Demand Generation vs. Lead Generation: What’s the Difference?

Demand Generation vs Lead Generation | PredictableProfits.com

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You might think they’re the same, but demand generation and lead generation are quite different. Knowing what each approach is all about is key to growing and scaling your business.

When we talk about B2B marketing, growing your company, or scaling your operations, we’re really discussing acquiring customers — how do you get more of them, how can your lower the cost of acquiring customers, and so on. 

A successful company ultimately has to close sales on a fairly steady and consistent basis. 

That being said, let’s explore two terms commonly associated with business growth: lead generation and demand generation. Are these just synonyms for the same thing? Is one better than the other?

Understandably, it might get confusing when you hear demand generation vs. lead generation. But there is a difference.

Demand generation creates interest in a product or service, whereas lead generation captures contact information from potential customers. While they both work toward the same goal — bringing in more business for the company — demand generation and lead generation are two different activities. 

Generally speaking, these two concepts represent different approaches when bringing new customers into your company’s sales pipeline. Although there is overlap between demand gen and lead gen activities, achieving success with one doesn’t necessarily mean success with the other. 

What Typically Happens During Lead Generation?

A key activity in any successful business is generating leads. New leads bring in new customers. And without a steady stream of customers, a company eventually withers and dies. 

Lead generation activities revolve around gathering information from prospective buyers for sales purposes. It’s what happens when someone expresses interest in what you sell. 

Clearly, much effort goes into mastering the art and science of lead generation. You can even say that it’s important to have an effective lead generation strategy in place. 

Read more about our own Lead Generation Process here at Predictable Profits.

There are many different ways to generate leads: outbound calls, inbound marketing, online ads, networking events, email blasts, word-of-mouth, market research, referral programs, and so on. 

During lead generation, a company acquires a potential customer’s contact information. In many cases, individuals trade personal information such as their name, company name, phone number, email address, etc., in exchange for something of value– — a lead magnet, if you will.

This lead magnet can be an ebook download, newsletter subscription, resource kit, discount code, or some other valuable promotional material.

Aside from the usual contact information, you can collect data about their preferences, the type of products they are interested in, and more. This information can then help you create more targeted marketing campaigns that reach the right people.

What Typically Happens During Demand Generation?

Now, when we talk about demand generation, this is the process of creating and nurturing a pool or pipeline of potential customers interested in your product or service. 

You can increase sales opportunities and grow your business through activities such as content marketing, search engine optimization (SEO), social media campaigns, email outreach, etc.

You see, demand gen is about attracting potential customers to your company or product through the methods mentioned above. Once you have drawn them in with your offer, you can then capture their information to follow up and convert them into paying customers.

The objective of demand generation is to create interest in your product or service, while also being pervasive and staying top-of-mind. This way, when someone makes a buying decision, they engage with you rather than your competitors.

Demand generation includes both digital and more traditional methods. Along with publishing lots of relevant, engaging, and shareable content online, public relations and reaching out to influencers and media outlets should also be part of your demand gen gameplan.

Exploring the Differences of Demand Generation vs. Lead Generation Even Further

Now that we’ve talked about demand gen and lead gen, let’s dive deeper into how these two terms relate to each other.

Is There an Overlap Between Lead Gen and Demand Gen?

Demand generation and lead generation activities do overlap. Both approaches can even use the same marketing channels: online ads, content creation, email marketing, outreach, campaigns on social media, and so forth.

And yes, the end goal is the same: to bring new customers to your company’s doorstep. 

The intent behind each, however, is what makes them different. While lead generation is all about collecting customer information, demand generation builds interest, awareness, and relevance.

In fact, we can even say that good demand generation efforts almost certainly result in bringing new leads into your sales pipeline. Whereas good lead generation efforts might not lead to generating demand for your brand.

How Do Demand Gen and Lead Gen Fit Into Your Overall Business Strategy?

Another way to look at it: lead generation is more closely related to bringing in sales. Sales funnels, landing pages, lead capture forms, lead magnets, retargeting campaigns, and lead nurturing are all part of your lead generation efforts. 

On the other hand, demand generation doesn’t make use of these items. Instead, we look for visitors to discover you online and visit your website. Some might check you out via a blog article or a video you shared on Instagram or Facebook.   

You can, therefore, consider demand generation to be more of brand-building for your company (which eventually brings in new business).

Whereas conversions can measure the success of your lead generation efforts, demand generation instead looks at organic growth and traffic on search and social. Brand mentions and direct traffic are also both excellent indicators of good demand generation efforts.

Where Does Lead Generation and Demand Generation Come Into Play in a Typical Sales Funnel?

Lead generation is more closely connected to the sales funnel. Your lead generation efforts aim to gather or attract as many potential customers as you can and direct them to the top of your funnel.

And so, through your various landing pages, email sequences, retargeting campaigns, etc., your sales team now guides these leads down the funnel. A small percentage then eventually converts into sales.

Meanwhile, demand generation is more closely associated with the vast expanse before the funnel even begins. Through demand generation, you want to put as much helpful content out there as much as you can — useful articles and guides, shareable social media posts, perhaps even online groups and communities, courses, webinars, research papers, and so on.

So when it’s time for your leads to step into your funnel, they have you top-of-mind. They’re familiar with your brand, they know more about what you offer, and, as a result, they are more likely to do business with you than with your competitors.

Which of These Two Approaches is Right For My Business?

You might think you need to choose between lead generation and demand generation for your business (i.e., growing more sales or growing your brand).

But why not do both?

Over the short term, focus on building up your sales pipeline. This is where your lead generation comes in. However, when you look at the more long-term picture, you also want to build your brand authority by showcasing your expertise and earning your customers’ trust.

Can you manage with just lead generation? Or just demand generation, for that matter?

You probably can for a while, but what happens when you suddenly find your pool of leads shrinking or drying up? This might be the case for a company that does lead generation but doesn’t invest in demand generation efforts.

On the other hand, you might be coming up with all this great content online. But suppose you neglect your lead generation and lead nurturing. In this case, you’ll have many missed sales opportunities — folks ready to do business with you might turn to your competitors because you aren’t guiding your leads down your pipeline.

What Are The Benefits of Using Both For My Business?

Now that we’ve established how demand generation and lead generation are two different approaches, understand that using both is the smart thing to do. 

Both get your business in front of potential customers, but lead gen is generally used to collect information about potential customers, while demand gen is used to get your customers more involved with your brand. 

Your demand generation efforts complement your lead generation efforts.

What do you get from lead generation? Through your lead gen activities, your company benefits by: 

  • acquiring new customers, 
  • growing your customer base, 
  • increasing brand awareness, 
  • getting to know your customers a lot better, and 
  • generating sales opportunities. 

What are the benefits of demand generation for your business? Through your company efforts in demand gen, you can get:

  • increased brand awareness;
  • better organic traffic;
  • more visitors to your website and social pages, as well as sign-ups to your weekly email newsletter;
  • more quality leads (and higher conversion rates), and
  • a deeper pool of leads. 

Using demand generation together with lead generation ensures a more robust sales pipeline over the long term. You continually create demand for your products and services, while you also work toward optimizing your conversions.

A Final Word on Demand Generation vs. Lead Generation

Much has been said about lead generation, but we feel like demand generation is a concept not fully understood by many growing companies. 

The most important takeaway here is this: while demand generation and lead generation are two different approaches, you must make good use of both to grow and scale your company sustainably.

If you have issues generating leads, you have a problem creating demand. Paying attention to your demand generation activities will help you continually fuel your sales pipeline for better business growth and more predictable profits.

If you’re ready to take your business to the next level, contact us today for a free consultation. 

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