demand generation vs. lead generation

Demand Generation vs. Lead Generation: Why Their Differences Matter

There’s a (semi) private little war raging in inbound marketing. It’s been going on for a while, but it most likely will not be stopping or really coming to a head anytime soon. It’s a “cold” war, if you will. Before you get concerned or confused, this is about demand generation vs. lead generation.

As B2B tech marketers, we are at the heart of the conversation and would like to provide some clarification and ideation on these marketing strategies. (because yes, while they are related, they are different.)

First, we’ll start with some definitions.

What is Demand Generation?

Demand generation is creating consumer demand for your product or service. This process is focused on brand positioning, awareness, audience education, and trust-building. Basically, you’re reaching out to markets or audiences and trying to generate excitement about your offerings and business.

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Also, Demand gen will be at the top of your marketing funnel and focus on the earlier stages of a buyer journey. Because of that, you’ll want to employ strategies that push brand awareness and thought leadership.

What is Lead Generation?

Lead generation is all about attracting leads and converting them. Your team focuses on capturing contact information and nurturing those leads to a full Marketing Qualified Lead (MQL). Essentially, if MQLs and a full sales pipeline are your marketing team’s goals, then you’re doing lead gen.

Lead gen will be at the bottom of the funnel and focus on strategies that draw in contact information like gated content, demos, paid advertisement, and social media.

Now that we’ve defined them, let’s unpack their distinct differences.

A Change in Perspective

Their differences can seem very distinct and widespread. But we’ve seen many marketers list where they depart in tactics, channels, and industries.

But in the end, you will find demand and lead gen differences rooted in results and overall goals.

Note: we realize there are many nuances involved here. These are just basic foundational elements of these strategies.

Demand Gen and Lead Gen Define Results Differently

From a high level, both approaches to marketing have the same overarching goal: greater growth and ROI.

It doesn’t matter if you’re an agency or an internal team; you are busy crafting campaigns that boost your client’s or your business’s bottom line.

In demand and lead gen, they understand what it means to contribute to the bottom line differently.

Demand gen grows interest and builds trust, which in turn increases your bottom line. The result you are aiming at here is potential customers that are ready to buy.

Your demand generation efforts may only capture 50 points of contact, but because of the relationship you’ve nurtured, 40 of those 50 will become customers.

For lead gen, you create campaigns designed to capture as many contacts as possible and then determine if it is an MQL. Once that MQL is generated, your campaign has done its job, and it’s up to the sales team to take that MQL and make it a customer.

For lead gen, your marketing team may generate over 500 leads per campaign, but only 75 will actually convert to customers.

Let’s turn to how these approaches quantify results.

Demand Gen and Lead Gen Measure Results Differently

Attribution

In terms of attribution, both camps here take a different perspective.

Demand gen marketers recognize the limitations and complexities of pinpointing the exact impact their efforts have on a customer buying cycle.

With Google moving to phase out third party cookies, this understanding makes sense to many marketers.

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On the other hand, attribution still needs to be a known, not an unknown, in marketing. Why? Attribution is the key to predicting the impact of increased or decreased spend on specific tactics in a campaign. You need it to execute a good marketing strategy.

Metrics and KPI

Before you determine the ROI for your lead gen or demand gen marketing, you need to know what metrics and key performance indicators (KPIs) you care about.

Each approach here has slightly different metrics to focus on. While there’s definitely some overlap, lead gen focuses more on specific campaign metrics, and demand gen will look to more business-level numbers.

Demand generation

  • Organic traffic—These are visitors who come to your site from unpaid sources because of interest or your SEO efforts.
  • Customer acquisition cost (CAC) — measures the cost to acquire a single paying customer through a specific campaign.
  • Customer lifetime value (CLV) — this is how much revenue a customer or client will generate over the period of time they are your client. (This is especially important for B2B businesses.)
  • Close rate — This shows you how many of your contacts are turning into customers.

Lead generation

  • Maximum cost per lead (MCPL) — how much your business can afford to spend on a lead while still generating profit. Check out our article here for more on why MCPL is so important to marketing.
  • The number of MQLs per campaign — This will determine if you’re campaigns are reaching your intended audience.
  • Conversion rate — the percentage of leads that perform a specific action on an ad, email, landing page, whitepaper, etc.

You can also invest in looking at even more specific metrics like leads per offer, content conversion rates, deal size, and more.

In the end, we believe that demand and lead can work together because of the overarching goal we mentioned above: growth.

Creating a marketing plan that uses the best of both worlds can get very complex. This leads us to ask…

[STOP] If you are feeling overwhelmed with getting results from your marketing that you should be -> see the plan ››

Ready for more B2B Marketing Expertise?

Demand gen and lead gen may seem at odds at first glance, but they can both be practical approaches to marketing. It all depends on perspective and purpose.

If you’d like to expand your knowledge in these areas or if you’re looking to improve your overall marketing strategy, let’s talk.

At New North, we’ve been doing this for over a decade, and we have extensive experience in demand and lead gen.

Schedule a free consult, and let’s start planning your firm’s strategy today

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