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

The terms “demand generation” and “lead generation” are used interchangeably, so it can be confusing to understand how they differ.

Moreover, both demand generation and lead generation are relatively similar, although their goals and processes make them distinct. So, they look similar, sound similar, and share similar characteristics… but they’re not the same thing?

The short answer is no.

Both processes are vital when it comes to creating a successful marketing strategy, but you’ll only be able to maximize your efforts if you understand the differences between demand generation and lead generation.

Need a refresher? Here’s everything you need to know about the differences between demand generation and lead generation.

Demand generation defined

Demand generation is the bulk of all marketing. It’s bringing attention and awareness to your brand or product through various processes.

Demand generation can be broken down into three phases: create demand, identify demand, and nurture demand.

Each phase feeds into the next and creates a never-ending marketing loop whose ultimate goal is to get people interested enough in your product or service to buy it. How you create demand will depend on your business.

For example, you might create informative blog content on your brand’s website in hopes that someone who might need your product will see it. Or, you may consider paying for advertisements on the web.

There’s no right or wrong way to pursue demand generation, but it may take some trial and error to find the most effective route for your business.

Lead generation defined

Lead generation is a part of the demand generation process. However, although it’s a part of demand generation, they are not necessarily the same thing. 

On its own, lead generation leverages the awareness generated by successful demand generation strategies and helps to transform them into real ‘leads’ or those who are interested in your product. 

These leads are then nurtured and aided in the process of moving through the sales funnel.
It’s easier to think of it in terms of a road trip. If demand generation is the trip, then lead generation is the vehicle.

Together, demand generation and lead generation help get customers from point A to point B, from awareness to interest.

There are many strategies that can be employed for lead generation. These strategies often include creating “gated content” for those who are aware of your business.

Gated content serves the primary purpose of getting contact information from interested parties.

For readers, the price of content can be as simple as an email address. However, for marketers, that email address is invaluable as it presents a direct line of communication with a potential lead.

Demand generation vs. Lead generation

It’s obvious to see why demand generation and lead generation are often confused for one another. They both utilize similar methods such as content creation, and both rely on brand awareness.

So, should you prioritize demand generation or lead generation?

Well, if your goal is to maximize the effectiveness of your marketing strategy, then you’ll need to master both demand and lead generation.

Demand generation makes people aware of your business’s products and services.

It essentially plants a seed in their head, they may not do anything with the information at first, but eventually, they may use it.

Demand generation is broad, though people may know about your brand, there’s no guarantee that they will actually pay for your services or product. 

That’s where lead generation comes in. 

Lead generation takes those who are already aware of your brand and transforms the awareness to interest. From awareness and interest, customers move through the processes of consideration, decision, and purchase.

In short, demand generation and lead generation are the fundamental starting steps to making a sale.

How do demand generation and lead generation work together?

Lead generation depends on successful demand generation. Though subtle, the difference between awareness and interest is significant. 

Demand generation creates awareness, and lead generation creates interest. The result is qualified leads that have a greater chance of making a purchase. 

Here’s what that looks like in action:

  1. Demand generation: A business puts out an SEO-friendly informative blog post related to their business that begins to rank on the first page of Google’s search results page. Readers gain valuable information on the subject.
  2. Lead generation: At the end of the blog post, readers reach a CTA offering a free e-book on the topic they just read about with more insights. Readers click on this offer and are asked to submit their email address where the e-book will be sent. The reader then becomes a prospective lead.
  3. Lead nurturing: The lead is nurtured via emails related to the business. These emails include information about the brand’s service or product. One of these emails catches the attention of the lead, and they click on the offer.
  4. Completing the sale: The customer makes a purchase!

Though there are many more factors to consider in this idealized portrait of successful marketing, it’s clear that the two most important aspects of this marketing strategy are demand generation and lead generation. 

Key takeaways

Marketing is never straightforward. In fact, it’s quite chaotic! 

Demand generation and lead generation are two extremely valuable features of any successful marketing strategy.

The goal of demand generation is to generate awareness, and the goal of lead generation is to take that awareness and transform it into interest.

With both of these strategies in place, businesses have a chance to turn leads into paying customers.

Getting Started With Demand Generation

Are you a marketer looking to increase revenue by closing more deals? Or, perhaps, you’re trying to develop a holistic upgrade to your product or service’s customer touch points.

It’s no secret that an effective demand generation strategy can help achieve these goals. More businesses are looking to better attain, nurture, and retain customers through their marketing strategies with enhanced demand generation, and you want in on the action.

So, you’ve found yourself asking the question: “How do I get started?”

Luckily, we’ve got the answer. This guide will break down (literally!) everything you need to know about demand generation, including:

  • The basics of demand generation
  • The key elements of demand generation strategy
  • Demand generation tools
  • Quality examples of demand generation

 

What is demand generation?

Demand generation is 90% of marketing. It’s a specific marketing function dedicated to identifying, creating, and nurturing “demand” for your product or service. It’s generally used as an umbrella term that encompasses various tactics, programs, and strategies.

Demand generation differs from lead generation, though the two are often confused. Lead generation is a part of the demand generation process that focuses on acquiring leads at the top of the sales funnel. Whereas, demand generation works on all levels of the sales funnel to enhance acquisition, development, and retention of all leads.

Basically, all lead generation is demand generation, but not all demand generation is lead generation.

Understanding that key difference, let’s move forward to breaking down the three main components of demand generation:

  1. Creating demand
  2. Identifying demand
  3. Nurturing demand

 

Creating demand

Demand creation does not always need to be product-led or product-influenced.

Good demand creation makes prospective buyers feel like they aren’t being sold to or having a product pushed onto them. It’s almost entirely educational.

It’s best to identify and position the problem (some prospective buyers may not even be aware of the problem), what they can accomplish by taking steps to address and/or eliminate the problem and then finally, the implications of not addressing the problem.

Identifying demand

At this stage, you have to work to get your product to those businesses that are actively in the process of looking for a solution to their challenges. These businesses have identified their challenges but haven’t yet settled on a way to solve them.

They are actively searching for a solution, and you want to ensure that they are readily considering your product. This component is about finding those people where they’re looking and bringing them into your sales funnel.

This can be challenging, as they may be considering a wide array of solutions, and your product may be pitted against your competitors during the decision-making process.

Nurturing demand

Demand can’t be turned off or on like a light switch. Nurturing demand means leveraging the initial demand to increase the pull to your solution or product. 

This component is the continued process of ensuring that the prospect has the information they need, exactly when they need it, to encourage them to choose your product over others.

You are also contending with the decision of some businesses not to pursue a solution, you have to make your solution a greater incentive than letting the challenge persist.

This is the time for supporting the growth of the brand and the customer.

Where should I start?

There’s no step-by-step playbook that’s going to improve your demand generation efforts exponentially. In fact, demand generation is going to look a little different for each business.

Marketers have to choose the tactics, programs, activities, and tools that best work for their business to increase the demand-side of the supply and demand equation.

That’s not to say there’s no clear cut answer to the question. Think of demand generation like a grid. On one axis, there are the tracks and programs that always need to be running for marketing to be effective. On the other axis, are the activities and tools a marketer has to work with to apply to those tracks and programs.

Let’s discuss marketing fundamentals and the marketer’s toolset.

Marketing foundation

There are certain foundational elements of marketing that always need to be happening to ensure that your marketing efforts are effective. These are the elements that are built on to form an effective and successful marketing strategy.

In fact, without them working in conjunction with one another, you’d be hard-pressed to bring in a single lead. The marketing programs/tracks that need to always be running include:

  • Identifying existing demand
  • Creating demand (including generating awareness)
  • Nurturing demand (including supporting the brand and customer growth)

 

You’ll notice these are the same core components of demand generation, and that’s no coincidence. Demand generation is a fundamental process of marketing.

The biggest differentiator is that while both are umbrella terms, demand generation falls under the umbrella of marketing, which plays host to any and all efforts to promote a product or service.

There are many different ways to go about achieving that goal, as the marketer’s tool belt is massive.

The Marketer’s tool belt

A marketer’s tool belt is their greatest asset. It encompasses the range of practices, techniques, strategies, and, well, tools that a marketer can use to bolster their marketing efforts.

It’s not a good idea to stretch yourself and resources thin by trying to hit on each of these tools. The marketing tools you utilize should be customized to fit your business’ needs. 

Here’s a non-exhaustive list of the marketing tools you can work with:

Content

  • Website
  • Blog and educational resources
  • Videos
  • Podcasts
  • Case studies / Testimonials
  • Third-party reviews

 

 

Targeting

  • Target account list
  • Intent data
  • Technographic data
  • Firmographic data
  • Demographic data

 

 

Tactics

  • Organic and paid search
  • Organic and paid social
  • Display advertising / retargeting
  • Content syndication
  • Email marketing
  • Events
  • Webinars

The list is lengthy, but it’s filled with techniques that can provide a lasting positive impact and high ROI when done effectively.

To boost effectiveness, combine various tools to create a specialized program within a given track. Examples below.

Example 1: Run paid social to target ideal customers in a market.

  • Track: Identify existing demand
  • Program: DoorDash Demo campaign
  • Tools: Target Account List; LinkedIn; Facebook

Example 2: Cold outbound to prospects using a competitor’s product

  • Track: Create demand
  • Program: Sales competitive cold outbound
  • Tools: Technographic data; Outbound; Email

Whichever tools you choose to utilize in your marketing efforts is up to you!

Most marketers make an informed decision regarding the marketing avenues they’ll use for a company, including a process of trial and error. It’s not an exact science.

However, if you want to maximize the efficacy of your demand generation strategy, you’ll need to choose tools that allow you to target prospects vs. simply reaching a wide audience.

High-level differences between Account-Based Marketing and Demand Generation

In yet another case of “all this is that, but not all that is this.” Account-based marketing, or ABM, is a specific type of demand generation, as described above.

ABM is associated primarily with you, as a marketing/sales department, narrowing down your options and deciding which prospects to go after. Then you’ll begin building programs that will help you pursue them.

ABM is generally used as a part of the creating or identifying demand tracks.

For example, you can have a track geared toward creating demand, and the program can be “run a competitive ABM program.” You’’ then choose to use several specific tools to do so.

The key difference is that demand generation has a much broader scope than ABM. For example, with demand generation, you also want to build an SEO-optimized website that will attract organic traffic that will ultimately turn into a deal.

Website optimization for SEO is not an ABM program, but it definitely would be a demand generation program.

Key takeaways

Demand generation can be a rewarding process, but it takes time and effort to pull off a successful demand generation strategy.

The key is to understand the parts of the whole. Demand generation is a part of an effective marketing strategy, in the same way that ABM can be a part of the demand generation process.

Understand that demand generation isn’t always straightforward. Creating the right strategy means figuring out which tools and techniques will work best for your business.