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Demand generation vs. lead generation: 7 Differences to consider

Demand generation vs. lead generation: 7 Differences to consider

In the last several years, there has been a tactical shift in how companies have marketed their products and services.

Most of us have succumbed to or have used these strategies, i.e., demand or lead generation, to make our life easier or promote a product or service. 

One of the evidently observed struggles among businesses would be choosing between demand generation and lead generation marketing strategies. 

Well, you can find a fine balance between these two, in my opinion. 

I understand that most marketers on the exact difference between demand generation and lead generation marketing campaigns.

Here are some of the most commonly heard answers when asked about the same. 

  • Lead generation is what creates a high demand for your product or service. 
  • Demand generation is a part of lead generation. 
  • Lead generation is a part of demand generation. 
  • Both are basically the same.

As you can see, it’s difficult to learn the fundamental differences from the above answers.  

So, let’s understand what is demand generation vs. lead generation and the key difference between lead generation and demand generation once in for all.

Demand generation vs. lead generation: What’s the fundamental difference?

Below are the key differences of demand generation and lead generation:

Demand generation  Lead generation  
 It helps your prospects learn about your brand and the problems they face.  Offers definite solutions to those problems. 
Helps improve your ranking on SERPs. Also, promotes ‘Thought Leadership’.  Highlights the current and future benefits an organization can reap from your offered solution. 
Offers free resources with the sole purpose of educating your targeted niche. Uses gated resources to capture basic info about prospects such as name, email, phone number, and more. 
Caters to a wider audience. Focused on converting high-quality leads into customers.

Demand generation marketing is the process of educating and engaging with your audience to make them aware of your existence.

It’s solely developed with the purpose of promoting brand awareness.

Therefore, while exercising the same, the company only aims to help you learn who they are and what they can do for you.

Lead generation marketing, on the other hand, is nurturing prospects and converting them into loyal customers.

The process is divided into various stages. And its success rate also depends on many factors.

So, we can rightly say that lead generation is a subset of demand generation.

Or creating a healthy demand for your product or service in the market can eventually generate organic leads.

The above is a TL; DR version of two different marketing strategies. Let’s dive deep into learning the differences in process, campaigns, metrics, and more.

Difference between the process of demand generation vs. lead generation

The process of demand to lead generation comprises four sub-processes.  

  1. Awareness 
  2. Engagement
  3. Nurturing 
  4. Conversion  

Observing the conversion funnel, we can learn the fundamental difference between the two approaches.

It states that demand generation is an activity that is positioned at the top of the funnel while the latter is at the bottom.

The demand generation marketing process serves you by:

  • Increasing brand awareness among your potential customers 
  • Educating them about your service or product 
  • Trust building
  • Pique potential customer’s curiosity
 Increase brand awareness with personalized emails

Increase brand awareness with personalized emails

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Lead generation focuses on engaging, nurturing, and converting potential customers into loyal consumers. This approach observes tasks such as:

  • Gathering prospects’ contact information
  • Nurturing filtered leads
  • Illustrate brand value
  • Convert potential leads to consumers 

However, it’s right to say that lead generation is directly proportional to demand generation.

Your extensive and successful implementation of demand generation marketing will offer you interested and qualified leads.

Demand generation vs. lead generation: How are the campaigns different?

The demand generation marketing campaign aims to lead prospects to your lead generation funnel organically. Therefore, this campaign consists of activities such as –

Difference between demand generation and lead generation
  • Helping a prospect identify pain points 
  • Create brand authority 
  • Offering free and relevant resources to help them learn the entirety of their problem 
  • Creating interest in your product or service 

With a successful demand generation campaign, your clients would naturally move a step closer to your lead generation funnel.  

Yet, they shouldn’t be considered converted leads as you would need to conduct the following tasks successfully to achieve the same. 

  • Offer exact solutions to their problems 
  • Current and future benefits their business can reap 
  • Offer gated resources to learn more about your prospects 
  • Regular follow-ups for successful lead conversion 

Demand generation vs. lead generation: Are the channels different?

Choosing the right marketing channels is imperative to creating a successful demand and lead generation program.  

It’s essential to ask yourself the following questions before choosing your marketing channels and optimizing your lead generation efforts. 

  1. Which channels should I invest in? 
  2. How much budget should I allocate for each marketing channel? 
  3. At what stage of the conversion funnel do these channels meet my prospects? 
  4. How do these channels complement each other? 

To ease your confusion on the same, here’s a list of the marketing channels you can choose from. 

Top demand generation channels for 2022

I think these 3 channels have offered great results in the past couple of years, specifically to demand generation teams. 

1. Semantic SEO

Semantic SEO functions on the concept of Topical Depth Optimization.  

A process where one can create and optimize their content based on topical search engine results page.

This tactic can prove to be time-consuming. But it can be surprisingly rewarding once you tune your content as per search engine guidelines. 

This stage focuses on education, primarily through top of the funnel content like webinars, industry news, beginner-level in-depth guides, YouTube videos, and more.

It’s important to understand a prospect’s needs before one makes an attempt to sell them a product or service. For instance, there’s no point in selling dairy products to a lactose intolerant person.

Similarly, SEO can be used to target the right clients. This is where you can help a customer learn their problem in detail and the solutions to overcome those problems.  

2. Podcasts, Interviews, & How-to Videos

Podcasts effectively serve demand generation efforts, offering information to prospects without being salesy. They shift your mindset from “just selling your products” to “educating and selling your product.” 

The best thing about podcasts is – you can listen to them anytime! 

You can work the same magic with how-to videos and interviews. The only disclaimer is that your podcast, interview, or how-to video should only offer the information it promises to offer.

Below is an example of Salesmate’s video, which provides information on creating a sequence for text automation.

There can be a lot of competition with these marketing channels. But it also helps your product or service reach a wider audience. 

Apart from this, hearing about your brand from an authority on a subject that users already trust can prompt them to try the same. So, you can also conduct interviews with industry experts and share them with your target audience.

3. Email marketing 

Email marketing is one of the most old-school yet effective ways to promote your brand – it’s effective for both demand gen and lead generation.  

This is because a vast majority of users access their email regularly. As per a report from Ascend2, 45% of respondents believe email marketing efficiently increases brand awareness and lead generation. 

But there are a few rules that a company should follow to create the intended effect on a prospect’s mind: 

  • Optimize your frequency depending on your industry. For instance, if you have a marketing agency, then one weekly email can work well. 
  • Personalize emails by mentioning their name, position, company name, and more to make your emails relevant to each recipient. 
  • Always include a CTA from which a prospect can seek more information. 

To make your email marketing process smooth, you need a solid platform that can efficiently take care of the automation.

Email automation statistics

At Salesmate, we use our product to send weekly newsletters to our prospects to educate them about sales, marketing, and CX concepts. 

Salesmate offers a quick and convenient way of reaching out to your prospects. You can create customized email templates and send bulk emails in minutes using the power of Marketing Automation.

120+ ways to create hyper-personalized emails

120+ ways to create hyper-personalized emails

Create successful campaigns with pre-defined templates, automation & personalization.

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Top lead generation channels for 2022

I find these 4 channels are the most effective in generating high-quality MQLs. 

1. Bottom of the funnel content (BOFU)

As it sounds, this content targets users at the end of the decision-making process. At this stage, you have prospective leads that are aware of their problem and many of its potential solutions. 

So, they are essentially focusing on details of your products or service.

The type of content that serves these prospects are: 

  • Lead magnets 

You can offer free trials, demos, evaluation tools or calculators, and more. Below is an example of Salesmate’s resource, the free sales commission calculator.

Salesmate Sales Commission Calculator
  • Landing pages 

Write product or service comparison guides with links to your website’s landing pages.  You can also offer direct links to your ‘buy now’ or ‘sign-up’ pages. It will help you increase the conversion rate.

  • BOFU listicles 

Listicles are the best form of content that the BOFU leads likes to consume. For instance, if you’re searching for “top CRM to use for my real estate business,” a listicle content structure would offer the most value to the reader.

It generally consists of an introduction, a list of ideas, products, or services, their pros and cons, and a conclusion. 

One can also use CTAs aggressively and contextually to get users to purchase their product or at least convince them to start their free trial.

2. Paid ads

Paid ads are one of the most widely used lead generation tactics to drive quicker leads to your business.

Using the same in tandem with other organic lead generation practices can offer successful long-term benefits. Paid media instantly presents your product or service in front of your customers.

The search engine or social platform you target for pay-per-click (PPC) or social media ads also boosts your content for lead generation.

One can target users based on their behavior, demographics, location, and other filters. This helps generate leads that are in alignment with your targeted personas.

3. Affiliate marketing 

Affiliate marketing spending forecast graph
Source 

Affiliate marketing is the process of selling other people’s products or services in return for a small commission on each sale.

Your company can partner with other famous brands, bloggers, and influencers to promote your products or services.

As per the statistics, more than 81% of brands and 84% of publishers in the US have tried affiliate marketing to promote their products. You can see in the graph above that the US will spend more and more in the following years. 

This process is incentive-based. It can effectively drive traffic and help convert those leads into customers.

Businesses have a dedicated affiliate program that offers attractive commissions to their preferred partners. For instance, one can earn up to 30% commission in the first year by becoming an affiliate partner with Salesmate.

4. Content marketing  

As per the Ascend2 report, you would know that content marketing is one of the most effective marketing channels.

However, the lead generation content process is tedious as it needs to bridge the gap between the top and bottom of the sales funnel in content marketing for lead generation process.

The only way forward with this is the trial-and-error method. One can try publishing content or offer services such as: 

  • Targeted newsletters
  • Case studies
  • White papers
  • ROI calculators
  • Datasheets
  • FAQs

 Now that we’ve learned about channels let’s look at various metrics you need to measure for B2B demand generation and lead generation.

B2B demand generation vs. lead generation: Metrics you need to measure 

Irrespective of the marketing campaign you focus on, it’s necessary to measure ROI on the same.

For instance, you might observe a decent subscription rate for your newsletters.  

But you also have to learn if those individuals are reading it and whether they’re the right audience for your business.

Here are a few methods that assist you in tracking the effectiveness of both lead and demand generation campaigns.

8 Metrics for measuring the demand generation efforts

Here are the best methods to measure your demand generation channels’ marketing qualified lead (MQLs). 

1. Lead-to-MQL conversion

MQL is the abbreviation for marketing qualified leads. These prospects are qualified if they meet the pre-defined criteria for lead intelligence. In a nutshell, these leads are qualified for nurturing and retargeting.

The percentage of MQLs can help you learn how effectively your demand generation channels are targeting the right prospects.   

An ideal lead-to-MQL conversion rate is 39% for a B2B SaaS company.

2. Conversions within the marketing funnel  

Conversions in the middle of the sales funnel are as important as getting leads into the funnel.

Converting a prospect that is unaware of your brand into a customer comprises many other steps that one has to invest in. 

Measuring how your nurturing campaigns offer results will help you improve conversion rates in the middle of the funnel. You can map changes in topics, approach, messaging, and marketing channels. 

For example, you can start offering more webinars, posting more how-to videos, or doing more podcasts if it offers more conversions in the middle of the funnel.

3. Tracking email marketing metrics 

You can run multiple email marketing campaigns. Therefore, the metrics that need tracking also depend on their goal.

Here are the top 7 email marketing metrics that one needs to track.  

  • Open rate – The most basic KPI tells you the percentage of subscribers who actually open your email.  
  • Bounce rate – The bounce rate refers to the percentage of users your email has failed to reach.
  • Email conversion rate – Conversion rate is an important metric to observe. It lets you know people who clicked on a specific link in the email and performed the requested action. Such as signing up for a free trial or course.
Formula to calculate email conversion rate
  • Click-through rate – This depicts the percentage of users who clicked on one or more links shared in the email.
  • Unsubscribe rate – This percentage is the individuals who are no longer interested in receiving emails from you and unsubscribe from the email list.
  • Device statistics – Observing this will help you learn how well your content is being accessed on different devices. This is important as your email won’t look the same on a mobile and a laptop.

In today’s day and age, most consumers access their email on mobile devices rather than desktops. Hence, it’s important to optimize your email for mobile devices.

These are the main email metrics to measure. To know more about how to measure such email marketing KPIs and their formulas.

Which metrics to track for lead generation?

The quality of leads you pursue will determine the success of your marketing campaign. If you have high traffic but a low conversion rate, it means your content isn’t reaching the right people. You have to keep tabs on various KPIs such as: 

1. Customer Acquisition Cost

Customer Acquisition Cost determines how fruitful your lead generation campaign is.  

The lifetime value of customers (LTV) divided by the number of consumers acquired through those channels will yield you your Customer Acquisition Cost (CAC).

Your most prominent costs with the lead generation campaign would be for things such as: 

  • Advertisements 
  • Content marketing 
  • Martech 
  • Events 
  • Vendors
  • Affiliate marketing commission  
Free Customer Acquisition Cost Calculator

Free Customer Acquisition Cost Calculator

Download the Sales Metrics calculator and measure 10 metrics, including CAC.

Sales Metrics Calculator

2. Sales Qualified Opportunities Cost

This metric can be calculated by learning the conversions that take place in the middle of the sales funnel.  

The middle funnel bridges the gap between the curiosity sparked at the TOFU and the final sales at the BOFU. We learned above how different content marketing channels contribute to lead generation. 

Sales Qualified Leads (SQLs) illustrate the results of your lead nurturing activities. A higher persuasive ability and refined content optimized with SEO can yield high-quality SQLs.

8 Interesting demand generation and lead generation examples

 Here’s a list of examples illustrating how demand and lead generation campaigns can be carried out.

1. Demand generation examples 

Share relevant and SEO-optimized top-of-the-funnel content through your website. Your targeted niche is already looking for your product or service on search engines.

For instance, if your company offers software for eCommerce marketing automation, this comprehensive guide can be a blog you can try.  

Guest podcasting, ads on third-party websites, and guest posting can offer surprising results. A trusted blogger or podcaster pitching your product can help boost trust in your product or service and increase your customer base.  

It’s natural for potential consumers to learn whether your solution is the best fit for their problem. A free trial can assist them with their decision-making process.  

2. Lead generation examples

Lead generation campaigns have more specificity in their approach. They share gated content as a means to learn the prospect’s information, such as name, phone numbers, and email. 

Here are a few tried and tested examples of the same. 

Paid social media campaigns work best once you have fixated on your target audience. Here you can address the concerns of your users while starting a healthy interaction about how to overcome those problems. 

For example, the tech giant Apple best uses its ads.  

Paid social media campaign example
Source 

The ad clearly states what you would get by signing up with Apple music. It has a ‘Try it free’ CTA that is clearly visible with an elegant color scheme and easy-to-read fonts.

Also, the devices that can use these services are mentioned above in the CTA.

Gated content is another way to learn quite a few things about your prospects. This is because it allows your users to share their contact information. 

For instance, Salesmate offers eBooks, whitepapers, calculators, and more in exchange for your personal information.

Your sales team can reach out to the prospects that have provided information and execute the outreach campaign.

In the era of Instagram, customers have a short attention span, so it’s best to try infographics, podcasts, and webinars. The demand generation content should be easily understandable and can also be accessed through mobile devices.

Also, for many users, it’s easy to sit through a 1-hour long webinar as opposed to reading a 2000-word blog. As newly observed data states, customers prefer watching videos over reading a technical document.

For instance, this Pandadoc integration webinar educates its users, acts, and promotional tactics. 

 So, ensure that you add visual elements to your blogs and improve your lead generation process.

Demand generation vs. lead generation: Role and responsibility

Both these processes require a broad vision for implementing them successfully.  There is a lot of difference in the tasks conducted under both campaigns. Here’s a glimpse of the roles and responsibilities that are to be carried out by a demand and lead generation manager. 

1. What does a demand generation manager do? 

  • Developing and deploying relevant marketing content on social media platforms and other relevant websites. 
  • Learn different customer segments for delivering their targeted marketing content.  
  • Ensuring that the content they post is informative and non-repetitive. 
  • Analyzing the campaigns to learn organic leads that can be optimized for the lead generation funnel. 
  • Managing all the teams that fall under different marketing disciplines to ensure a streamlined demand generation process and create a successful demand gen strategy. 

2. What does a lead generation manager do? 

  • Making ample use of outbound marketing efforts to connect with the right businesses and individuals. 
  • Conduct in-depth research to design lead generation strategies that appeal to their targeted niche.
  • Having great communication skills to reach out to prospects, convince, and convert them into customers.
  • Generate new leads with data from other verticals such as social media, customer referrals, advertising, and marketing campaigns.
  • Responsible for offering high-quality leads. 
  • Make an accurate list of all the information offered by prospects. 

Can demand generation and lead generation work together? 

Modern marketing techniques observe a shift in their approach, i.e., from generating maximum leads to generating demand.
This is because investing in lead-generation tools without creating solid demand can prove to be cost-inefficient.

Your sales teams must also put in extra effort if your targeted niche isn’t yet aware of your solution. Therefore, demand generation campaigns primarily offer your potential customers free resources and valuable content.

So, you can rightly say that demand generation can be effectively used to plant a seed in a prospect’s mind. Yet the application of the same doesn’t guarantee results; a prospect might be aware of your service or product but may never decide to pay for the same.

This is a juncture where demand and lead generation campaigns can work in congruence. Lead generation targets prospects that already know your brand.

Their job is to push these prospects from awareness to interest and, lastly, to convert them into customers.

Having both demand and lead generation teams can offer a healthy mix of marketing strategies. That focuses on brand awareness as well as lead conversion. Efficient investment in both can definitely offer eventual growth, if not an immediate one.

Bottom line

Lead generation vs. demand generation is always a topic of discussion for a marketing team, so if you wish to generate high-quality leads that convert, you must try a combination of both demand and lead generation campaigns.

One can try the above-mentioned metrics to calculate their ROI and learn which strategies work best for them. 

This investment might not earn you immediate returns but will surely prove fruitful in the long run. Plus, it adds to your brand awareness. You can ensure quality leads using demand generation and apply lead generation tactics to convert them into loyal customers. 

Ankit Bhatt

Ankit became a writer because he couldn’t beat the urge to share his observations on life. He is highly passionate about providing perspective on things. When he’s not writing, you’ll find him discovering new music, binge-watching crime thrillers, playing a sport or exploring his spiritual side.

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