Lead Generation vs. Demand Generation Marketing

Many B2B marketing strategies depend on both lead generation and demand generation. That’s because if you don’t generate demand, you won’t be able to generate leads efficiently and sustainably. Wait, aren’t those two the same? No.

Just because demand and lead generation have many of the same ends-objectives doesn’t mean they are the same thing. Many B2B marketers have the terrible habit of using those terms interchangeably. Although we may say, that lead gen might fall under the umbrella of demand gen. Yet, both processes require unique skills and tactics.

So, don’t try to mix those two because you might miss out on leads or pay more for them. You can quickly generate more leads and more revenue by clearly separating the two. How can you separate them? Well, you’ll find out after reading the article.

What is Demand Generation?

Demand generation refers to the combination of marketing activities that build awareness about your product or service within your target market. 

The aim is not to turn contacts into leads in your CRM. That’s more the realm of lead generation. Demand generation’s goals are to reach your target market, establish your leadership position, and build trust with your brand.

This explanation of demand generation shows you that it is not a subset of lead generation. Instead, it shows you the importance of your brand’s first encounter. Moreover, it presents the efforts you need to make before even searching for leads.

It is important to remember that demand generation does not necessarily refer to increasing brand recognition. However, it is possible to increase exposure for your brand, but you must help your target audience understand and identify their needs so they can search for the right solution.

How can you start generating demand for your business? Demand generation doesn’t mean waiting for contacts to come to you. It is all about seeking out potential contacts in their hideouts and offering them tailored content or an offer.

Do you know your buyer’s persona? Finding your perfect client is significant for demand generation. It will allow you to understand better your target audience’s online habits, trusted sources, and pain points. What’s next?

You can also create new and exciting content that will drive prospects through your funnel. That’s why it’s essential to understand which pieces of content you have now and which you still need to create. You can do that by creating new marketing content and acting according to the results.

So what is demand generation marketing? That is a Marketing powerhouse that increases brand awareness, traffic and secures leads. B2B demand generation is about building a predictable pipeline to support your sales team. 

What is Lead Generation?

As we mentioned above, demand generation is about bringing attention to the demand for your product or service among your target audience. Whereas in lead generation you can use your gated content to generate leads for you or your sales team. You can find some valuable ideas on how to do that below:

  • Whitepaper,
  • E-book
  • Guide, 
  • Checklist
  • Email subscriptions (e.g., to your blog)
  • Freemium trials
  • Webinars

Implementing those ideas in your business could potentially bring you more leads. Then, prospects need to be convinced that you have the solution to their problem. That could include sharing information about your products and their importance.

For example, sharing leadership content that shows your sector expertise and distributing resources and tools could demonstrate your value. 

If that doesn’t do the trick, you can also share influencer posts. Choosing the leadership topic again will highlight your brand’s values. Lead generation aims to turn the interest generated by all this activity into tangible and actionable results.

Difference Between Demand Generation and Lead Generation? 

Simply put, demand generation refers to the process of attracting people (creating demand) to your product. Lead generation is the task that converts that interest into names or contact details (leads) that you and your sales team can follow up with.

There is one significant difference between those two. It depends on whether or not the campaign requires contact information. 

A lead generation campaign requires you to create a contact form to request information. Then you pay to have your content distributed to the target audience. 

The main goal of this piece of activity is not to get as many people to engage with your content as possible – it is to capture as many leads by giving people reasons to share their contact details and making it easy.

If you make content available for free and then pay for distributing it to as many people as possible, you’re in the business to generate demand. 

Paying to have as many people engage with your content and learn about your business, viewpoint, and appreciate your expertise will allow you to generate demand. As little friction as possible should be allowed to prevent that from happening.

Can you do Both Lead Generation and Demand Generation Simultaneously?

Yes, and you should. Why? Just imagine how a lead generation campaign would look without the demand generation analytics component. You may create more prominent pieces of gated content that include pop-up forms and conversion opportunities, landing pages, and other elements strategically placed on your site.

Without the demand generation, however, who will visit your site and become an opportunity? You might have much traffic to your website or other assets. Yet, closing sales becomes heavily dependent on whether the prospect wants to follow up with you.

The Most Important Lead Generation Metrics

How can you improve and manage something that you don’t measure? Now is the time to discover which lead-generation metrics you should be tracking, and more importantly, how to leverage the data insights for growth.

You might already know that you can use performance metrics to assess the effectiveness of your campaigns. Now, you will find out vital lead generation metrics for tracking. These important barometers are worth paying attention to, no matter how big or small your business is.

These insights will allow you to assess the performance of any creative asset, paid advertisement, offer, or landing page and determine if it is making the desired impact.

Click-through rate: You should focus on the CTR because it measures any Call To Action (CTA) click performance. That way, you can see the percentage of viewers who click your CTA on any given ad, link, email, landing page, etc.

The Conversion Rate: This metric is the key to monitor your results in any campaign. What exactly conversion rate is? It’s the percentage of leads who perform a particular action on an email, landing page, or ad. 

When you set up your campaign, this “specific action” will be something that you specify. A conversion can be achieved when a user clicks on a link, fill out an email subscription form on your site, or downloads an e-book.

Still, you can recognize conversion in other situations too, but in essence, it is the ultimate goal of many campaigns. It doesn’t have to be a sale, but it can be any goal that you set.

How do you measure conversion rates? You need to define your campaign goal (e.g., you want to acquire 50 leads through your PPC campaign). Then you can calculate the percentage of leads who reach the conversion goal. (e.g., Clicking on a link to verify an email address will result in people clicking on it.

What time does it take for visitors to convert into leads? If you track the time to conversion metric, you will soon know the answer. You should keep track of every stage in your funnel. That will allow you to get a better understanding of the length of your sales cycle.

How can you track the time it takes to convert? It is very simple. You can do that by calculating the time that all visitors spent before they reached your conversion goal. All you need to do is to divide this number by the number of leads you have.

For example, something like this:

John verifies his email after 10 hours.

Ann verifies her email address within 24 hours.

Josh verifies his email after 50 hours.

We can use the formula to calculate the time it takes to convert the following:

Conversion time = ((10 +24 + 50)/3) = 28 Hours

*Return on Investment (ROI) is the most crucial metric in any campaign.

Now you know about the importance of lead generation metrics, but ROI is something that you shouldn’t overlook. Some might even say that ROI is your most important metric. It’s quite remarkable, we think.

ROI is a percentage or ratio that provides a quick answer for every investor and the C-suite member’s big question. Questions like: Is it worth the effort? Is this enough money to support the business venture?

Let’s suppose you make $20 for every lead you capture. You currently spend $15 to capture each lead. Your ROI is, therefore, 25% ($20/$15).

How to Measure Lead Quality?

The focus used to be on the number of leads and getting more of them. High response rates seem to be the norm until marketers realized that lead quantity was not enough. They realized that you need to take into account the quality of these leads.

Marketing campaigns and advertising are often judged on how many leads they generate. Yet, this isn’t the best way to measure success. You should consider lead quality as well.

Instead of focusing on your response rates and cost-per-lead rates, set some benchmarks for qualified leads, then you should look at your qualified response rate or cost-per qualified-lead. 

You are searching for a way to rank and sort leads when you qualify them, which allows you to prioritize your follow-up time. Do you want to measure lead quality? You can do that either by their closing potential or by their revenue potential.

The term “closing potential” refers to how easy it is to convert a prospect into a client. At the same time, the revenue potential is the amount of money a prospect could make over a lifetime or for a set period.

Final Words

Hopefully, you know the difference between lead and demand generation. Yet, the most important thing for your business is to incorporate both simultaneously. 

Remember that the more demand you can generate for your product or service, the more leads will follow. Also, do not underestimate the power that combination has over your business. Good luck!

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