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Demand Generation Vs. Lead Generation: What’s The Difference?

Did you know that 35% of marketers prioritize demand generation marketing strategies in 2022? Creating “demand for your product or service may be the best way to acquire inbound leads. Learn about these dissimilarities in this enlightening blog.

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Picture this: Your customers contact your sales reps and straightaway ask to buy your product or service. In fact, they insist on it. No scripts are required. No education is necessary. Too good to be true, isn’t it?Inbound leads, as a modern sales methodology, are based on you generating awareness about what you’re selling amongst your ideal prospects. You should aim to educate, inspire, entertain, inform and generally create hype using the power of good content, leading your prospects to knock on your door, wanting to try out your product or service. 60% of B2B marketers consider content marketing an integral part of demand and lead generation.But is demand and lead generation so synonymous that these terms should be used interchangeably? The surprising answer is a no.There are several differences between these two concepts, and you need to study each strategy in detail to ensure that you successfully generate inbound sales.In this blog, we will discuss demand generation and lead generation, the dissimilarities between the two, and how to execute both strategies together to maximize your brand growth.Let’s jump right into it!

What is demand generation?

As the name suggests, demand generation is raising awareness and creating “demand” for the product or service your company offers. Demand gen tries to introduce your business to new customers by helping them identify a pain point that is hampering their growth and offering your product or service as a solution. mDemand generation primarily focuses on building a target audience, creating trust, establishing you as an authority in your industry, and garnering their interest in your business.

demand generation
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Multiple channels can be used to generate demand around what you’re selling— these include videos, blogs, webinars, infographics, social media posts, PPC ads, and much more. What sets demand generation activities apart from other marketing initiatives is that they are not purposely targeted toward lead conversion.Demand gen uses free content (not gated or paywalled) to acquaint your prospective customers with the value you provide. Demand generation aims to increase awareness of the problems that your target audience is facing and puts your product or service front-and-center as the potential solution.

Examples of Demand Generation Practices

There are multiple processes that can make your ideal customer aware of your brand, and each takes its own sweet time to bring you the desired results. That said, here are some effective demand generation tactics:

1) Guest posting

Did you know that guest posting boosts your product or service sales by ensuring an 80% growth in organic and referral traffic to your website?Guest posts help you improve your search rankings while building authority around your brand and offers, thereby, facilitating audience extension as well as an increase in brand awareness. If you’re launching a new product category, guest blogging, guest podcasting, or advertising on third-party sites relevant to your offer can be especially useful.Building relationships with high-authority websites and contributing content to them is a good way to make yourself visible in front of your ideal prospects. It can also help readers in the awareness stage of the buyer's journey get to know and trust your work better, eventually leading to them becoming leads and, eventually, customers.

2) Publishing SEO content

46% of marketers consider SEO content a priority in their content marketing strategy.Your search rankings can be raised by including an efficient on-page and off-page SEO strategy in your demand generation campaigns. This will increase traffic and establish your authority with top-of-funnel prospects just starting their buyer's journey.Maintaining top results for your most valuable keywords requires time and effort, but it can build credibility before a potential customer even visits your website. To retain excellent search rankings, everything in your content should be constructed around your primary keyword approach.In short, a search engine-optimized blog can lead an anonymous prospect, who may have never come across you otherwise—-straight to your blog! And who knows? Using a powerful CTA at the end of all that valuable information (that you divulged for free!) may lead the prospect to pay to view some gated content or buy a free trial for your product.

Demand Generation Practices
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3) Offering digital freebies

Educating your prospect is a significant part of the sales process. And everyone loves free stuff! The more value you provide for free, the more your ideal customers will find your expertise credible. Thus, digital freebies become a great way to generate demand for your product or service. These could include walkthroughs of straightforward self-service tasks, free trials or free-to-use features, audits, estimating tools, calculators, or audits.For example, if you provide website content and developer services, you could offer your prospects a free website audit to identify the current problems with their website that are preventing them from generating leads or converting customers and provide them your service as an ultimate solution targeted to grow their business.Digital freebies can include a social media content calendar or an editorial (blog) calendar, how-to guides, to-do checklists, newsletter templates, mini-courses, contract templates, ideas for social media captions, cheat sheets, starter kits, etc.

4) Running PPC or social media campaigns

Demand generation may be the first stage in a marketing funnel, but there’s a vital activity you must perform before that—market research! Less than 40% of marketers drive their decisions based on consumer market research. This is where you can outshine your competitors! You should invest in learning about your buyer personas and customer journeys and then use what you learn to put yourself in front of your ideal prospects, using paid and organic social media campaigns. With all the free content you provide, you can quickly grow to become a potential (and perhaps, the best) solution for your client to solve their problem.

What is lead generation?

Lead generation is the logical next step after you’ve created the desired demand for your products or services, bringing a prospect forward along the marketing or sales funnel. Lead generation builds on the interest generated during the awareness stage and advances the prospect into the consideration and decision stages. Now you transition into offering your prospects gated content that they may be interested to invest in, which in turn, helps you collect leads from anonymous prospects, either for more focused marketing or to give to your sales team.Lead generation tools need to provide more specific and valuable information that your audience finds worth investing in. They include live or virtual events, white papers, case studies, how-to guides, webinars, ebooks, survey reports, thought leadership articles, retargeting campaigns, ABM campaigns, etc.In a nutshell, lead generation focuses on pulling in potential buyers watching your free content to pay for access to more valuable gated content that may ultimately convert them into paying users of your product or service.Here are some useful statistics that give you a complete picture of lead generation and its significance in sales.

Examples of Lead Generation Practices

Lead generation content is created from a more detail-oriented perspective, delivering far greater value than ungated content. The tools, which can be referred to as “lead magnets,” should be customized to the individual client's demands, compared to demand generation content—it is specifically created with the potential buyer persona's pain points in mind.

1) E-books, survey reports, case studies, and white papers:

Depending on the subject, in-depth, downloadable resources can be quite helpful in displaying knowledge and guiding the reader through the consideration stage. Examples include ebooks, case studies, whitepapers, survey reports, and other thought leadership and instructional content.This gated material usually delves more deeply into a topic than is covered in a piece of content that is more demand-focused. Trend-focused content that demonstrates your foresight into upcoming changes in the industry can also provide great value to your potential client. You can even share the knowledge from other industry experts by including their quotes. When those industry experts advertise your content in front of their audiences, it can multiply your lead generation efforts.

2) Webinars:

Profiting from the strength of human connection, webinars may be a successful approach to build a stronger relationship with consumers during the contemplation and decision stages of the sales funnel and even after they have signed up. Webinars can address specific aspects of the prospect's problem, which may prompt the prospect to join up for more comprehensive help or use a paid resource.Webinars are an effective way to generate lots of leads, with 72% of marketers citing that webinars have a direct positive impact on both pipeline and revenue. Furthermore, marketers also concur that 66% of sales teams prioritize leads that come from webinars, making it the numero uno digital marketing channel for generating qualifying sales leads.

Differences between demand generation and lead generation

TL; DR: Although the terms "demand generation" and "lead generation" might be used interchangeably, demand generation focuses on building brand awareness and product knowledge at the top of the funnel, while lead generation is concerned with turning prospects into qualified leads who can then be nurtured into customers. To generate resources and offers that will result in conversion, the lead gen process depends on sound segmentation, data analysis, and alignment across content, sales, and customer teams.Both demand and lead generation tend to use many of the same tools and tactics to bring you the desired results. However, they both use content and targeting processes differently.

Targeting for demand generation

The most effective demand generation efforts concentrate on generating interest among those who are most likely to become leads rather than simply maximizing reach and awareness. In a similar vein, they stop paying to share free content with customers who already have all the free formation they require about your company.With LinkedIn being 277% more effective as a social media platform, converting B2B leads is the best place to generate demand for your product or service. The profile data that Linkedin provides access to is spectacularly detailed—you can filter your ideal audience based on parameters such as industry, job title, experience level, and location. Once you get your leads on a verified list of possible buyers, you can:

  • Use website retargeting to enable the most relevant content to be visible to your prospects:

LinkedIn’s Matched Audience Capabilities tool can help you segment website visitors based on what pages they visited and then use the information to retarget them with content that piqued their interest in the first place. You can target demand generation efforts towards readers of specific thought-leadership entries on your blog, for instance, by connecting your solutions to problems you know these readers are considering.

  • Use ABM strategies to target specific client accounts:

ABM techniques concentrate your demand generation and lead generation efforts on companies who are more likely to buy what you're selling and will be worth more to your company when they do. You can upload a list of the companies you've chosen as part of your ABM strategies using LinkedIn’s Matched Audience Capabilities tool. By doing this while targeting your ideal prospects on LinkedIn, you can be certain that your money is going toward promoting awareness among your most important potential prospects.

  • Exclude contacts who are already leads:

There’s no sense in generating demand amongst customer segments who are already in your sales pipeline. Gathering the email contact information on LinkedIn profiles and putting them into LinkedIn’s email matching processor, you can effectively add or exclude contacts, making your targeting efforts much more precise.

Targeting for lead generation

Lead generation aims to increase the number of high-quality leads that will be accepted by sales and turn into sales, demonstrating the return on investment of your lead generation marketing. When you can find the proper people to target—those who are pertinent, have the right degrees of business knowledge, and are at the right stage of the decision-making process—you can more easily accomplish all of these goals.With 80% of B2B leads coming from LinkedIn, it is the most effective marketing channel for B2B lead generation. The LinkedIn Lead Gen Forms tool was developed as an efficient way for you to gather in-depth and accurate information about your prospective clients. Owing to it, marketers have seen an increase in the number and quality of leads as well as upped their conversion rates by 3x.

  • Website retargeting to pick up intent, at a lower cost;
  • Target the prospects who have shared contact information, but are yet to fill the sales pipeline;
  • Create a priority segment with high-value account names to further deploy customized lead generation campaigns (i.e. formulate an ABM client list); and,
  • Upsell and cross-sell to existing customers.

Content marketing for demand generation vs. lead generation

Content is the secret to success in both demand development and lead generation. Content marketing is reported to be 3x more effective for lead generation and costs a stunning 62% less in budget, compared to outbound marketing measures. Mind-blowing, isn’t it?

Content Marketing
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Content marketing for demand generation:

Demand generation content is —

  • Geared more towards brand messaging, positioning, and recognition; and,
  • Primed for exposure, therefore must not be countered by any obstacles.

This is where you should give customers the data sheets, videos, webinars, blog articles, and other materials they require to make a purchase.

Content marketing for lead generation:

Lead generation content is —

  • Focused on getting contact information from the lead;
  • Gated to leverage the curiosity of the prospects; and,
  • Filled with value, such that, it effectively lays the groundwork for sales.

When the prospect clicks on a lead gen content piece, they are directed to a landing page with a lead-generating form that they must fill out in return for your content. You may give your sales team more qualified leads by leveraging the fact that prospects that fill out a form in exchange for information, are probably convinced that it will benefit their purposes.Limiting access to your material can prevent less qualified prospects from entering the funnel and reaching your sales staff.It's important to remember that some content assets might serve as demand and lead generators. You'll have a terrific tool for teaching potential customers and establishing authority if you generate in-depth research or an eBook packed with value for your audiences.You'll also have something prospects will be ready to offer their contact information for. However, even if you have a resource with this kind of multitasking ability, it still makes sense to format and deliver the content differently for demand and lead creation.

Metrics for demand generations vs. lead generation

How do you know if your demand gen or lead gen initiatives are succeeding? An important question, isn’t it?Well, you can monitor the effectiveness of a particular campaign using metrics and key performance indicators (KPIs). To gain a complete view of your inbound marketing performance, you must examine each channel for acquisition and referral.

Demand generation KPIs:

  1. Organic traffic: that is, the prospects coming to your website from your organic marketing initiatives primarily including social media channels;
  2. Market share percentage: that is, the percentage of total sales in an industry, earned by a single company; and,
  3. Cost per mile (CMP): that is, the price of an advertisement per one thousand clicks.

Lead generation KPIs:

  1. Conversion rate: that is, the number of visitors on a website who complete a desired objective out of all the prospects who visited the website;
  2. Time taken by the customer to purchase (i.e., length of the sales cycle)
  3. Customer acquisition cost: that is, the investment made by a company to win over the business from a single customer;
  4. Marketing ROI: that is, the return on investment your company receives from the combined results of all your marketing initiatives;
  5. Number of newsletter subscribers; and,
  6. Number of sales qualified leads (SQLs)

This is, by no means, an exhaustive list, but you can start to measure the effectiveness of your demand gen and lead gen campaigns with these metrics.

How to use demand generation and lead generation together to gain maximum benefits?

Both demand and lead generation may have the same goal, but they must be carried out in the right order to produce healthy conversion and maintain a healthy pipeline. Without a strong demand-gen plan, your sales teams won't have the number of inbound leads required to produce sales metrics.Employing demand gen without lead gen might find you directing loads of traffic to your website or other assets, but you might come up empty on conversions without the right nurturing or no precision focus on conversions. Similarly, lead gen without demand gen would make you come across as inaccessible, and you’d make little to no sales.

demand generation Vs. lead generation
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A crucial element in maintaining the health of your funnel is the variety of your demand creation. Prospects use a variety of channels for browsing and working, and they each prefer distinct methods of information gathering. The best method to ensure you're not passing up on valuable chances is to have a robust selection of branded videos, social media postings, guest opportunities, speaking engagements, and paid advertising.Additionally, compelling incentives and CTAs during the demand gen stage can encourage prospects to focus on a business, providing lead generation the best chance to persuade them to provide contact information and continue with the buyer's journey.

Final Thoughts

It is possible to create combined programs, utilizing the power of both demand and lead generation processes, that complement and support each other. The ultimate goal is to attract more attention to your website and to your products and services and turning that attention into high-quality leads and customers who will support revenue growth and stability. Demand generation and lead generation are both integral components of driving inbound sales. Your lead generation methods will nurture qualified leads into happy clients if you ensure that your demand-generating strategies will assist you in attracting qualified leads.Strengthen your strategy to convert inbound leads into sales opportunities with RevenueHero.How can RevenueHero help?We provide full-cycle inbound sales acceleration services.

  • Lead qualification. Check.
  • Lead routing to the most appropriate sales reps? Check.
  • Lead prioritization based on high-value prospects? Check.
  • Monitoring leads and scheduling meetings at different stages of the marketing funnel? Check.

Using features like a strong lead scoring system and seamless integration with every product in your GTM stack, you can generate as many inbounds leads as you’d like and convert them into paying customers.Want to know more? Check out the platform right here!

Madhurima Chatterjee
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