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Lead Generation VS Demand Generation – either way, it’s the same?

For the past couple of years, there’s been one dominant conversation in B2B marketing: lead generation VS demand generation. There are pros and cons to both, but the people that preach for either one of these strategies only tend to highlight the pros. We’re here to help you understand how these different strategies work in practice and which one will better support your goals. Let’s get straight to it then…

Lead gen – the OG of content marketing

Lead gen by content marketing became a thing already around 2014-2015, believe it or not. This changed the game in B2B marketing and shifted the focus of every marketing team into creating content that could be used to generate leads.

Basically, lead gen utilises gated content to generate leads that are then either nurtured with marketing automation or directly passed on to sales for qualification. The gated content can be anything from guides to white papers, webinars, events, anything really that tempts your audience to leave their contact information in return.

The great thing about lead gen strategy is that it’s a fast way to feed leads into your funnel. It’s a great strategy especially for early stage startups that need new leads and potential for business growth fast. Why some companies are addicted to lead generation, is because it is easy to measure and you can make pretty accurate predictions for it.

However, there’s two typical issues with this specific strategy. First of all, companies that tend to focus on lead gen, usually target their entire audience with the same exact content, regardless of the stage their potential buyers are in. This means that most of the people that end up downloading the content piece or attend a webinar, are not ready to buy, they’re simply consuming the content. In other words, this method on its own can lead to a lot of unqualified leads and low hit rates from leads to customers.

The second issue with lead gen is that companies that utilise this strategy typically set marketing KPI’s as to generate X amount of leads. Now, the problem with this is that X amount of leads is all about quantity, not quality. So basically, as long as you deliver that desired amount of leads, you have fulfilled your marketing goals. But then your sales team complains about marketing delivering weak leads. And they’re not wrong. Setting the wrong KPI’s for lead generation will result in the same problem as above, a lot of unqualified leads and low hit rates from leads to customers.


Demand gen – what’s the fuss about?

Well then, how is demand generation any different from lead generation? The confusion with these two different terms comes from the fact that when lead generation originally took off, it was often referred to as “demand gen”. Misleading, to say the least.

The demand generation strategy that you now hear about is a method where the target audience is systematically targeted with different types of content, helping the potential buyers move forward on their customer journey and reach purchase decisions while the majority of the market that is not ready to buy is nurtured with more brand and awareness content that help your company stay top of mind.

The goal with demand generation is to make all information about your product, brand and company so transparent and easily available that your potential buyers can complete their customer journey on their own, and come to you as inbound leads basically ready to buy. This means way less time qualifying leads and excellent hit rates from leads to customers. In the long run, this method will result in more marketing generated revenue.

The only downsides of this strategy is that it is a process that takes time and can’t be measured as simply as lead generation. B2B customer journeys are long and complex, which is why the demand generation method also takes time to start converting (if you’re only getting started today) and it’s hard to show instant results from it.


Choose the right strategy to support your goals

Although lead gen is a fast way to generate leads and more contacts in your database, it is not a forever scalable method. There comes a limit to how many leads you can deliver, no matter how much budget you throw at it. Also, if you base your marketing strategy on lead generation only, you’ll find yourself constantly running new campaigns and creating new content to get more leads and it is a never ending cycle that keeps your focus on short term goals.

Demand generation is a long term game that requires a lot of effort to begin with, but the workload reduces along the way. It can deliver very high quality leads that come straight to you, but there will be much less quantity. Also, this strategy requires some time to show results and the content served has very high requirements. It is not the easiest strategy to implement, but it caters excellent long term returns.

If your company is looking for fast growth and you have the resources to skim through lots of incoming leads, then lead generation just might be the right tactic for you. And of course, if your marketing KPI’s only require a certain amount of leads, then this strategy is the way to go.

If however, you already have a well established business and are looking for sustainable and scalable growth in the long term, you should invest your time into generating demand. Once the results of this hard work start showing, it’s difficult to do things differently anymore. And your sales team will thank you for the quality leads – even if there’s less of them.


Meet in the middle

The hard truth is that most marketing teams will have possibly the biggest challenge of their working lives trying to convince management and sales to go from lead gen to demand gen, even if it yields bigger and better returns in the long run. So if you’re looking for a middle way, great news: there is one!

The apostles of these two strategies rarely say you can do both, it’s always either or. But every company needs to balance the short term and long term goals – which is why incorporating these two methods into one strategy could be the most useful tactic for most marketers out there. How exactly can you do that? Follow us for the next article on sustainable growth with the help of digital marketing.