Demand generation and lead generation are often mistakenly used interchangeably in the B2B world. In practice, both strategies are critical for successful B2B marketing campaigns, as they complement each other to create a seamless customer journey.
They serve distinct roles in any B2B marketing strategy.
Nonetheless, when deployed in harmony, these two strategies form a sustainable pipeline of workable high-quality leads, driving both immediate and long-term growth.
This article aims to unpack the distinctions between demand generation and lead generation, demonstrating the extent of their roles in a sales funnel. So, without further ado, let’s get started!
Table of Contents
What is demand generation for B2B?
Demand generation refers to the methodical process of stimulating interest and awareness in a company’s products or services among potential customers.
It involves the deployment of a series of tactics and strategies to attract prospects, build lasting relationships with them, and guide them through the buying journey. As a critical component of marketing success, demand generation helps B2B companies stimulate more demand to maintain sales levels.
For the most part, this education-focused strategy is focused on creating long-term interest and reliable brand awareness, ultimately resulting in high-quality leads.
In practice, it prioritises engaging “out-of-market” buyers. Its idea is to remain top of a prospect’s mind so that a company’s product/service may be immediately considered for purchase in the near future.
What is lead generation for B2B?
Lead generation is the methodical process of identifying the ideal customers for a product and reeling them to make a purchase.
The core activities for B2B lead generation revolve around capturing information from prospective customers. This includes decision-makers’ names, emails, company names, and job titles. This information helps to target them with customised sales pitches or advertisements.
In the B2B context, lead generation is crucial for providing key information to marketing representatives, sales representatives, and sales development representatives. These professionals work closely together to effectively guide prospects into the sales funnel.
In fact, without lead generation, there would be no leads to flow through the B2B sales pipeline. This would consequently result in a negative impact on the business’s growth and success.
Key differences between demand generation and lead generation
Demand generation and lead generation are two radically distinct but similar marketing strategies that serve different purposes in the B2B sales funnel.
These differences can be further illustrated as follows:
Goals and objectives
Demand generation principally seeks to create broad awareness and long-term interest in a company’s products or services. It accomplishes this via activities that focus on building brand visibility and nurturing a wide audience by employing various marketing strategies, resulting in high-quality leads.
On the other hand, lead generation is mainly geared towards converting this interest into actionable leads. Its core goal is to collect contact information from individuals who have demonstrated a specific level of interest in the company’s offerings, moving them closer to becoming potential customers.
Target audience approach
For the most part, demand generation targets a broader audience with an education-focused approach in order to nurture them about the brand and its value proposition. Fundamentally, it’s a long-term marketing strategy that prioritises reaching and engaging “out of market” buyers.
On the other hand, lead generation revolves around converting a specific group of people who have shown past interest and engagement into paying customers. It is done by highlighting a product’s standout features and differentiating it from competitors.
Marketing tactics and strategies
Conventional demand-generation marketing strategies to create awareness and engage the audience include content marketing, brand-building campaigns, and educational webinars.
These marketing strategies aim to showcase a brand’s expertise and commitment to its customers, building trust and credibility. Thereby, ultimately leading to increased brand consideration and preference.
In contrast, lead generation marketing tactics are more targeted to capture specific information from potential leads. For example, targeted email campaigns, gated content, and lead capture forms.
Content type and usage
B2B demand generation content is often educational, brand-oriented, and not gated. It aims to inform and educate potential customers whilst establishing the brand as a thought leader in its respective industry.
This approach is especially effective in the B2B context, where potential customers often conduct extensive research before making a purchase decision. Additionally, the content in demand generation being not gated means that it’s freely accessible to potential customers without the need to provide contact information.
In contrast, B2B lead generation content is conversion-focused content that is more likely to be gated. This means that it requires contact information from potential customers before they can access it. This approach is deployed to generate leads by providing B2B prospects with valuable information.
This is done in exchange for their email address, industry, job title, and other relevant contact information. This information may be exploited for further segmentation and personalisation, as well as to learn about the context of visitors. Gated content may be product/service-specific in the form of white papers, videos, e-books, product demos, or case studies.
Measurement and metrics
Measuring demand generation involves metrics like brand awareness, website traffic, and engagement levels. In contrast, measuring lead generation focuses on metrics such as conversion rates, sales-qualified leads (SQLs), the number of leads generated, and cost per lead.
Overall, the metrics used to measure the success of demand generation efforts are distinct from those in lead generation. Demand generation metrics focus on building brand awareness and interest around assessing the reach and resonance of marketing efforts.
Lead generation metrics are more focused on converting prospects into paying customers. More specifically evaluating the effectiveness of strategies deployed to capture, nurture, and convert potential leads.
Sales funnel stage
Demand generation activities typically occur at the top of the sales funnel (ToFu). This is because they primarily focus on creating broad awareness and long-term interest in a B2B company’s products or services.
Fundamentally, they emphasise building trust, and establishing the brand as an authority. Thereby, laying the groundwork for prospective leads to progress through the sales funnel.
In contrast, lead generation activities occur more in the middle funnel (MoFu), where prospects are identified and nurtured, moving closer to conversion.
Read: Mastering the Demand Generation Funnel: A Step-by-Step Guide
Duration and relationship building
Demand generation is a long-term, ongoing process focused on building relationships with a broad audience over time. That’s why its activities seek to help potential customers be more open to further interactions and inquiries as they progress through the sales funnel.
Lead generation, despite also contributing to relationship building, is more short-term and transactional with a focus on immediate results. This is demonstrated by the urgency, agility and responsiveness embedded in B2B lead generation strategies that cater to the need for prompt and measurable outcomes within the sales cycle.
Integration with sales
Demand generation activities revolve around creating a conducive environment for sales where potential customers can be made aware of a company’s products but also be intrigued and engaged.
This consequently creates a favourable context for the subsequent stages of the sales process. In essence, demand generation creates an atmosphere of receptivity and interest within the target audience.
On the other hand, lead generation is closely tied to sales activities, usually followed by direct handoffs of leads to sales teams. Fundamentally, the culmination of B2B lead generation is the seamless transfer of qualified leads to the sales teams.
Tools and techniques
Several technology tools and techniques are typically deployed in demand generation initiatives. For example:
- Content marketing tools like Wordable, to create and distribute valuable and relevant content to attract and engage a target audience.
- Social media tools and platforms for sharing content, engaging potential customers and building brand awareness. For example, Hootsuite.
- Lead nurturing via the deployment of a series of communication mediums to educate, engage, and guide prospects through the buying journey.
- Lead scoring to prioritise leads based on their likelihood to convert into customers, allowing B2B sales teams to focus on high-quality prospects.
For lead generation, a host of techniques and systems are usually employed, such as:
- Lead scoring systems like Outfunnel for prioritising leads based on their likelihood to convert into customers.
- Customer relationship management software like Salesforce to manage and analyse customer interactions and data.
- Gated content like e-books or webinars, requiring prospects to provide contact information in exchange.
- Marketing automation software to automate marketing tasks like the transmission of emails, social media posting, and tracking lead engagement.
- SEO tools for optimising online presence to attract prospects who may be actively searching for products or services.
In the context of lead generation, CRM systems are critical for identifying and prioritising leads based on various criteria, like demographics or engagement level. This allows B2B sales teams to focus their efforts on the most promising prospects, ultimately increasing conversion rates.
Marketing automation platforms are also vital for B2B lead generation. This is because they enable businesses to automate marketing tasks like email marketing, lead nurturing, and campaign management.
This automation appreciably saves time and resources, allowing businesses to focus on strategic initiatives. For example, creating personalised marketing campaigns that resonate with their target audience.
In the sphere of demand generation, CRM systems are also equally important. CRMs provide a comprehensive view of each prospect. Thereby, enabling B2B marketers to tailor their messaging and offers based on individual interests and behaviours.
This personalised approach appreciably increases the chances of converting leads into loyal customers whilst also nurturing long-term relationships with existing customers.
Furthermore, in demand generation, SEO and social media help businesses attract potential customers by increasing brand visibility and driving website traffic.
Integrating demand and lead generation in marketing strategy
By aligning lead and demand generation strategies, businesses can create a seamless customer journey that effectively converts prospects into paying customers. In practice, this alignment can be achieved by the deployment of technology tools such as CRM systems, marketing automation, SEO, and social media.
By understanding the complementary nature of lead and demand generation, businesses can yield immediate and long-lasting results, driving business growth and success.
Here are a few tips on how businesses can effectively integrate demand and lead generation:
- Create a comprehensive marketing strategy that aligns both demand and lead generation efforts.
- Utilise gated content strategically whilst also building brand awareness and trust.
- Leverage marketing automation tools to streamline lead generation and demand generation efforts.
- Foster sales and marketing team collaboration.
Conclusion
Demand generation is a long-term, education-focused B2B marketing strategy focused on increasing brand awareness and interest. Its overarching goal is to generate a pervasive demand for the brand.
Lead generation is the subsequent process of turning the interest generated by demand generation into actionable leads by collecting contact information. Lead generation is more focused on converting brand-aware prospects into customers. It usually achieves this by leveraging tactics such as targeted email campaigns, gated content, and lead capture forms.
Together, these two concepts maintain a symbiotic relationship where demand generation creates a receptive market and lead generation refines and capitalises on that market to drive meaningful business outcomes in the B2B space.