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Difference Between Lead Generation and Demand Generation

Every business has their own unique approach to growth. Some want to get in front of potential buyers and make a name for themselves, and others want to find a way to bring the leads to them without the fear of stepping on any toes. Neither is easy, but both solutions consistently generate new leads that fill your sales pipelines with opportunities.

What are these solutions? They’re called “lead generation” and “demand generation.” While these terms are often used interchangeably, they do have some noteworthy differences.

Throughout this blog, we’ll cover the following  topics: 

  • Definition of Lead Generation
  • Definition of Demand Generation
  • Main Differences Between Lead and Demand Gen
  • How Do Lead and Demand Generation Work Together?

Definition of Lead Generation

Lead generation aims to get in front of potential buyers in your target market, pitch your product or service offerings, and convert them from leads into customers. This business growth strategy can be used in any industry, but is more often practiced by small to medium-sized businesses.

Ways to Practice Lead Generation

Selecting a method of lead generation should align with the purchasing habits of decision-makers in your target market. There are two core approaches:

  • Outbound lead generation: This focuses on outreach efforts to get your brand in front of potential buyers. Sales development representatives (SDRs) cold call or email prospects, pitch your company’s product or service, and secure appointments between a decision-maker and a member of your internal sales team.
  • Inbound digital marketing: This focuses on bringing interested buyers to your business through online selling. Marketing teams attract potential customers by practicing search engine optimization (SEO), search engine marketing (SEM), and social media advertising. 

Benefits of a Lead Generation Strategy

  • Better understanding of their target market: It empowers businesses to gather information like wants, needs, and pain points.
  • Ability to better target leads: It allows SDR and marketing teams to reduce the amount of time they spend in the sales cycle.
  • Generate more qualified sales leads: It ensures companies are more likely to result in a significant ROI.
  • Increased sales opportunities: It generates more sales opportunities than relying on referrals. 
  • More predictable sales pipeline: It better forecasts sales, so they always know what new revenue opportunities are on the horizon.
  • Improved relationships with prospects: It builds better relationships with prospects, increasing the likelihood of being long-term customers.

Definition of Demand Generation

Demand generation is the process of educating prospects about common problems they may face regarding a specific product, service, or topic, and positioning your company as an expert who helps resolve these pain points. The ultimate goal is to drive higher quality leads to your business without reaching out to them directly. Once a potential buyer is ready to take the next step in the sales funnel, they’ll contact you rather than you reaching out and convincing them.

Ways to Practice Demand Generation

This process draws interested buyers with a variety of methods, including:

  • Content marketing: This involves creating and distributing content that’s valuable to potential buyers, such as blog posts, guides, e-books, sell sheets/whitepapers, infographics, webinars, and more.
  • Social media marketing: This prioritizes social media platforms to build brand awareness and get in front of potential buyers with both organic and paid practices.
  • Influencer marketing: If a person sees a public figure that they respect promote your product or service, they’re more likely to purchase from your business.
  • Email marketing: Potential buyers can sign up to receive marketing newsletters or discounts from your business, encouraging them to invest in your product or service.
  • Public relations: When your company is seen in a good public light, they’re more likely to buy from your business because you have a good reputation in the community.

Benefits of a Demand Generation Strategy

  • Higher conversion rate: People enter themselves into the sales pipeline and choose to make a purchase on their own time.
  • Reduced time in the sales cycle: When demand is high for products or services, potential buyers pursue them as valuable assets.
  • Less of a need to nurture leads: SDRs don’t follow up phone calls or send direct messages to the potential buyers, leaving it up to marketers to send targeted sales and content. 
  • Spend less time prospecting: Without approaching prospects, there’s no need to find decision-makers to implement into the sales pipeline. This allows sales and marketing teams to spend more time crafting the perfect content for potential buyers.
  • Enhanced product or service value: Companies can position their product or service as a go-to solution for pain points.

Main Differences Between Lead and Demand Gen

When it comes down to it, there are three core differences between lead and demand generation:

Their Goals

Lead generation strives actively to acquire sales opportunities. In this process, SDRs focus on building relationships over time to better implement prospects into the sales pipeline. On the other hand, demand generation prioritizes brand awareness and marketing research to passively draw prospects in.

Their Engagement Levels

  • Higher conversion rate: People enter themselves into the sales pipeline and choose to make a purchase on their own time.
  • Reduced time in the sales cycle: When demand is high for products or services, potential buyers pursue them as valuable assets.
  • Less of a need to nurture leads: SDRs don’t follow up phone calls or send direct messages to the potential buyers, leaving it up to marketers to send targeted sales and content. 
  • Spend less time prospecting: Without approaching prospects, there’s no need to find decision-makers to implement into the sales pipeline. This allows sales and marketing teams to spend more time crafting the perfect content for potential buyers.
  • Enhanced product or service value: Companies can position their product or service as a go-to solution for pain points.

Their Impact on Growth

Lead generation aims to grow businesses by drawing prospects down the pipeline with follow-up calls and personalized emails. SDRs know the right times to reach out by asking open-ended questions in previous conversations, such as when they reevaluate contracts or are looking to make a purchasing decision.

When it comes to demand generation, marketing teams aim to purely educate their target market with informational content, such as blog posts, guides, and e-books. If a potential buyer sees the value in what you have to say, they can look more into your business to determine if they want to purchase from it. 

How Do Lead and Demand Generation Work Together?

While lead and demand generation are often seen as two different approaches to generating revenue, they must work hand in hand to achieve the best results. Without creating demand through high-quality sales and marketing efforts, you won’t generate interest or bring new leads that grow your business. 

Since more buyers today evaluate companies, products, and services before making a purchase, demand generation positions your business as a trusted industry leader. Prospects will convert themselves into leads if their need for your product or service is high enough. From here, SDRs can reach out to learn more about the potential buyer and what they may be looking for.

Prospects often take a considerable amount of time before they make a purchase, so lead generation accelerates their movement in the sales cycle. SDRs can help guide them through making a financial decision that’s beneficial for the short- and long-term success of their business.

Combining both approaches can better align sales and marketing efforts. When a qualified lead comes in through inbound digital marketing efforts, marketing teams can direct this information over to the sales team so they can reach out and secure sales or appointments.

Key Takeaways

Demand and lead generation both serve a great purpose for businesses looking to consistently generate new forms of revenue. While they may have different approaches to growth, they must work seamlessly together for the best ROI. Using the two methods together, you can build and sustain a sales pipeline full of interested prospects who are (or will be at some point) ready to buy.

Abstrakt Marketing Group may prioritize lead generation, but our team of SDRs and marketing specialists collaborate to help small to medium-sized businesses like yours find and nurture quality prospects until they’re towards the end of their buying cycle. 

When you’re ready to maximize business growth for long-term, sustainable success, contact the A-Players at Abstrakt!

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