Demand Generation and Lead Generation: Why They Both Matter

Demand generation and lead generation strategies have some differences that can play a major role in how you get the most out of your marketing campaigns. Here are the key differences: demand gen is typically used to build brand awareness, and lead generation is about converting leads attracted by your demand gen into actual customers.

Think of it this way—demand gen could be the high-value piece of content (social media, video, blog) that draws people to your brand, builds trust, and makes the decision to enter your lead generation funnel more appealing.

These marketing components are different, but they aren’t independent. To acquire more customers and industry authority, businesses need to create marketing campaigns that blend both demand and lead-gen strategies into a harmonious and intuitive customer journey.

Demand and Lead Generation

Before you can design high-converting demand generation and lead generation campaigns, it’s helpful to differentiate between these terms to yield the maximum results. It can be easy to confuse the terms because they are so close in the customer journey, so we’ll provide a more detailed description for both demand gen and lead gen.

Getting To Know Demand Generation

Demand generation marketing is a marketing technique that builds brand awareness and trust with cold prospects. It’s usually done through free, ungated content such as blogs, video marketing, webinars, free tools, or product trials. Demand generation is all about giving away high-value and relevant content without gating it behind a wall—be it paid or just an email address.

It’s much harder to generate leads effectively without using demand generation to your advantage. It’s crucial to nurture a business and customer relationship that draws qualified leads in and primes them for the next step: lead gen.

Discovering Lead Generation

Lead generation strategies are the process of transitioning qualified leads from casual observers into engaged members in your sales funnel. If demand gen has served its purpose by supplying prospects with high-value, ungated content marketing, then lead gen is much easier and more effective.

Lead generation works in tandem with nurturing demand generation by offering a lead magnet—a resource that provides value to your ideal prospect. Lead magnets are usually free, but qualified leads can only access them by performing a desired action, like joining your email marketing list, for example.

Demand Generation vs. Lead Generation: 5 Key Differences

With both marketing strategies defined, you should see the differences between demand generation vs. lead generation and how this division ultimately makes life easier for your sales team. These strategies can be important for creating a more effective customer journey through your sales funnel.

1. They Have Different Goals

Objectives are arguably the most important difference between lead generation strategies and demand generation marketing. Demand generation is inbound and focuses on building brand awareness. It’s about nurturing prospects with content marketing and ungated resources that appeal to the target audience and address their pain points.

Lead generation strategies are about converting qualified leads into the sales funnel by collecting their contact information with conversion tactics like lead magnets. With this information, your marketing team and sales team can continue to nurture leads and increase customer acquisition.

2. They Use Different Tactics

Much like how their objectives differ, demand gen and lead gen marketing strategies and tactics do, too. Demand generation uses completely free and ungated content to educate, engage, and build brand awareness with prospects.

Alternatively, lead generation creates content marketing assets to compel a desired action from the qualified lead. Marketing teams use lead generation content to convert prospects into the sales funnel with gated (but free) lead magnets like checklists, e-books, and more.

While demand generation is about making consumers more brand aware by generating demand with content, lead generation takes it a step further by asking individuals to practice reciprocity by sharing their contact information in exchange for the lead magnet.

For example, a demand generation tactic could be a YouTube video explaining how to solve the customer’s pain point with step-by-step instructions.

The lead generation tactic could be a YouTube video explaining how the product/service is the solution to the pain point–and compel the viewer to share contact information in exchange for a free resource that enhances the free lead generation video they just watched (AKA, provide a step-by-step guide after signing up for a newsletter).

3. They Work Better Based On Timing

Choosing which strategy to prioritize will depend on your timelines. Lead generation is about customer acquisition. Your marketing team and sales team target pre-qualified leads, who are already in the market for solutions like yours, to quickly increase conversion rates on an established product.

Demand generation is about creating qualified leads and generating demand among them. It’s a great strategy for those new to their industry. It’s about building brand awareness and trust that increases conversion rates down the road. If your company or product is new, then demand generation can be a much better option than lead generation.

4. They Establish Different Relationship

Demand generation is an inbound brand marketing strategy, while lead generation falls under direct marketing.

Demand generation builds trust with prospects by offering content marketing assets, thought-leadership social media posts, and engaging with the target audience on your marketing channels.

Lead generation marketing is about showing how your product or service is exceptional in your industry and creating content like webinars and email marketing campaigns to increase your conversion rate.

5. They Have Different Impacts

Demand generation can be a powerful preliminary step to your lead generation strategy, as it can lower your overall customer acquisition cost. Demand generation also helps improve lead scoring because the content you publish is already vetted by the prospect’s pre-existing interest in the topics. This tactic means a lower ad cost and more lead nurturing through inbound marketing strategies that bring prospects to you.

Ultimately, demand generation attracts prospects with content that addresses their pain points. In contrast, lead generation focuses on conversion rate and turning leads into buyers by positioning your brand/service/product as the solution to the pain point.

How Do Demand Gen & Lead Gen Work Together

Whether B2B or B2C, the best marketing strategies—demand gen or lead gen—are clearly defined paths, designed solely to attract and support prospects through the customer journey. Demand generation can be seen as step one of that journey.

Your prospects go from unaware to brand aware and develop a positive impression of your brand through your thought leadership.

Lead generation leads the prospect to the next step of their journey by transforming them from outside observers to active participants in your sales cycle, priming them to convert into buyers.

Demand generation and lead generation tactics can have a huge impact on generating leads and enhancing lead scoring. Because consumers are inundated with ads on practically every online space they frequent, more B2B brands are setting themselves apart by increasing the demand for their products instead of trying to accumulate high volumes of leads that are then assessed for MQL after they enter the lead generation funnel.

Since there are so many options, consumers are more discerning and invest more time making buying decisions vs. just choosing the first or most convenient solution to their pain point.

Balancing demand generation and lead generation marketing can contribute to consistent conversion by keeping your pipeline full of qualified prospects who are excited and ready to become buyers.

With steady content engagement, fewer ads are necessary to build awareness or conversion, helping to lower customer acquisition costs.

Manage Leads With Podium’s AI Employee

One of the things affecting inbound demand generation and lead generation marketing tactics is what happens when customers make contact with your brand — and the software platform you use to manage communications. If prospects reach out with questions or concerns, it’s crucial to supply rapid and expert responses. The sooner you do, the more likely you are to secure that lead.

However, it can be difficult to supply enough manpower to monitor incoming leaks and messages. It can be all too easy to risk customer messages getting lost amidst a busy inbox.

The best way to enhance the efficacy of your lead generation efforts, decrease the strain on your sales team, and convert more customers is by introducing automation. With Podium’s AI Employee, you can ensure every lead receives immediate, expert support that feels as intuitive as a human sales rep — but never gets tired, has a bad day, or has to go home.

That means continuous customer support 24/7 — without sacrificing quality or putting a strain on your human resources.

Schedule a demo with Podium today to discover how Podium’s AI Employee can enhance your demand and lead generation strategies.