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  • Writer's pictureEric Doherty

Lead Generation vs. Demand Generation: What B2B Tech Companies Should Know


In the ever-evolving landscape of B2B technology, businesses are confronted with a plethora of marketing terminologies and strategies. Among the most commonly heard, yet often misunderstood, are "Lead Generation" and "Demand Generation." Though these terms are sometimes used interchangeably, they serve unique purposes and offer different returns on investment. Understanding these differences is critical for technology companies aiming to scale their operations, particularly in a competitive marketplace.


I have used a combination of both in mainly new and emerging vendors and share my experience here on the efficacy of both.


What is Lead Generation?


Lead Generation is a tactical approach aimed at identifying and capturing potential customers for your business. The core objective is to gather individual leads—essentially, contact information—that can then be nurtured through the sales funnel toward conversion. In other words, Marketing Qualified Leads (MQLs)


Methods of Lead Generation


- Content Offers: Whitepapers, eBooks, and webinars designed to provide value in exchange for contact details.

- Paid Campaigns: Targeted advertisements that drive traffic to landing pages, aiming to convert visitors into leads.

- Cold Outreach: Direct emails or calls to potential clients.


Metrics


The success of a lead generation strategy is generally measured by the number of qualified leads gathered, the cost per lead, and the conversion rates.


What is Demand Generation?


Unlike lead generation, Demand Generation is a broader strategy. It focuses on creating a market interest in your product or service. Demand Generation aims to position your company as a leader in the space, educating your market not just about your solution but also about the problem it solves.


Methods of Demand Generation


- Educational Content: Thought leadership articles, industry reports, and blog posts.

- Social Media: Engaging with the community to foster relationships and brand affinity.

- Public Relations: Media appearances, press releases, and influencer partnerships to expand your reach.


Metrics


Key performance indicators include website traffic, audience engagement, and brand awareness levels.


Key Differences


1. Focus: Lead Generation is more targeted, focusing on individuals; Demand Generation casts a wider net, targeting market segments or industries.

2. Objective: Lead Generation aims for conversions; Demand Generation aims for market awareness and education.

3. Metrics: While lead generation looks at the quantity and quality of individual leads, demand generation focuses on broader metrics like brand equity and market saturation.


Which Strategy to Choose: Lead Generation, Demand Generation, or Both?


When to Opt for Lead Generation


- Immediate Sales: If you're under pressure to meet short-term revenue targets, lead generation could be your go-to strategy.

- Defined Market: If your service or product already has a clear market understanding, targeted lead generation can be very effective.


When to Opt for Demand Generation


- Long Sales Cycle: For more complex services or products that require significant customer education, demand generation is beneficial.

- New Markets: If you're pioneering a new technology or solution, generating demand will be the first step in your go-to-market strategy.


A Combined Approach


For most B2B technology companies, especially those in different stages of growth like startups or companies looking to scale, a multi-layered approach often yields the best results. A well-executed Demand Generation campaign sets the stage for more effective Lead Generation. First, creating brand awareness and interest makes potential clients more receptive to your marketing messages. Then, lead generation activities can capture these interested parties for more targeted interactions, thereby boosting the chances of conversion.


8 years ago, I identified a particular market niche that the Cybersecurity vendor I was representing fulfilled well. An influential government entity responsible for cyber awareness had just released a best practice mitigation strategy for organisations to help reduce cyber incidents. We quickly built a dashboard for an organisations current posture against the strategies and carried out some preliminary research with existing customers if it would be of value. The response was overwhelmingly positive.


We quickly followed that up with a compliance guide, landing page, whitepaper, and a press release. We eventually ran a PPC campaign based on this collateral. Through natural and paid search, we were able to act on enquiries to close opportunities of over $100,000 each and comprehensively beat competitors who had 100 x factor of spend on marketing and R&D.


Out of interest I recently checked the vendors website, and it stills feature prominently in their capabilities. They still dominate natural search for the keywords and are in the top 3. One of their senior sales executives recently contacted a friend of mine and when challenged on their value proposition recited word for word the positioning we came up with all those years ago.


This multi-pronged approach perfectly encapsulates how demand generation can set the stage for effective lead generation. First, by creating a strong brand narrative and market need, you made potential clients more receptive to your marketing messages. This awareness made our lead generation activities, like the PPC campaign, more effective and resulted in substantial sales.


This example demonstrates the potency of a well-integrated demand and lead generation strategy. It not only helped the company carve out a niche but also allowed it to dominate that niche sustainably. It highlights the importance of understanding both demand and lead generation not as separate silos but as complementary aspects of a comprehensive marketing strategy.


This approach serves as a textbook case for how companies can successfully blend demand and lead generation strategies to not only penetrate a market but also sustain a dominant position long-term.


Here's my advice on selecting the appropriate strategy:


1. For Startups and Emerging Vendors: Focus on Demand Generation activities like thought leadership pieces and industry research reports that establish your brand and create a market for your offering. Layer this with targeted lead gen tactics to capitalize on the generated interest.


2. For Mature Vendors: If you're looking to expand your market footprint, employ targeted Lead Generation strategies, underpinned by ongoing Demand Generation, to enter new markets or verticals successfully.


3. For IT Service Organizations: Adopt a balanced approach. Use Demand Generation to educate potential clients about new revenue streams or emerging technologies and then deploy Lead Generation techniques to capture businesses that show an active interest.


In summary, while both Lead Generation and Demand Generation have their unique merits, understanding when and how to employ each is the key to a holistic and successful marketing strategy. By knowing your business goals, target audience, and market maturity, you can make informed decisions that effectively drive growth.



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