Demand and lead generation target potential customers at different stages in their journey with your company. Demand generation focuses on capturing an audience’s attention and then gradually increasing desire through persuasive marketing. Lead generation, on the other hand, focuses explicitly on the bottom of the funnel.
Visualize sales as a funnel: the top represents the initial engagement with your brand while the bottom signifies the conversion of leads into paying customers.
Demand generation aims to attract a broad audience at the top of the funnel, where prospects discover your company. On the other hand, lead generation focuses on nurturing specific prospects to convert them into customers. Understanding the nuances of each approach and knowing when to deploy them is crucial for effective marketing.
Think of the 95/5 rule. Only 5% of your audience will be in the market for your service or product at any given time. Marketing to this pool of people will only ever yield finite results. The rest of the makeup is where the focus of demand generation lies: building mind and brand connections between companies and their offerings.
This article will explore the distinctions between demand and lead generation within your marketing strategy. We’ll delve into practical implementation tactics and outline the key metrics to measure their success. Let’s begin!
Understanding demand generation.
Demand generation is an education-focused marketing approach designed to establish brand awareness. The strategy isn’t explicitly about selling; it’s about reaching customers early in their journey before they consider buying and then capitalizing on their engagement through to the point of a sale. Whilst it’s focused primarily at the beginning of the user journey, demand generation should encompass the entire sales experience.
The primary goal of demand generation is to spark interest in your product or service. By attracting an audience at the top of the funnel, demand generation aims to create a pipeline of future leads.
Key strategies for demand generation include the following:
- Content Creation: A critical component of demand generation is creating valuable content for your audience. This content educates and excites people about your business and supports a robust content strategy. There’s no immediate expectation of sales.
- Engagement: Success in demand generation depends on how well you engage with your audience. Nurturing relationships with potential customers builds trust and keeps your brand in mind for future purchases.
- Analytics: Evaluating the effectiveness of demand generation requires consistent monitoring of metrics. Tracking audience reactions across social media and your website helps you tailor the right content.
Demand generation is essential for establishing an audience and driving interest in your products or services. It attracts the right people to your company and enables you to engage with future consumers.
Understanding lead generation.
Once an individual shows interest in your business’s offerings, they become a potential lead. While demand generation targets individuals at the top of your sales funnel, lead generation re-engages those who have shown interest.
Lead generation targets individuals in the final stages of the consumer journey and collects information to make a future sale. The benefits of lead generation include:
- Future sales with a pipeline of leads,
- Cost-effective marketing aimed at your target audience,
- A data-driven approach where lead information is collected and analyzed, and
- Relationship-focused approach to establishing trust with your brand.
A qualified lead is an ideal customer who has had some interaction with your brand. There are four different types of qualified leads based on where someone is in your sales funnel:
- Marketing Qualified Lead (MQL): A lead that has shown interest through interaction with your marketing efforts but isn’t ready to take the next steps yet. They may have filled out an offer on your landing page but require continued nurturing before purchasing.
- Sales Qualified Lead (SQL): A lead that has inquired about your product or service, showing their interest. For example, they may have filled out an online contact form to ask a question.
- Product Qualified Lead (PQL): A lead typically found with companies who offer a free product trial. Leads in this category will inquire about your paid-tier upgrade.
- Service Qualified Lead (SQL): A lead interested in your product or service may already be a customer. They have experience with your brand, often expressing interest to a customer service representative.
By identifying the different types of qualified leads, you can nurture their interest in a targeted way. Knowing how to best interact with each qualified lead increases the likelihood of making a sale.
Lead generation for small businesses.
Acquiring new customers is a common challenge for small business owners. Adopting a lead generation strategy can help grow a small business and establish strong brand loyalty.
Small businesses must understand their audience and what they care about to generate leads. Key tactics include:
- Experimentation: Try different methods of lead generation to understand what works best for your business.
- Understanding customer needs: Tailor content to your audience’s interests and relevance to their lives to improve engagement and success.
- Utilizing social media: Consistently post content on platforms like Facebook and Instagram to drive interest. Newsletters and SEO blogs are also effective for generating buzz and website traffic.
- Creating offers: Provide value to potential customers who visit your website, such as a free consultation or resource download. Helpful, free resources help nurture leads who aren’t ready to purchase yet.
Small businesses can leverage lead generation to create a pipeline of future customers. Investing in this strategy is essential for enhancing brand recognition for small businesses.
What is demand generation vs lead generation?
Demand and lead generation target customers at different points in their journey and have contrasting end goals. Recognizing the differences between these two strategies will enable you to understand which works best for your business.
| Demand Generation | Lead Generation | |
| Goal | Used to attract an audience to your brand | Helps convert an audience into leads |
| Audience | Wider audience (those with interest in your industry) | Targeted audience (those who’ve shown interest in your brand) |
| Timing | Long-term strategy | Short-term strategy |
| Content | Initially provides educational content to build brand awareness | Captures information from leads for future sales conversion |
| Sales funnel engagement | Engaging the top of your sales funnel through to the bottom | Focuses on leads at the bottom of the sales funnel at all times |
| Key metrics | Brand engagement and web traffic metrics | Conversion rates and cost per lead |
Though distinct, demand and lead generation complement your overall marketing strategy. And both are essential for building a robust pipeline of leads! The benefits of integrating demand and lead generation include:
- Brand awareness: Demand generation attracts potential customers to your brand, gauging their interest and enabling retargeting with lead generation offers. This combination raises awareness, generates interest in your brand and establishes your authority.
- Sales funnel engagement: Demand generation initiates relationships with potential customers, while lead generation nurtures these connections throughout their sales journey. Together, they ensure continuous engagement.
- Higher conversion rates: By focusing on individuals with similar interests, demand and lead generation strategies enhance conversion rates and drive business growth.
- Enhancing marketing analytics: Demand generation analytics reveal the origins of potential customers and inform retargeting efforts. Lead generation data helps tailor marketing to specific interests to optimize overall effectiveness. These valuable insights help you target your ideal customer.
Lead generation or demand generation: What should be your marketing priority?
Although lead generation can be understood to be a smaller component of demand generation focused at the bottom of the funnel – your own focus on a longer-term or shorter-term strategy depends entirely on the focus of your business. Factors to consider when it comes to prioritizing demand or lead generation include:
Business goals.
The need for demand and lead generation will shift depending on where you are in your business.
If your business lacks brand awareness with your target audience, it makes sense to start with demand generation.
But if you already have brand familiarity, lead generation will help develop your target audience into leads and help with conversion. Equally if you operate with Ecommerce with a limited need to educate your audience and simply require a simple transactional relationship, lead generation would work perfectly well.
Type of content.
Once you better understand your business goals, you can prioritize the content for demand or lead generation.
Demand generation requires educationally focused content to promote social sharing and build a community. Lead generation content aims to prompt potential customers to share their information. Content creation can be time-consuming and should only be created with a specific audience/end goal in mind. Do research on your audience before you start creating any sort of collateral.
Measurement.
As previously mentioned, success is measured differently for demand and lead generation. Demand generation initially focuses on soft metrics like engagement and brand awareness-led goals. Lead generation is more sales-focused and reviews insights like the cost-per-lead.
An effective marketing strategy will combine demand and lead generation for a holistic approach. Each has a place when bringing awareness and engagement to your brand.
Both can be very successful! For example, Single Grain outlined how visual media company Twenty20 needed more help converting prospects into paid subscribers. By implementing digital strategies that optimized sales funnel marketing, Single Grain helped website traffic increase by 403 percent.
A success story of a demand generation example is HubSpot, which offers the opportunity to use its customer platform tool for free. By letting the customer try their product before buying, they create demand. At the same time, the free resource helps generate relevant leads for the company to nurture further.
Implementing demand generation.
Demand generation requires your company to engage with an audience and encourage them to take action. The following are methods to implement demand generation into your marketing strategy.
Content marketing.
Demand generation begins with educational content that establishes your company as a credible source. Whether through videos, blogs, or social media posts, the objective is to provide valuable content that enhances brand awareness. To target individuals whose interests align with your brand, create content that addresses their specific needs.
Social media.
Social media is an excellent platform for sharing content and building an online community. Engaging with potential customers on social media helps establish trust, boost brand awareness, and encourage them to act.
Additionally, these channels provide valuable insights into your audience, enabling you to target their needs better.
Webinars and events.
Providing value to customers through education is essential for effective demand generation, just like with social media content. Free webinars and events for potential customers also build credibility for your business.
Disruptive advertising.
Using channels like paid social and display advertising helps you get in front of people without the need to search for particular keywords or your brand. This means you aren’t reliant on any pre-existing knowledge of your brand, which is ideal for building brand awareness. By focusing on increasing the touchpoints between you and your customers, you can effectively increase familiarity and reduce buyer/brand friction.
Free resources.
Demand generation should never offer gated content. Providing a free resource without expecting something in return is integral to its strategy.
Implementing lead generation.
With an effective demand generation strategy, you can start retargeting potential customers who have shown interest in your brand. Following certain best practices makes nurturing leads at the bottom of your sales funnel easier.
Invest in landing page optimization.
Demand generation drives potential customers to your website, but they need to learn more about you once they arrive. Your landing page should encourage visitors to stay and explore. It should also clearly explain your brand and capture lead information effectively.
Provide a strong offer.
You need a compelling offer to capture lead information on your landing page. Gated content or exclusive deals can incentivize visitors to share their contact information. The content or offer should provide more value than what is available for free, benefiting both parties.
Capture lead information.
Capturing accurate contact information and data from potential leads is crucial. Lead capture allows you to continue the conversation and build the relationship. For maximum impact, ensure you store and utilize the data properly.
Target based on engagement.
Tailor your messaging based on how individuals have previously engaged with your website. Consider creating targeted landing pages that adapt to how each visitor has experienced your brand. Deliver retargeting ads promptly and in a targeted manner.
Measuring success.
The success of demand and lead generation are quantified differently. The following chart outlines both strategies’ Key Performance Indicators (KPIs) and the tools used to track these metrics.
| Demand generation metrics | Lead generation metrics | ||
| Impressions | The number of times your ads or content has been seen | Conversion rate | The number of leads who complete the sales journey |
| Social media engagement | The number of shares, likes, and comments, which gauge the level of interaction | Sales revenue | How much revenue is connected to your lead generation strategy |
| Brand mentions | How often your brand is mentioned across various channels | Customer Lifetime Value (CLV) | How much money potential customers are expected to spend with your business over time |
| Click Through Rate (CTR) | The percentage of individuals who click your ads, content, or links | Cost per lead | How much advertising budget was used per lead |
| Website traffic | The number of visitors to your website and where they’re coming from | Length of sales cycle | The amount of time it takes to convert potential leads into paying customers |
| Indirect conversions | Indirect bottom line contributions from demand generation like assisted and direct conversions | Frequency and Exposure | How much people are seeing your ads. |
Once you know which metrics to use, you’ll need the right tools and techniques to track the data. Here are methods to measure the success of demand and lead generation strategies:
Project management software.
Like any project, a marketing campaign requires solid organization with clear goals, timelines, and expense tracking. An all-in-one marketing-specific tool allows your team to effectively collaborate and track campaign progress.
Social media management tools.
Consistent social media presence is crucial for demand generation. Use tools to schedule posts, integrate various channels, and manage social media ads to help drive brand awareness campaigns efficiently.
Email/SMS marketing software.
Capturing information through sign-up forms and pop-ups is essential for qualifying leads. Email and SMS marketing software supports automation and personalization, enhancing the customer journey.
Customer Relationship Management (CRM) software.
You must store the collected lead information for future use. A CRM platform records interactions, tracks leads, and manages prospective customers to ensure organized and effective follow-ups.
Marketing campaign analytics tools.
Tracking the effectiveness of marketing campaigns can be complex. A platform that aggregates analytics from various sources and visualizes the data simplifies this process. You can then use the results to inform future campaigns.
The right tools for demand and lead generation can significantly improve the effectiveness of your marketing campaigns. It’s essential to track the metrics for each strategy and organize the information to inform future decisions.
An example of how demand and lead generation support marketing strategies.
Let’s learn about Company XY, a small technology company. The company wanted to increase brand awareness and drive sales for its new project management software, so it used demand and lead generation to support its marketing efforts.
To initially attract an audience to their company, they used the following demand generation strategies:
- Content marketing: Webinars, blogs, and educational posts to provide valuable insights and attract interest.
- Social media engagement: Targeted ads on Instagram and Facebook to drive website traffic.
- SEO optimization: Data-driven keywords to increase search rankings and enhance organic traffic.
After generating interest from prospects, they understood the need for targeted strategies to convert them into customers. They used the following lead-generation strategies to help accomplish this:
- Lead magnet: The company offers a free software trial after a lead provides their contact information.
- Landing pages: Optimized landing pages for each offer clearly outline a strong Call to Action (CTA).
- Email marketing: After entering contact information, leads receive personalized content and special offers to nurture them toward a paid plan.
This robust marketing strategy increased the technology company’s brand awareness and drew in leads. The pipeline of potential customers led to higher conversion rates for the paid tiers of their new software.
Improving productivity with demand and lead generation.
Although they require different goals and timing, you should use demand and lead generation simultaneously in your marketing funnel.
Combined, these strategies allow you to connect with potential customers and nurture those relationships through a sale.
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