Demand generation is a marketing tactic designed to create a need for the thing that you sell. It seeks to build awareness among your audience so that they:
Realize what their problem is.
Understand there is a better option than what they’ve chosen in the past.
Lead generation is the action of collecting user contact information to market to them, primarily through email, and encourage them to make a purchase.
If you're a digital marketer, it's likely you've heard the terms “demand generation” and “lead generation” thrown around on a daily basis, often even interchangeably.
It's gotten to the point where some are quick to say there is no difference between the two terms, but truthfully, there is.
On the surface, both concepts entail building a relationship with a prospect and bringing them through the sales cycle.
The difference is that demand generation is about building awareness and interest, while lead generation is about driving someone toward sales.
Whether you’re a seasoned marketer or just starting out, you may be trying to figure out what strategy is right for your business. In this stage, it’s best to take a step back and start with the basics of each to understand how demand generation and lead generation can be used on their own and how powerful they can be together.
Below, I’ll provide:
An overview of demand generation
An overview of lead generation
An explanation of how the two complement each other in the real world
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What is demand generation?
Demand generation is all about building awareness so you can create excitement and need for whatever you do.
That said, demand generation is a critical approach to marketing — especially for those launching new products or services.
The modern buyer’s journey can be dozens of steps long and demand gen plays a critical role in the early stages as it:
Helps people articulate their problems clearly.
Help people discover a new way of solving that problem.
Social media platforms like Facebook, LinkedIn, and Instagram are where your audience is already having conversations related to what you’re looking to sell. They're asking questions and expressing frustrations.
You can create demand generation by engaging in these conversations either through direct responses or through content.
Social media posts that speak to the pains and aspirations of your customers will catch their interest. You will begin to create awareness of your business and build relationships with prospects who may not yet ready to buy at this moment but could eventually become customers.
In practice, demand generation is a complex process aimed at the specific goal of making people know who you are.
Just as with other marketing tactics, demand gen begins with understanding who your buyers are and where they exist online. You want to know what problems and pain points they have, and how your company can help solve them.
When your content speaks to these needs, you begin to generate demand for your products or services.
Note: Sometimes people confuse demand gen and inbound marketing — as they share some core similarities.
For each, you create content that’s relevant and valuable, and then put it in places where your customers are already conversing. However, demand generation is really just one tactic of a larger inbound marketing strategy.
What is lead generation?
If demand generation is creating the want or need for your product or service, lead generation is the act of capturing existing demand in the market — whether through direct response, paid social ad, or through a form on your website — and getting them into your marketing/sales cycle.
With lead generation, you’re creating content or marketing campaigns designed to capture a prospect’s contact information so you can market to them.
You accomplish this with things like gated content, lead forms, newsletter sign-ups, promotions, and other offerings that exchange something of value for audience contact information.
For example, you might be looking to generate more business for a particular service your business offers.
By creating something of value that potential buyers want, you’re giving people an avenue to express interest and give you their contact information.
To build awareness of that piece of gated content, you can place calls-to-action throughout your site or on other pieces of content, or boost your reach by running paid ads promoting it to your target audience on social media.
To know what you need, examine your data
Marketers need to work closely with salespeople to really understand why and how people buy from you. Each month, look at all your closed-won deals and trace them back to their point of first contact.
What journey did they take that brought them to purchase? Did they convert on a piece of gated content, enter a nurture series, and eventually make a purchase when you sent them a special offer?
If so, thank your lead generation strategy.
Were they impressed by your social media thought leadership, eventually reaching out to speak to your sales team when they were ready? That’s pure demand gen.
What you see in your data will help you decide where to put your efforts.
However, the best tactics involve integration and alignment between your demand gen and lead gen efforts.
How do demand gen and lead gen complement each other?
Your buyers are looking for information. Depending on where they are in their buyer’s journey, that information will come in different forms and that's where demand generation and lead generation work together.
Early on in their buyer’s journey, they might just be looking to understand their problem: Why can’t my team at work stay organized? Or Why does my basement get flooded every spring?
These early-stage buyers are in a perfect position for demand generation tactics. Social media content that speaks to these concerns can begin to build awareness for the solution you sell — even before they are aware of that solution.
Then, as these customers start to compare options, lead generation tactics can capture their contact information so they can enter into a nurture series or get passed along to your sales team.
You know this series will hit on problems your ideal customer might be faced with, so the content will be relevant and helpful to them.
The series itself is designed to show your expertise and therefore let that viewer know you can help them. Now you’ve attracted them to your brand and started to build trust. They become a subscriber.
Within the videos or in the description, you might include additional resources that you’ve developed, such as e-books, articles, or guides. Now you’ve given that user a reason to come to your website and learn more, increasing the trust and building the relationship.
If you notice, you haven’t yet asked for contact information.
Within the pages you’re leading them to from YouTube, you can start to include calls-to-action for things like gated content where the information is more exclusive, detailed, and valuable.
By attracting the customer and starting to build trust with them first, you can now capture their contact information, knowing that this is likely coming from a more qualified lead.
This is demand generation and lead generation working in tandem. You’re creating demand and generating leads with a seamless experience suited to the customers’ needs.
The best strategy for growing your business
Buyers today come to make a purchase after dozens — maybe hundreds — of touchpoints with your brand. Both demand gen and lead gen can be critical parts of your marketing strategy.
While there are certainly exceptions, we’ve found demand gen is particularly well-suited to B2B companies. They initiate social media conversations that speak to the pain points of their target audience. Over time, they build a relationship with this audience and those social media followers become high-quality leads.
For B2C companies, lead generation plays a big role. Building a vast database of leads allows them to send promotional material, newsletters, and other content that can prompt a sale.
For many companies, both lead gen and demand gen figure into their marketing strategies, and the line between the two is ever more blurry.
If you're ever in doubt as to how to use them, look at your closed-won deals. See the steps they took to buy from you. Then, do what you can to replicate that experience for more and more potential customers.
Always remember that the right digital marketing strategy can guide your business to exponential growth, but the wrong one will lead to stagnation. At IMPACT, we give businesses the training, coaching, and guidance they need to ensure long-term success.