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Jul 13, 2022 A88Lab.

Demand vs. Lead Generation: What’s the Difference?

Have you ever wondered about the difference between lead generation and demand generation? It's a common question, as people often use the terms interchangeably without a clear distinction between them. But the thing is, the differences between the two are pretty big from a strategic and implementation perspective. In this blog post, we'll cover the main definitions, similarities, differences, and strategic approaches for both demand generation and lead generation.

What’s Demand Generation?

Demand generation is a comprehensive strategy aimed at building lasting relationships between brands and their clients. This approach uses various marketing and sales tactics to raise awareness, spark interest, and generate demand, ultimately speeding up the sales process. 

It's an ongoing cycle that covers the entire buyer's journey, focusing on acquiring new customers and establishing a connection between your brand and potential buyers right from the start of their journey, leading up to the point of purchase and beyond.

Within the demand generation framework, the main focus is on educating the target audience. This is especially important for those who are unaware of how your product can solve their problems, its broader category, and the potential improvements it can bring to their workflow.

Through carefully created campaigns, demand generation aims to create interest and demand for your product or service, increasing awareness and excitement and motivating people to make a purchase.

Beyond just generating hype, demand generation also helps expand your audience, aligns your marketing and sales teams, and drives traffic, turning interest into action. It's not just about creating a buzz—it's about building sustainable relationships that turn leads into loyal customers.

What’s Lead Generation?

Lead generation, unlike demand generation, is all about converting interest into potential leads. This step usually involves getting a prospect's name, email address, or other contact info. It's basically the process of identifying and nurturing potential leads into actual customers.

Strategies for lead generation often use gated content and similar methods that require prospects to provide their contact info in exchange for access to the material. However, this approach is different from demand generation, which focuses on making sure the right people see the content meant for them. So, gating resources may work for lead generation but may not always be the best strategy for demand generation.

Lead generation is rooted in marketing campaigns that gather information about potential customers, turning them into leads. The main focus is on leads ready to become customers, especially those who have shown significant interest in your product and are willing to share their personal info to learn more.

The Art of Generating Demand

Did you know that only about 1% of people actively seek solutions to their problems? Focusing just on that small group of 1% won't help you grow your business much. Moreover, it will increase your expenses, and who wants that? That being said, to really grow your SaaS, your attention should be directed toward the other 99% of people who might not even realize they have a problem that needs solving. And this is where demand generation truly shines.

Demand Generation will help you build long-term relationships and keep people engaged. It’s focused on constantly educating customers who might not be aware of:

  • How your product solves their problems or challenges

  • Which overall category should you be in

  • How their workflow could be improved with your product

  • Your overall brand perception

By focusing on educating potential customers, demand generation sets the stage for future sales and helps them become more familiar with your brand. But to achieve this, you have to have a strong content marketing strategy in place.

The Process of Demand Generation Research 

Conducting thorough research for demand generation can be broken down into four main steps that will help you gather the information you need to build your strategy. These steps include:

Assembling Your Ideal B2B Persona 

The heart of successful demand generation research lies in understanding your ideal buyer. Develop detailed buyer personas by gathering demographic and psychographic data. Ask questions that go beyond surface-level information to truly grasp who your audience is and what motivates them.

Establishing Essential Data Points

Figure out the specific data points you want to find out during your research. Whether it's qualitative, like user behavior, or quantitative, like website engagement stats, having clear data points makes sure that your research serves a purpose and gives you useful insights.

The Process of Demand Generation Research 

Using Suitable Research Methods

With objectives and data points in mind, select appropriate research methods. This could involve a combination of surveys, interviews,  competitor analysis, and social listening. Tailor your approach to gathering the most relevant and valuable information from your target audience.

Analyzing the Data Received from the Research

After you’re done with the research, you’ll have a bucket-load of data to analyze. Now, regardless of the success of your research, you’ll find plenty of insights that will open up some gaps. For first-timers, this is the most likely scenario.

This final step of analyzing data is extremely important and dictates your future research plans and decision-making. You will probably identify certain mistakes in your research at this stage, and that’s normal. Take the time to review the data, look for patterns, and identify key takeaways.

Demand Generation Best Practices  

When building your demand generation strategy for your B2B SaaS, there are a few basic fundamentals you should never forget. The first is that content is king when it comes to demand generation, so make sure you create content that's valuable, informative, and engaging. The second thing is your audience's pain points; always talk about them and show your audience how you can fix them. And last is a well-planned content marketing strategy that can do wonders for your brand's visibility. 

Once you have these essential fundamentals in place, you can move on and start implementing these few demand-generation practices that will only improve your overall demand-generation strategy:

1.  Define Clear Goals and Objectives: Before launching any campaign, set clear and measurable goals. These objectives will serve as the guiding force behind your efforts, providing direction and benchmarks for success.

2.  Conduct Comprehensive Market Research: Get to know your target audience, competition, and the market landscape. This thorough research will help you understand what your customers need and how you can help them.

3.  Create Detailed Ideal Customer Profiles (ICPs) and Buyer Personas: Knowing your ideal customers inside and out is crucial. Develop detailed ICPs and buyer personas to tailor your messaging and content specifically to their needs and pain points.

4.  Choose Appropriate Distribution Channels: Select distribution channels based on your target audience and campaign goals. Understanding where your audience engages the most is key to reaching them effectively.

5.  Develop a Robust Content Strategy: Craft a content strategy that resonates with your audience and addresses their pain points. Ensure your content is not only informative but also engaging and valuable.

6.  Implement A/B Testing: Continuously test and optimize your campaigns to enhance performance and boost conversion rates. This iterative process ensures that you are always refining and improving your approach.

7.  Nurture Leads Through Marketing Automation: Utilize marketing automation tools to nurture leads and guide them through the sales funnel. Automation ensures a personalized and seamless experience for potential customers.

By incorporating these best practices into your demand generation strategy, you'll not only generate interest but also cultivate meaningful connections that drive long-term success for your B2B SaaS campaigns.

Demand Capture vs Demand Generation

Your demand generation strategy always needs to align with your company strategy; for example, are you creating a new category, or are you joining an existing category and aiming toward a market share cut? Making this decision will significantly impact your marketing activities, channels, campaigns, and more.

While demand generation focuses on creating awareness and interest in your product or service, demand capture takes a slightly different approach. Demand capture is all about capturing that 1% of the market we mentioned earlier before they choose another option. The main difference between demand capture vs. demand generation is that buyers are signaling their intent to purchase.

Demand Capture vs Demand Generation

To make demand generation work, you need to implement tactics focusing on building that brand awareness. You need to build your audience, talk about the challenges your target audience is facing, implement thought leadership activities and a lot, a lot of ungated content. The main focus here is educating your audience about you while preparing your demand capture strategies.

On the flip side, to make demand capture strategies work, you need to know your target audience like the back of your hand - their behavior, preferences, and pain points.

Unlike demand generation, which focuses on building long-lasting relationships, demand capture aims to take advantage of immediate opportunities presented by those already searching for solutions. If your main focus is demand capture, then retargeting and remarketing campaigns like retargeted email ads, CTA buttons that guide people back to your site to buy, or simple display ads that help you stay on the top-of-mind on your audience will become your best friends.

Dark Funnel and Its Impact on Demand Generation

The Dark Funnel is a term used to describe the hidden and non-linear customer journeys that happen outside of traditional tracking methods. When we talk about the dark funnel, we talk about those potential customers who interact with your brand through channels that are not easily traceable, such as private forums, social media groups, or direct communication channels; in other words, we talk about interactions that happen on dark social channels. 

The good thing about dark social channels is that they show the critical activities that happen in the B2B buying journey, like problem awareness, problem verification, solution exploration, decision validation, and more.

The not-so-good thing about these channels is that the touchpoints, while highly impactful, are not measured appropriately by software-based attribution. And because companies can’t measure activity in these places as they’re accustomed to, many don’t understand how meaningful this new buying behavior is and how much of a growth opportunity they’re missing by ignoring it.

When it comes to demand generation and the dark funnel, while it complicates accurate measurement, it also highlights the importance of fostering personal relationships and creating content that resonates deeply with individuals. By analyzing the patterns and trends in Dark Funnel shares, you can gain a deeper understanding of your target audience preferences, behaviors, and content resonance. This knowledge will help you with your content creation, audience targeting, and personalized messaging, leading to more effective demand-generation campaigns. 

Lead Generation: A Misguided Demand Capture?

Lead Generation and Demand Capture, although they are two strategies that fall under the umbrella of the overall Demand Generation strategy used by SaaS companies to accomplish a similar goal, which is to convert interests into actions, are actually quite distinct from one another.

Lead generation primarily focuses on identifying and nurturing potential leads who have expressed any type of interest in your SaaS product or service but may not be immediately prepared to make a purchase. This strategy involves gathering information through tactics like gated content, requiring prospects to provide contact details for access. The main goal is to provide relevant information to these leads and to move them down the sales funnel. 

On the flip side, demand capture targets individuals who have already shown a clear intent to purchase and are closer to the decision-making phase. This strategy aims to capitalize on immediate opportunities, leveraging techniques such as retargeting and remarketing. 

The key difference lies in timing and readiness to purchase. Lead generation fosters relationships and awareness in earlier stages, while demand capture targets those leads who have already moved past the brand awareness stage, are actively seeking solutions, and are ready to make a purchase.

Content and engagement strategies differ, too. Lead generation employs gated content and a longer nurturing process, while demand capture relies on immediate calls to action and retargeting ads for quick decision-making. 

So, while they share a common goal within the broader Demand Generation strategy, their approaches to the buyer's journey are quite different.

Lead Generation Fails 

Although over these past few years, the focus of many SaaS companies has mainly been on the Demand Generation trend, Lead Generation is still not dead. In fact, lead generation is the heart of any successful SaaS sales process. Unfortunately, there are some mistakes that can hinder its effectiveness, and here are some of the most common ones: 

1. Attracting and Targeting Wrong Leads

Not all leads are potential customers, and one of the most common lead generation pitfalls is chasing the wrong ones. Losing focus on your ideal leads can result in useless pursuit and draining resources without getting any actual leads. This is why it’s crucial to define a specific group of leads who have the potential to become your desired customers. Avoid the trap of a one-size-fits-all approach, create detailed buyer personas based on demographics, pain points, interests, and behaviors, and tailor your messaging to resonate with the unique needs of your target audience.

2. Overlooking Lead Nurturing

Lead nurturing is the backbone of turning prospects into loyal customers and having a successful lead generation strategy, yet it often gets overlooked. Neglecting this crucial process can lead to missed conversion opportunities. Create relevant and helpful content that addresses your leads' pain points and interests. Use various channels to stay in touch with your leads, such as nurturing emails, social media posts, or webinars.

3. Not BegettingEnough Inbound Traffic

Inbound leads are cost-effective, yet many SaaS companies struggle to drive inbound traffic effectively. Addressing this challenge involves optimizing your online presence, content strategy, and engagement with potential buyers. This involves creating high-quality content that attracts your target audience, optimizing your website for search engines, and engaging with prospects on social media and other online channels

4. Adopting a One-Size-Fits-All Approach

Lead generation isn't a universal formula; each SaaS business requires a unique approach. Tailoring your strategies based on your SaaS product type, target audience, and budget is crucial for an effective lead generation strategy. So, make sure you test and experiment with different lead generation tactics to see what works best for your SaaS.

5. Ignoring Prospects' Pain Points

Focusing on your target audience's pain points is crucial for effective SaaS lead generation. Rather than solely promoting your product, prioritize addressing the needs and challenges of your potential customers to build trust and increase conversion chances.

Understanding your target audience, consistently providing solutions to their pain points, and fostering trust and loyalty among potential customers is the key to a successful SaaS lead generation strategy.

Should You Implement Demand Generation or Lead Generation?

Now that you understand the differences between demand generation and lead generation, you may be wondering which strategy is more important. The truth is both approaches are essential for a successful marketing strategy. 

Demand generation will make people aware of your brand, but you still need to get them to the stage where they'll purchase your product or service. That's where lead generation comes to the rescue. 

Lead generation will take the people interested in your product or service and move them through the stages of consideration and decision. So, while demand generation creates awareness and interest, lead generation often ultimately drives conversions and revenue

You may see where we're going with this. Focusing on just one area can limit your potential for success. Imagine what a lead generation strategy will look like without a demand generation element. You will create a landing page with gated content or place conversion opportunities around your site. But who will come to your site and become a lead if you don't have an active demand generation strategy in place?

On the other hand, solely focusing on demand generation without lead generation may result in a large audience but a lack of conversions. You will create buzz about your brand and get people talking, but unless you have a way to capture and nurture those leads, your efforts may not translate into actual sales.

To truly succeed, it's essential to strike a balance between demand generation and lead generation. Both strategies are important in their own way, but when combined, they can create a powerful marketing engine that drives conversions and revenue.

Real-World Success Stories 

There are plenty of real-world success stories that show how effective it is to implement both demand generation and lead generation strategies at the same time. Here are two awesome SaaS companies that will inspire you.

Gong, a revenue intelligence SaaS company, has perfected its demand generation strategy. They regularly publish LinkedIn posts, maintain a comprehensive resource hub with cheat sheets, templates, and guides, and frequently host webinars and podcasts on industry-specific topics. Gong's approach has generated buzz, raised brand awareness, and expanded its targeted audience. 

Moreover, Gong has launched Visioneers, a dedicated platform for the Gong community that acts as a powerful lead-generation tool. Users can access free courses, participate in community discussions, join the Gong referral program, and even create their own community posts, further enhancing their lead-generation efforts.

Apollo is another outstanding example of excelling in demand generation strategy. They have developed Apollo magazine, a knowledge-based hub and academy offering free courses without requiring any contact information. Additionally, they strategically show numerous success stories and reviews to generate more interest in their services. Apollo also employs effective lead generation tactics such as a Refer a Friend program and a book a demo request option.

These companies exemplify the successful integration of both demand generation and lead generation strategies, demonstrating the power of a well-rounded approach.

Final Thoughts

At the end of the day, the choice doesn’t come down to either lead or demand generation - it comes down to finding the right balance and integrating both strategies for optimal results.

Demand generation is vital in generating brand awareness, nurturing leads, and building relationships with potential customers. On the other hand, lead generation helps convert those interested leads into actual customers. Combining both strategies can result in a more effective marketing approach that drives growth and success for businesses.

Once you understand the difference between lead and demand generation, you can start figuring out how to incorporate both into your marketing strategy. Consider the unique needs and preferences of your target audience, and create a plan that uses both strategies in a way that best suits your business.

Want to learn more about demand generation? Go to our blog and find some insightful tips to help your business grow!

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