will see answers like "I've been reading your CEO's LinkedIn posts for 6 months." That is the engine working.

Building Efficiency Through Honesty

As you should know, the era of "Growth at All Costs" in SaaS is over. We are in the era of "Efficient Growth."

Continuing to pour money into traditional "Demand Gen" and horrible outbound campaigns is like trying to force a harvest from cold soil. It burns cash, burns out teams, and burns bridges with future customers, if you care about that? (You should by the way.)

The alternative is harder to sell to a frantic board of investors, but it is the only path that actually works: Honesty.

• Admit that 95% of your market isn't ready to buy.
• Admit that "Brand" is the only thing that influences them until they are.
• Admit that when they are ready, you need a technical foundation (Webflow, SEO, LLM Optimisation) that captures them without friction and at high-cost.

At Team 4, we don't promise to magically "generate" demand that doesn't exist. It just doesn’t work like that in reality. Many companies learn this the hard way after a year of expansive demand generation campaigns on multiple platforms.

We engineer the systems that capture the demand your brand has earned. We build the infrastructure that ensures when your buyer finally asks, "Who can solve this?", your name is the only answer.

Stop paying to shout at people. Start engineering a brand they want to listen to.