Are demand generation and lead generation the same?
The answer is no!! Their differences are just as evident as between alligators and crocodiles.
Yes, you read it right. While both the reptiles appear similar, a closer look reveals stark differences: crocodiles have V-shaped snouts whereas alligators have U-shaped snouts.
The same is true for lead generation vs demand generation. Both practices generate leads, however, demand generation is involved in the initial stages. It raises brand awareness among a wider audience helping generate leads from a diverse group of potential customers, whereas lead generation comes into play later. This strategy targets brand aware prospects and leads them down the sales funnel to convert.
Lead generation thrives when demand generation does its work precisely. Demand generation is similar to a brand ambassador subtly promoting varied services and products. It creates the need for the product by showing how it could resolve a specific challenge.
A quote by Brian Tracy, a Canadian-American motivational speaker, perfectly fits the context here:
“Approach each customer with the idea of helping him or her solve a problem or achieve a goal, not of selling a product or service.”
Lead generation takes over the role of facilitator that gets the best leads down the sales funnel. Find the image below for a better understanding:
Source: brandalyzer.blog
So, can you understand this funnel? If not, let’s delve deeper. At the top, you can see how demand generation works. Marketers reach audiences on different social media platforms and through email marketing campaigns, leveraging B2B data for precision targeting. Inside the funnel, leads have to go through varied stages: attract, interact, track/manage, close, and loyalty. The stages are self-explanatory. In the first stage, you need to attract leads. These leads are no longer strangers, they’re now aware of your brand. So, they would interact freely with your rep’ which is done in the second stage.
In B2B selling, you need to maintain specific standards and avoid pestering customers to make a purchase. Instead, focus on being patient while tracking and managing (nurturing relationships) in the third stage of the process. Finally in the fourth stage focus on closing deals and fostering customer loyalty.
Who Wins in Demand Generation vs Lead Generation?
The answer is there is no winner or loser here!!
They are two sides of the same coin. The difference between lead generation and demand generation is clear, they work together to achieve business objectives. It’s you (as a marketer) who has to determine howto use these practices effectively, therefore doubling the profit of the organization.
If you want to gain in-depth knowledge on this subject, you’re at the right place. You’d learn the nitty-gritty of demand generation and lead generation and further have a competitive advantage.
What is Demand Generation?
Demand generation is a marketing strategy aimed at creating awareness and interest in a company’s products or services. It involves various tactics like content marketing, social media, and paid advertising to attract potential customers and nurture leads.
Assume you’re working in a startup. And your targeted customers aren’t aware of your product/service. So, how do you reach them? Here demand generation comes into the picture.
You adopt different practices (demand generation practices) to ensure prospects notice your product and further connect with you. Marketers seek visibility and brand recall (remembering your brand whenever prospects see your logo, color combination, or specific letters and others). It’s not enough to show that you exist, you need a serious effort to create a strong impact and pull customers to your brand.
For large enterprises this isn’t challenging as they have passed this test long back. Start-ups and small businesses need to go through the same path to create demand among prospects. With various practices, marketers build a strong sales pipeline with the sales team.
In the below image you can see various B2B demand generation tactics:
As you can see here, some of the successful B2B demand generation tactics have been in-person events (76%), lead nurturing campaigns (58%), webinars (58%), case studies (40%), videos (38%), and so on.
Marketers in a start-up could reach prospects through in-person events-one of the best practices derived from old-school thoughts and still effective. Prospects interacting in-person are bound to remember your brand. But is it that simple? Yes, it is. It is human nature to remember incidents and events that give them different experiences. And an in-person event where you physically meet the prospects makes that impact.
Lead nurturing campaigns are next-level campaigns where you subtly push the prospect down the sales funnel through the right communication and nurturing practices. B2B companies need to follow this pattern as they can’t just push their product to customers. They need to make the customer believe (win trust) that the product would resolve business challenges and yield profit. This is necessary as B2B deals are high-end deals and no customer would invest without having absolute knowledge of the product/service.
Case study:
Now we’d analyze a case study of Digipart Limited, an electronics parts supplier company, based out of Norway and with headquarters in the USA. The organization was looking to meet the demands of customized machine parts in different parts of the USA. They were using different tactics to bring qualified traffic but no luck.
Later, they took the help of a demand generation agency and the results were as good as expected. The agency offered solutions such as paid search strategies and integrated the demographics of audiences. This was aimed to attract the relevant audience through relevant searches.
Results:
The results were truly impressive with an 8x conversion rate, a 300% increase in ROI, and a 30+ increase in click-through rate.
https://www.boundify.io/case-studies/digipart
As a company that was looking to reach an audience in the USA, this is a remarkable achievement. It shows with the right guidance; you can connect with the right audience across varied regions and countries worldwide.
What Is Lead Generation?
As discussed, this practice involves moving brand aware prospects down the funnel from a pool of leads created by demand generation.
It’s skimming out the non-real leads (they’re the window shoppers or regular crowd) from real prospects (who intend to buy if not now but, in the future,). The skimmed-out leads are then moved to the sales team (with contact details) who further interact to understand the mindset of leads. With that, they could plan their next move and convert these leads into customers.
Now, which companies need lead generation practices more often?
It’s a fact that large companies face challenges in generating leads. As these companies have a stronghold in the market, they might have it easier than some small companies or start-ups. But they still have their share of struggle which lead generation practices help ease. Most large enterprises and multinational organizations adopt lead generation practices rather than demand generation practices as they don’t have to spread awareness about their product or arouse interest in their services.
These lead generation practices are integrated for a sole purpose- sales and revenue.
Case study:
This is a case study of ThinSlim Foods, a business that witnessed impressive growth rates of 100-150%. It was a steady growth that not many businesses could achieve in a few years. Their advertising strategy was also showing remarkable results with accounts that were generating almost $70-$80K in a month.
So, everything looks fine or what we believe. Companies must avoid stagnation or they risk becoming obsolete (this was the challenge).
Now, what is the company here looking for? They were aiming for ROAS (Return on ad spend) which basically implies a willingness to receive a good return on every investment in advertising. The organization took the help of a leading digital marketing agency for the right advice.
Results:
The results were really impressive. With the right advertising strategy, ThinSlim Foods had a good (95%) impression share for the clients.
https://www.singlegrain.com/casestudies/lead-generation-case-study/
And it didn’t stop there, dynamic product ads had a nearly 200% increase in the rate of conversions. This case study just shows that marketers should never settle for less, you never know with improved strategies and implementation, you could achieve enviable results.
What are Common Strategies Followed by Both Lead Generation & Demand Generation?
Some of the most effective strategies followed by both lead generation and demand generation are as follows:
Drip Campaigns:
What are drip campaigns?
Drip campaigns are email campaigns that send out targeted messages at scheduled intervals. They’re essential for nurturing prospects by reaching them at the right moment.
By leveraging latest email marketing insights & stats, marketers can fine-tune these campaigns to hit optimal open and click-through rates based on customer behavior patterns.
Additionally it helps to know when the prospect is most likely to buy such as buying during a specific time of year, or after budget allocation leads to a successful drip campaign. It is automated so that you don’t miss out on sending emails and losing opportunities.
Below is the pictorial representation to plan for a successful drip campaign:
Source: clevertap.com
In this image, you can see the first step starts by defining the goals, followed by defining and segmenting the audience. The segmentation is done based on different criteria such as industry, region, requirements, and so on.
How is the drip sequence executed?
Drip sequence means sending specific emails on a monthly, or weekly basis to have meaningful interaction (this could be by triggered event/action). It helps maintain relationships for a longer period. And with that, you need to craft compelling messages, a simple message won’t get noticed easily.
After that, you need to set up automation that automatically sends out emails (you need not memorize every date and detail to send out in emails). Finally, you could measure and optimize the campaign through testing and iteration.
The drip campaigns are mostly used in lead generation tactics, whereas they can be also used in demand generation strategy to arouse interest among the audience.
2. Content Marketing:
Content marketing helps maintain relationships, and guides prospects with the usage of a product/service, further resolving the business challenges of the prospect.
So, isn’t this useful in lead generation? Of course, it is…
And how does content marketing help demand generation?
As the demand generation strategy (through content marketing) disseminates product information and solutions to business challenges, the prospects are motivated to know more. This is why marketers pay strong attention to this marketing form. The only motive is to make a strong impact on the above-the- funnel stage (demand generation stage) to make the process easier later.
Find the below pie-chart to understand the importance of content marketing strategy:
Source: wordstream
In this chart, you can see almost 82% of marketers are investing in content marketing strategy, whereas 16% of marketers aren’t aware of what they’re missing out on.
3. Social Media:
Last but not least, social media marketing strategy is used in both lead generation and demand generation practices. The tactics used here connect with qualified leads (who are converted within a reduced sales cycle).
Find the below image:
Source: directiveconsulting.com
In this image, you can see that CMOs are confident of social media impact; they are brand awareness (82.3%), brand loyalty (81.5%), and sales (76.2%). Demand generation practices outreach prospects on LinkedIn, Facebook, and others across the world. These prospects often see the product’s content regularly giving them sufficient information to recall. The result- they’d approach when they need the product.
Lead generation practices are more aggressive in this context. The content is informative and stimulative, further motivating the prospect to take action.
What Organizations Want from Lead Generation?
Undoubtedly, organizations want to achieve these objectives:
1) Increasing The Number of Convertible Leads:
A good lead number isn’t enough if 90% of it isn’t converting. Not a good sign, right?
Lead generation plays a significant role in filtering out these leads and allowing mostly convertible leads. It just accelerates the deal closure and subsequently the revenue. Additionally, saves time for sales reps’ who would have wasted time chasing non-convertible leads.
2) Increasing Deal Size:
Now a good number of deal closures is necessary, but you should also have closures with larger deal sizes. As revenue generation increases, so would the profit. In a competitive market, a high-end customer just gives the boost that you need to stay relevant in the market. A good lead generation tactic helps attract high-end customers.
3) Improving the Loyalty Among Customers:
As customers have many options to choose from, marketers need to be on their toes to retain customers. They need to understand what’s going on in the customer’s minds? Are they satisfied with the product? What are the odds they would go for other brands in the near future? And so on. Further, marketers can use the right tactic to retain customers when they have answers to these questions.
Lead generation practices such as nurturing, maintaining relationships, and others help improve loyalty.
4) Brand Advocacy:
Good leads most likely get converted and further, they refer your brand to their families, friends, and others. It helps increase the conversions as these leads now could witness good reviews about the product from varied sources- websites, and word-of-mouth marketing from customers familiar to them.
As a marketer, you’re lucky if your existing customer does promotion of your product free of cost (you’d have invested time, money, and other resources and yet might not get the desired results).
5) Better Understanding of Targeted Market:
With good leads entering the funnel, you now have an in-depth understanding of the market (how it works, how you can use your USP to target this market and others). Marketers receive valuable insights into improvising their lead generation tactics.
Instances such as prospects backing off from buying products, or customers ditching their old preferences are real…
As a marketer, you can’t afford to lose prospects or customers at such a critical stage. So, better be prepared than feel sorry later. You could do this by having personal(one-to-one) interaction with your customer or prospect. Customers will love this approach if you do it professionally and empathetically through nurturing campaigns (lead generation).
What do organizations want from demand generation?
A) Making Customers Aware of Presence:
Bitter truth- Customers won’t buy your services if they don’t know your brand!
Demand generation plays a crucial role in showcasing the USP of a product to a broader audience. It makes the organization stand out in the global market.
In fact, many leads will make the decision in the first interaction. So, demand generation practices need to be effective.
B) Building a Regular Pipeline:
Without a steady pipeline, you can’t have a quality customer base. The demand generation practices maintain this flow to the pipeline by reaching new and niche markets. The practices are aimed at making an everlasting impression on customer’s minds.
C) Identifying Customer Needs:
When you interact with a larger audience, you get better insights into their needs. It’s important to remember that an organization develops products to resolve customers’ business challenges. If challenges aren’t resolved, there will be no new customers. By identifying the gaps, you can fix the features to meet customers’ requirements.
Conclusion:
Demand generation and lead generation work together to create a seamless process. They stabilize the company and provide a continuous flow of leads.
In this blog, we explored what exactly these terms are, and how you could use the right tactics to make the best use of these practices.
