Demand Generation vs Lead Generation: Understanding the Key Differences and their Application in 2022

demand generation vs lead generation

Demand Generation vs Lead Generation is often confusing. Even though both concepts have common and similar characteristics, the reality is that the objectives they pursue and the specific tactics behind them are different.

Therefore, if we want to define and implement an effective digital marketing strategy, we must know what each concept consists of and, especially, when and how to apply them. Next, we will try to clarify what demand and lead generation are, how they differ from each other, and, most importantly, the specific tactics that each method uses to achieve the objectives.

What is Demand Generation

Demand generation is the process by which a sales or marketing executive creates a need for a specific product or service. It is a closed sale that creates a demand for a particular product based on what the business offers.

It is a complex process that is not as simple as it sounds. It may not always result in a demand generation, as you can run into any problems during the process. For this reason, the correct approach to this process is essential.

Organization and micromanagement are very important aspects of demand generation. To ensure that everything goes as expected, you need to prepare your action plan to generate demand properly. To do this, you will have to collect a lot of data, refine what is necessary, and do many analyses.

Making good decisions for your business is practically impossible without prior analysis and visualization. Also, since demand generation is a complicated endeavor, you must prepare properly.

Any marketing strategy can benefit from demand generation. Unlike lead generation, demand generation is based on creating excellent ventures, opportunities, and spaces that produce benefits, ROI, and add value to your business.

In simple terms, demand generation is the process of creating a demand for your company’s products through complex, interactive, and enthusiastic content. One of the simplest examples is to create a problem within the same content and make your products or services the solution for it.

Demand generation is a tactic specifically related to content. However, certain things are present in all types of content included in demand generation. This complex and specific marketing tactic includes:

  • Intertwining of content and marketing;
  • Event marketing and advertising;
  • Social media marketing and advertising;
  • Traditional marketing and advertising;
  • Automation and evaluation of leads;
  • Data collection, refinement, and analysis;

Generating demand can be complex, but it comes naturally to most marketing executives. It’s the classic process of meeting demand – only your task, in this case, is to create a demand for your product or service. It’s about having a solution and creating a problem to apply it.

Demand Generation Examples

  1. Web Positioning
  2. Free Trials and Services

Web Positioning

A “Problem Solving” approach is generally used. The seller positions himself as an authority on a specific topic (for example, “web positioning” and, through different techniques, contributes to giving support to the potential client on the subject.

 For example, some techniques used in this case would be:

  •         Webinar “Tips for positioning your website in search engines.”
  •         E-mail marketing campaign with techniques to optimize your website.
  •         Video tutorial, step by step, on how to increase conversions on your website.
  •         Blog with notes and weekly articles on the subject.

Free Trials and Services

The term “free” grabs users’ attention like no other. People are willing to try just about anything that is free since there are fewer risks and greater rewards involved. It is a good strategy to offer a stapled service or product for free, in an attempt to attract prospective customers.

For example, offering a free trial period with a “cancel any time” offer. Afterward, you may analyze whether the strategy works based on the results you get. Stats show that companies that use free trial offers to report a 66% increase in conversions.

What is Lead Generation

Lead generation is lower than demand generation. Lead generation is a small part of the entire demand generation process. It is the process by which you accumulate as much information as possible about your target audience.

While it may sound relatively simple, understanding your target audience is critical. Collecting the right information is a great way to reduce the complexity of the data refinement process. The information collected about your target audience is then used to create prospects for leads, create opportunities, and finally, create new customers.

Lead generation is essential for both small and medium-sized businesses and can be outsourced. The lead generation process is based on getting your prospects interested in your sales funnel. It’s a great way to build mailing lists, targeted content, or leads.

This process is not only extensive but it is also complicated. Your sales team will have to target customers potentially interested in your products — wasting time on people who aren’t is a waste of resources. However, if done correctly, it can pay off enormously.

Another aspect of the lead generation process is selecting from your list of potential customers. Finding the best of the best is a sure way to give your sales team a fantastic opportunity to maximize their efficiency and increase sales.

With the right lead generation strategies, you will be increasing your company’s value, performance, and growth. Lead generation and demand generation often go hand in hand, as creating demand for a product and searching for potential customers are good ways to increase sales overall.

Lead generation usually comes with demand generation, but it has certain specific practices. Depending on the industry, marketing objective, and sales team, lead generation includes the following:

  • The offering of eBooks, blogs, and technical documentation
  • Inbound content offering
  • Webinars targeted courses and mailing lists
  • Paid and specific segmentation of social networks
  • New advertising targets
  • Live event marketing

Lead Generation Examples

Use clear and direct “Call to Action”

This is one of the main tools when it comes to generating leads. Calling to action can grab the potential customer’s attention and effectively turn them into a lead.

  • Post the call to action
  • Use bold and contrasting colors
  • Link your CTA to specialized landing pages on the subject
  • Try various CTA formats and see which one works best

Search Engine Ads

Perhaps the most popular search engine ad model is PPC or pay-per-click followed by Bing Ads which is quite effective because it is applicable to a variety of campaigns. It is part of Google and Bings’ revenue model and some of the biggest companies are engaged in spending on ads using their platforms.

Demand Generation vs Lead Generation

Let’s start with what they have in common:

  • The overall purpose of generating demand and generating leads is the same: make the public want to buy our products and services
  • To achieve this, both depend largely on the creation and dissemination of solid content that is of interest to that audience

And so far, the similarities. Let’s see the differences:

  • The demand generation seeks to create awareness and interest in our company or brand and our products and services
  • To become qualified leads, the lead generation seeks to collect information from implicit and explicit consumers (email address, phone number, demographics, tastes and buying habits, etc.) to become qualified leads

An easy way to understand the difference is to think about how each of them makes use of the content. Content is usually freely given away to create awareness and generate interest in both our brand and our offer to generate demand. At the end of the offer, there is usually a CTA like “Do you want to know more? Contact us/click here!”  

The lead generation places the content behind a “door” to motivate sending forms: “do you want to access this valuable content? Fill out this form and send it or you can download it”. The contacts obtained are put in a queue where the sales team qualifies them and eventually contacts the ones who seem the most qualified. In other words, the price of the content is the consumer’s data.  There are many platforms including Google and Facebook, that helps with the lead generation process.

We can therefore conclude that lead generation is a subcategory of demand generation. The latter is used to create awareness and attract new customers to our business, while lead generation is used to qualify those people as “leads” and prepare them for the next step in the marketing or sales process.

Demand and Lead Generation Must Work Together

To generate demand and leads, they must not be seen as exclusive but as complementary. The degree of success often depends largely on how closely the two tactics work together.

When we think about demand generation versus lead generation and when to use each, we often look at metrics like web visits, page activity, engagement, and the number of leads generated. While this information is valuable and can help optimize our strategy, we must also be willing to experiment with the types of content we use and when and where we use it.

Building an audience around a particular topic is often more valuable to a brand than simply creating a unique campaign for the sole purpose of capturing leads or “making noise.” We have to assume that only part of the content we create will generate leads and that most will not. And that is not negative since that audience, even if it does not convert, can add value to us in the form of:

  • Information on new market segments for our products
  • Expanding our reach, possibly exposing you to hard-to-reach buyers by sharing content
  • Increase in brand awareness

While lead generation works to convert web traffic into leads, demand generation keeps the sales funnel full. Therefore, although not essential, it is more than recommended to use them together.

Seen in another way: lead generation allows us to know the success of the demand we are creating. Lead generation is only one part of demand generation. However, demand generation does not need to include a lead generation process.

Demand generation is a process by which new customers are attracted to your products and services. While lead generation is a process by which people are selected to convert them into leads, preparing them for the next step of your marketing strategy, with sales as the final objective.

The two are very different. The demand generation process uses different types of content to attract customers to your products. By creating a problem, demand generation provides a solution within the content itself — usually a video, post, article, or guide.

On the other hand, lead generation often uses a different approach. Lead generation uses technical documents, checklists, and PDFs regularly distributed through mailing lists. It is a more personal and segmented approach to generate leads and convert your potential clients into real clients.

Through lead generation service, marketing executives can nurture and develop the existing relationship between the customer and the brand, creating recognition, loyalty, and potential customers. Demand generation includes this initial step and additional strategies that keep customers returning to your business.

Both are practical tools used by the best marketing executives around the world. Lead generation and demand generation are two of the most used methods to attract customers, get them to buy your products or request your services, and keep them coming back for more.

Choosing between lead generation and demand generation completely depends on your needs. If you want to get the most out of your marketing strategy and achieve your marketing goals, you will most likely need to implement both tactics.

Data analysis, refinement, and visualization play a very important role in sales. Therefore, accumulating data without the possibility of accessing it is completely useless.

While demand generation is a very vast process, lead generation is a less expensive, less complex, and less demanding process that yields very good results. Capturing and collecting as much information about your potential customers is essential to the sales process. It will allow you to offer your content, services, or products directly to your customers.

The methods to choose from to find the right solution will depend on your budget, industry, or marketing goals. While great for collecting the personal data of your potential customers, lead generation cannot help you build brand awareness, nurture customer relationships, or produce ROI — it is only the first step.

On the other hand, demand generation is based on end-to-end customer management. Combining it with lead generation will give your company the best results.

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