Lead Gen vs Demand Gen: What Differences Matter for Success?

Many marketers confuse San Diego lead generation with demand generation, a mistake that could break what otherwise could have been a solid online marketing strategy. Avoid such a costly error by knowing the differences between the two and how each influences the outcome.

This article discusses the following:

• Definition
• Target audience
• Marketing strategies

Ready to read on for a dive deep into this topic? Let’s go!

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Demand and Lead Generation Defined

Demand and lead generation sound alike. Some marketers even use these terms interchangeably. In actuality, they are not the same.

• Demand generation is a long-term strategy. Lead generation is short-term because you want to take advantage of the small but critical window for conversion. It usually refers to a period when your qualified leads’ interest in purchasing is high.
• Demand generation is awareness driven. Lead generation is sales-oriented, converting as many leads into customers as possible.
• Demand generation creates a strong foundation for lead-generation activities by creating a pool of interested prospects who can be further engaged and converted into leads. Lead generation identifies and captures individuals with intent or interest in a specific product or service.

Despite their differences, demand and lead generation are interrelated and essential to the sales funnel. The former covers the first two stages of the customer journey: awareness and interest. The latter involves the phases at the bottom of the funnel: consideration, evaluation, and proposal. The last two are often found in the business-to-business (B2B) funnel.

Demand and Lead Generation Target Audience

The target audience for demand generation is broad. This is because businesses convert only a fraction of their leads into customers. The more people who enter the sales funnel, the better. Having more prospects also decreases marketing costs per lead.

For a clearer understanding of these two concepts, let us do some simple math. For example, the industry’s conversion rate is 5%. This means that you will make 50 customers out of 1,000 leads. 

Suppose each spends $100. You earn $5,000 for every 50 people. However, you also realize marketing expenses of $2,500, so the cost per lead (CPL) is $50. Overall, the net profit is $2,500.

However, what if you could increase the number of people interested in your brand by even 5%? It means adding 50 more to your 1,000 leads. Even if your conversion rate does not change, you still bump your numbers to approximately 53 new customers.

If the marketing expense does not change, you can reduce CPL to $47 and boost the net profit to $2,809 — a little over $300 extra. 

It might not be much, but remember, demand generation is an ongoing marketing technique. Small increments still equal hundreds or even thousands.

Demand generation also has a wider target market because you want to:

• Maximize brand awareness and exposure to influence purchasing decisions even if the immediate need is not present.
• Engage with potential customers early on and cultivate long-term relationships that might lead to conversions in the future.

• Appeal to different segments simultaneously, tailoring messaging and content to specific demographics, industries, or interest groups.
• Expand their customer base beyond their existing customer profiles, opening doors to new market segments, demographics, or geographical areas that might not have been previously targeted.

For lead generation, the target audience is qualified, sales-ready leads. They usually meet two criteria: a high level of interest or intent and the financial capacity to buy. 

In other words, these are highly targeted leads. Here are a few good reasons why:

• Maximize the efficiency of their resources, time, and budget.
• Increase conversion rates and achieve a higher return on investment (ROI) from your marketing efforts.
• Streamline sales efforts and improve the chances of closing deals, leading to increased revenue and business growth.
• Create customized messaging, offers, and experiences that resonate with their interests and drive higher engagement and conversion.
• Foster better alignment between marketing and sales teams, making the handoff smoother and letting sales focus on nurturing these leads.

Demand and Lead Generation Marketing Strategies

 San Diego lead generation and demand generation also vary in marketing strategies because:

• Demand generation concerns increasing visibility to achieve greater brand recognition, enhance trust and credibility, and develop higher-quality leads for conversion.
• Lead generation involves capturing contact information from interested prospects, building a database of qualified leads, and executing a more targeted marketing approach to raise conversions and sales.

With these in mind, the marketing strategies might look like the following for both:

When marketing efforts differ slightly, the key performance indicators (KPIs) are also dissimilar. For example, lead-generation metrics include:

• Number of generated leads.
• Conversion rate.
• Cost per lead (CPL).
• Lead quality.
• Sales-qualified leads (SQLs), prospects meeting specific criteria that indicate their readiness to be passed to the sales team for further nurturing and conversion.
• ROI.
• Amount of time to conversion.

On the other hand, demand generation might cover:

• Site traffic.
• Engagement metrics, such as page views per session or time spent on the website.
• Content consumption.
• Brand reach, especially for PR and influencer marketing.
• Customer lifetime value (CLV).

Summing Up

Contrary to popular belief, lead generation can be done without demand generation. However, it will not be as cost-effective. Demand generation sets the stage for successful lead generation by creating awareness, building brand credibility, and nurturing a pool of interested prospects.

Knowing their major differences further improves results. For this reason, find a San Diego lead generation agency that can do both. Digital Authority Partners (DAP) specializes in integrating these strategies to drive optimal business outcomes. Contact us today to learn more.