Demand generation vs. lead generation

Marketing is an art. And if you want your small business to be successful, understanding that art (or having people on your team who do) is an absolute must. People can’t turn into customers until they know who your company is, why they need your products or services, and what sets your business apart. 

That’s where demand generation and lead generation come in. You may hear these terms and ask yourself, “Why do I need both demand generation and lead generation? Isn't one enough?” Well, no—both are vital for companies that want to grow their business.

But how do these concepts differ, and how do you know when it’s appropriate to use one or the other?

What is demand generation?

Demand generation (commonly shortened to demand gen) is the process of casting a wide net to create demand for your product or services with the eventual goal of increasing sales and leads. It’s a way to tap into new markets, build excitement and educate people who may have never interacted with your company before.

This marketing strategy follows a journey that will guide your prospects through three main milestones:

1. The beginning, when they’re just becoming aware that they have a problem you can solve.
2. The middle, when their level of trust and confidence in your brand begins to increase.
3. The end, when they’ve developed a definite interest in what your solutions can do for them.

This is called a buyer funnel or buyer flywheel. Every business needs one if they want to take full advantage of both demand and lead gen tactics and strategies.

Blogging is one of the most commonly used demand gen tools. When people have questions about a product, service or topic, they often turn to the internet. Blogging gives you the opportunity to share your expertise with the world. In turn, your business gets put on the radar of people who could become customers down the road. 

Podcasting, social media and email marketing campaigns can also be part of your demand gen strategy. But no matter which platforms and formats you turn to, the goal is to spark interest in your company with smart messaging that shows potential customers what you have to offer while also demonstrating why they should care.

What is lead generation?

Lead generation (or lead gen) is the process of getting inbound inquiries from prospective customers through a nurturing strategy. Where demand gen focuses on getting your business’s name out there, lead gen is all about nurturing the interest you’ve created to convert visitors into leads.

Like demand generation, lead generation channels can include everything from direct mail to email and social media campaigns. But the main goal is to inspire your prospects to take action.

What’s the difference?

Here’s the most basic way to break it down: Demand generation is a long-term strategy designed to put your business on a prospect’s radar. It takes planning and investment, and the payoff doesn’t happen immediately.

Lead generation builds on that awareness and moves people through to the next stage—taking the first step to transition from prospect to customer.

What do those differences look like in practice? Here’s an example: You write a blog post that showcases your expertise in the field, providing guidance related to the services you offer or advice on how the products you make can solve a problem. The blog post lives on your website, and anyone who stumbles upon it can access that information, whether they searched for certain terms that helped them land on your page or they saw someone share your post on social media. If they find and read your blog post without ever interacting with your company beyond the few minutes they spend reading, that’s demand gen.

If you turn that same blog post into gated content—something readers can only get to after filling out a form with their contact information—you’ve now moved from generating demand to generating contacts. You’re not just trying to get as many eyes as possible on your content. You’re trying to capture the information of people who’ve shown enough interest to add their email address to your database.

From there, you can further narrow down contacts into prospects, also known as sales or marketing qualified leads. Not everyone who reads your blog post will be right for your products or services. But when you can identify ideal prospects, you’ll know where to focus your more personalized marketing efforts, which will save resources and keep you from annoying people who never had an interest in becoming a customer.

Why do you need both?

Relying on demand gen alone means relying on prospects to inspire themselves to make the transition from reader to customer. On its own, this strategy will build awareness without feeding that energy to turn it into a sale.

When you pair demand gen with lead gen, you funnel the interest created by demand gen strategies into actionable steps that connect you with customers, making their conversion from passive readers into active buyers easier.

If you’re not sure how to craft the perfect messaging or determine the right channels for your small business, schedule a free session with an EMyth Coach—we’re here to help.

Read this article on Inside EMyth.