Need a quick refresher on the differences between Lead Generation and Demand Generation?

Believe it or not, the two are actually different – and it’s important to know which one to use and when.

In this post, I cover the basics of both and how the two are applied to different scenarios in marketing.

Lead Generation

Lead generation has tons of definitions, but they’ve all got a few things in common. I’ve collected a few here that stuck out:

Kapost defines lead generation as “…using content or other marketing efforts to collect names and contact info for future follow-up.”

Business.com defines it as “often very detailed and lengthier than other pieces of content. It identifies a problem that its potential customers experience or offers help in making an informed decision about a product or service.”

“Lead generation is largely dependent on gated content. You promote and advertise your content to a wide net of people, often on social media” says Hootsuite.

One more definition: “Lead generation is the process of capturing consumer interest for product or service in order to drive growth” – Captora.

For the purpose of this post, the main indicator of lead generation is any gated activity or content with the purpose to create enough interest in solving a problem.

Lead generation’s entire philosophy is based on the idea that if you build something valuable and charge people a small fee (like their information) to get it, then you can nurture them later into buying your main offer.

Lead generation also depends very heavily on the sales process – if I think you need it, and if I can remove your inhibitions, your objections, and give you the perceived ownership of something, you’ll probably be likely to buy it.

One of the most important qualities of lead generation campaigns is that there’s usually a form involved – there’s something gated and it’s probably content of some kind.

If your entire purpose is to generate leads as a marketer, chances are you are probably more lead generation-oriented and you focus your efforts accordingly. Your metrics might be to focus on lead conversion rates and increasing the quantity of leads and working with Sales to determine the quality.

Channels are important to you because the best leads will need to be studied so you can map it back to where they came from in the first place. Tradeshows and events are heavily focused on getting people to give you their business card or some kind of information to continue the conversation.

Demand Generation

Now, demand generation’s definition is interesting because in some ways, it encompasses several aspects of lead generation but also focuses on another main concept: building awareness.

Kapost says “Demand generation is creating awareness of and interest in your company and its products, or sometimes even your industry as a whole.”

“Demand generation drives awareness and interest in a company’s products and services. The goal is to drive closed business with minimal interaction with the consumer or business you’re attracting” according to the MarketingTech blog.

“Demand generation: The practice of creating demand for an organization’s products or services through marketing. The direct outcome is that your audience is more likely to purchase your products or servicesfrom ContentMarketingInstitute.com.

“Demand generation is the generation of demand for a business’s products or services with the goal of driving closed business” by an article on Technologyadvice.com.

“Demand generation is focused on shaping perception and creating interest in your products or services….. Where brand awareness tactics only draw attention to your brand, demand generation creates interest in your product” also from TechnologyAdvice.com.

Several definitions, but also most of them are recurring themes. Demand generation essentially does these things:

  • Drive awareness and interest specifically in the product / service
  • Shapes perception and creating interest around the product / service
  • Less interaction in the beginning because demand generation implies the demand grows as awareness grows
  • Customer is ready-to-buy rather than being cold-nurtured or coaxed into buying

In order to accomplish the awareness part of the funnel, marketers focused on demand generation will often offer content for free – no form, no gate, nothing.

Because conversion rates are so incredibly low on gated content, it’s harder to spread the message around the brand’s products / services.

Instead, demand generation turns this concept on its head and would rather create a high-quality piece of content, offer it for free (again, no forms), and continue to shape the perception of the prospect until they know your brand so well, they will just come to when they’re ready to buy.

Demand generation does not depend as heavily on the sales process because it takes ownership of doing the selling even before the prospect picks up the phone or completes an order. This usually means tons of public content about the product / service to the prospect in addition to outbound campaigns specifically around the product / service.

The goal is ultimately awareness – better to have 1,000,000 people know about your brand than 10.

By the time the prospect is ready to purchase, they’re already warm, and they enter the funnel with a much higher close rate than if they came in from lead generation alone.

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There is, however, a certain element of demand generation programs that eventually move into lead generation.

The theory is that the two cannot exist without each other – demand generation still needs to be able to drive leads (which still means some kind of form) into the pipeline, and lead generation still needs to be cognizant of how awareness fills the pipeline with valuable leads.

When To Use Lead Gen vs. Demand Gen?

Ah – the ultimate question.

Whichever type of generation you use, you want to make sure you really understand the goals and their opportunity costs.

If you’re studying lead gen versus demand gen, chances are you’re in the B2B space as a marketer. You might not be – you might be B2C, but I’m going to assume.

Lead generation is best when your industry and target market is so well known to you, and your product / service is so well known to your target market.

Yes – it must be both. 

Lead generation works best when your brand is so well known that all you have to focus on is getting people to convert themselves in the pipeline and working on closing deals.

So in other words, unless you’re Microsoft, Salesforce, Apple, etc., you probably don’t have to do tons of demand generation and you’re much more focused on lead generation.

Properties of Lead Generation

If you’re unsure what kinds of campaigns to run, keep it simple by focusing on content that is high-quality, detailed, irresistible, and of course, gated:

  1. You’ll still focus on driving awareness through channels, but it will be to your content – whitepapers, ebooks, reports, studies, exclusive webinars, and other high-quality items.
  2. Next, focus on creating nurture programs that will slowly (or quickly) move a suspect into becoming a prospect.
  3. Configure the necessary reports and dashboards to measure everything you put in the funnel – from # of leads, # opportunities, $ est. pipeline, etc.
  4. Finally, test everything – all the way down to your content offers.

 

Meanwhile, demand generation has its place, too.

Demand generation is best when your brand is not as well known to your target market and you need to get the word out fast.

Demand generation is for the B2B brands that are in a more competitive space and need to ensure they’re known through major awareness campaigns.

This is very common for start-ups – if you’ve ever seen a kick-starter or ad campaign go viral, you watch demand gen happen at its finest.

Properties of Demand Generation

Demand generation campaigns might seem harder to run, and in some ways, they are, but in general keep these things in mind:

  1. Focus less on lead capture and much more on sending a message through your channels. You’ll still use channels to promote the campaign.
  2. Literally give content away. That’s right. Don’t require a form.
  3. Always tie back to the product and the brand.
  4. Create back-end, automatic nurture programs that eventually capture leads. Don’t have to give everything away without a form, but do try it in the beginning to spread your message. As your target market becomes more aware of your brand, start introducing ways to capture them.
  5. At this point, demand generation morphs into lead generation, but the long-term effects of constant demand gen programs are that people end up knowing you so well that they call on you when they’re ready to buy.

Critiques of Lead Gen and Demand Gen

Despite the fact that lead generation and demand generation both have their place in life and business, they do have both infinite possibilities and limitations.

One of the biggest critiques of both of these approaches has more to do with the manner of selling – B2B inbound marketing.

Because lead gen and demand gen are so common, millions of marketing and sales teams approach it the same way: we need more content, we need better content, content is king, personalize the content, and it will accomplish our goals.

Except in the B2B world, the amount of stakeholders when making a purchasing decision is around 5.4 buyers.

So personalizing content, creating content, sharing content – it can’t be a one-size-fits-all situation. You would have to create messaging and content for each of those buyers.

In any program – be it demand or lead – make sure you scope out the *exact* personalities you want to actively engage with your content.

 

 

 

 

Asia Matos was the Director of Marketing at ARKE Systems where she oversaw all of the marketing channels and operations for the organization. In her role, Asia managed lead generation-focused content strategy, traffic acquisition, campaign execution, and event planning. She worked daily with content management systems like Sitecore and Wordpress, the analytics platforms of Google Analytics and the Sitecore Experience Platform, and contributed her extensive experience with email service providers like Silverpop and ClickDimensions. Asia was the editor and writer of ARKE’s blog MarketingTechnologyInsights.com. Asia is now the #FlipMyFunnel Demand Generation Manager for Terminus.