Demand Generation Vs. Lead Generation: Key Differences and When to Use Each

Your sales funnel is a tool that divides a buyer’s journey into small, manageable chunks. They first get to hear about your brand from somewhere and show a slight interest in your offer. That gives you a chance to nurture them and convert them into a customer by offering freebies and through pre-planned marketing tactics. 

In this whole journey, two terms are often heard of, lead generation and demand generation. Some think they’re the same but only those who spend weeks building a funnel to grab inbound sales know that they’re two different things. 

If you want to make the most of your inbound sales, learning the differences between demand generation vs. lead generation and paying equal attention to the two is non-negotiable. Therefore, this guide will explain what sets these two stages apart, their impact, and when to use what.

So, keep reading and understand how these marketing strategies play out!

Demand generation creates a strong awareness and interest in your products or services. This strategic process paves the way for deeper engagement and sets the stage before any direct sales pitch comes into play.

Let’s say you run a company specializing in eco-friendly home products. Demand generation in this scenario would involve educating your target market not just about the products themselves but also about the broader value they offer — like sustainability and health benefits. 

You could be doing this through informative blog posts, engaging social media content, or compelling email newsletters that highlight the environmental impact of their purchase decisions. 

The goal here is to build a narrative that touches the pulse of your audience’s values and interests. Eventually, it builds your brand as a credible and trustworthy voice in the eco-friendly space.

Focusing on building brand visibility and credibility, you carefully craft a story that aligns with your potential customers’ needs. This method helps in planting seeds of interest that could grow into customer loyalty.

Demand generation is quite true to its name; you create demand for your product through calculated efforts. Here are some ways a brand can do it: 

• Content marketing (blogs, webinars, videos)
• Social media engagement
• SEO and organic search optimization
• Public relations and influencer partnerships
• Talks or keynotes and live events

Lead generation means increasing the audience’s interest in your business by nurturing them further down in the funnel. This stage is where potential customers become real prospects for your sales team to engage.

Let’s break this down with a simple example. Suppose you run a software company that offers project management tools. Through your demand generation, you’ve attracted an audience interested in enhancing their team’s productivity. 

Now, lead generation comes into action when you offer a free trial or a downloadable resource like an e-book in exchange for their email address or phone number. 

It’s a trade-off: they get a valuable resource, and you get their contact details, which turns a general interest into a specific lead.

When you have their information, you can now nurture these leads with targeted content, personalized emails, and special offers. All this material is designed to guide them further down the sales funnel toward becoming paying customers.

So, by the time you reach out to these prospects, they already recognize your brand and have engaged with your content. After pursuing the leads, you don’t have to make cold calls to stranger. Instead, you can start conversations with future customers who have shown a real interest in what you have to offer.

Once you have a database of prospects who have shown interest in your business, here are a few ways to convince them to become paid customers:

• Gated content (eBooks, whitepapers)
• Email marketing campaigns
• Landing pages with calls-to-action (CTAs)
• Webinars and live demos

Demand generation helps you knock at the doors of your future customers and lead generation means to get their email address or contact number in case they’ll need your offer later. Besides this surface-level difference, here’s how demand gen and lead gen stand apart:

1. Marketing Goals

Demand Generation Goals

Demand generation focuses on broadening the reach of your brand and embedding it into the consciousness of potential customers. This strategy creates an interest in what you do without directly pushing for sales. It lays the groundwork for future marketing efforts by increasing brand visibility and cultivating an environment where interest in your products or services can flourish.

Suppose you launch a fitness app that incorporates diet and exercise plans. Your demand generation strategy would involve sharing attractive content across various platforms: blog posts on fitness trends, Instagram posts featuring health tips, and free webinars on weight loss management. Such content does not sell your app directly, but it makes your target audience aware of your brand and the expertise behind it.

Lead Generation Goals

Lead generation narrows the focus from broad awareness to identifying customers who seem interested in your offerings. Your goal here is to gather contact information from these prospects through forms, subscriptions, or other means that help you engage with them. The lead gen phase is more immediate, with the intent of moving leads through the sales funnel toward conversion.

Continuing with the fitness app scenario, your lead generation efforts may include offering a free trial of the app in exchange for an email address. Or, you may provide a downloadable custom workout plan but only to those who fill out a detailed form providing their contact information.

2. Audience Engagement

Demand Generation Engagement Tactics

Demand generation casts a wide net to reach as diverse an audience as possible since it helps build brand awareness and general interest. The demand-creating stage is more about establishing a presence instead of securing immediate actions.

Let’s say you’re launching a new line of clothing. Through demand generation, you might run social media campaigns that promote your unique selling proposition (USP) in fashion, targeting a broad audience. This approach helps you plant seeds for future engagement.

Lead Generation Engagement Tactics

After you’ve captured general interest through demand generation, lead generation sharpens the focus to individuals who you’ve felt are inclined towards your product or service. This nurturing strategy includes engaging with these prospects on a more personal level to collect their contact information for targeted follow-ups.

Let’s stick to the example of the clothing line. At this stage, you may now offer a sign up for an exclusive newsletter that provides exclusive tips and discounts, but only to users who visited your website and spent time on specific product pages. Such a targeted approach ensures you engage with users who will likely help you make bank.

3. Content Accessibility

Demand Generation Content

In demand generation, the focus is on spreading awareness and attracting as many people as possible. To achieve this, businesses offer ungated content, i.e., materials that are freely accessible without any barriers. It may include blog posts, videos, podcasts, and social media updates that anyone can view or read without providing personal information.

Let’s say you own a company that sells organic skincare products. In the demand generation phase, you’ll publish informative blog posts about the impact of natural ingredients or share tips on skincare routines through social media. Since this content is accessible to everyone, you attract readers who are interested in skincare without asking for anything in return.

Lead Generation Content

The content strategy sees a big shift in lead generation. Now it’s more about collecting contact information from interested individuals with the help of gated content. This content is high-value materials that require the user to fill out a form before accessing them. Common gated content includes e-books, whitepapers, webinars, and exclusive reports.

Continuing with the skincare company, after attracting an audience with your ungated content, you’ll offer a free e-book titled “The Ultimate Guide to Natural Skincare.” To download it, users must provide their name and email address through a simple form. This way, you collect valuable leads who need your products. You can then follow up with personalized emails or special offers to guide them further down the sales funnel.

4. Measurement Metrics

Demand Generation Metrics & KPI’s

As the focus in demand generation is on capturing the breadth of your audience’s attention, the metrics here are broader. They revolve around how many people are getting exposed to your brand and how they interact with your content. Common measurements include website traffic, social media likes and shares, video views, and the reach of your blog posts or articles.

Lead Generation Metrics & KPI’s

When you’ve captured interest, lead generation takes the reins with a focus on conversion. Here, you’re looking at how well you’re turning that interest into actionable outcomes. Metrics for lead generation include lead conversion rates, the number of form submissions received, newsletter sign-ups, and the cost per lead.

Launching a New Product or Service

When you introduce a new product or service, demand generation creates the initial buzz. So, by reaching a broad audience, you ensure that your launch makes a splash and gathers as much attention as possible.

Entering New Markets or Demographics

Expanding into new markets or targeting new demographics? Demand generation helps you tap into these areas by raising awareness about your brand. It helps establish a foothold in markets where you might not yet be a known entity.

Building or Repositioning Brand Identity

If you want to reshape how the market perceives your brand — like by rebranding or shifting your market position — demand generation can play a pivotal role. This strategy spreads the word about what sets your brand apart now and reaches both new and existing customers to reinforce your changed identity.

Educating the Market at the Top of the Funnel

If your offerings include complex solutions that the market might not be familiar with or has a fairly long buying cycle, demand generation takes some work off your shoulders. It educates the new audience about your product and why it matters. This awareness is particularly important for groundbreaking products that may require a shift in consumer behavior or perception. It can also help to build trust with your audience in competitive or saturated markets by getting in front of your competitors and establishing trust before larger competitors are able to do so.

You switch gears from the demand-creating efforts to pursuing customers in lead generation. Here are the stages where lead gen is needed:

Established Brands Use It to Expand Customer Base

Lead generation is a strategic tool for big brands to expand their customer base. First, the business builds a notable level of brand recognition and loyalty through demand generation. And then lead generation helps pinpoint and capture interest from new segments of the market who are already somewhat familiar with the brand’s reputation.

Converting High Website Traffic into Actionable Leads

When your website begins attracting high traffic volumes because of successful demand generation efforts, lead generation turns browsers into buyers – be it through signing up for newsletters, downloading white papers, or registering for webinars. These actions let you collect contact details and other valuable information to nurture these leads down the sales funnel.

Shortening the Sales Cycle with Ready-to-Buy Prospects

Lead generation can shorten the sales cycle by targeting prospects considered ‘ready to buy.’ Focusing on these individuals with more direct and personalized follow-ups helps you crack the code and move them to the purchase stage.

Targeting Specific Market Segments with Tailored Offers

Lead generation excels in targeting specific segments of your market with offers tailored. The targeted pursuing approach makes sure that the marketing efforts are concentrated on the prospects most likely to convert so the campaign efforts bear fruit. 

Now that we’ve reached the end of the demand generation vs. lead generation debate, here’s a quick recap for you:

Demand generation and lead generation work like two links in a chain, each supporting the other. Demand gen gets people interested in what you offer, and lead gen turns that interest into actions that can lead to sales. Businesses need to understand how to use both as that ensures that marketing efforts lead to real results.

They are dynamic elements of a successful marketing ecosystem, each fueling the other throughout the customer journey. Balancing these strategies means your marketing efforts are cohesive and more successful in achieving your business goals.

What’s the difference between inbound sales and traditional sales?

Inbound sales focus on attracting customers through content and interactions that are helpful and relevant. On the other hand, traditional sales tactics involve cold calling or mass advertising. 

How do you measure the ROI of lead generation campaigns?

Measuring ROI for lead generation involves tracking metrics like cost per lead, lead conversion rate, and sales generated from converted leads. Tools like Google Analytics and CRM software can help track these metrics.

What are the best tools for automating demand generation?

Tools like HubSpot, Marketo, and Pardot are widely recognized for automating demand generation efforts. These platforms help in creating, managing, and analyzing marketing campaigns.