Lead Gen vs Demand Gen: Finding the Right Balance

As this Gartner article suggests, “generating leads and creating demand are two distinct inbound marketing tactics often confused as one.” Both are integral to an effective marketing strategy, but how do you decide which to prioritize?

The short answer: Both demand generation and lead generation should play significant roles in your overall strategy. However, determining which to allocate the bulk of your time, budget, and resources towards depends on your specific goals. 

In this blog, we’ll unpack the differences between the two and explore key considerations for striking the right balance to achieve your goals. Whether you’re looking to build a strong brand presence or drive immediate sales, it’s helpful to understand how both lead and demand generation factor into a successful growth strategy.

Differentiating Between the Two: Demand Generation vs. Lead Generation

Comparing the timeline of their effects is an easy way to grasp the difference between demand generation and lead generation. Demand generation establishes your brand identity, fostering long-term success by building awareness and reputation. In contrast, lead generation captures the contact information of potential buyers, fueling your sales pipeline and driving short-term sales. In this simplified context, it’s easy to see why both are essential to a holistic marketing strategy.

CREATING DEMAND

What is demand generation? Ask a variety of marketers and you’ll likely get unique answers every time. 

Here, we’ll be discussing B2B demand generation in the context of cultivating a broad audience of prospective customers and fostering interest in your product or service. The scope of your demand generation efforts should encompass the entirety of the buyer’s journey—from ‘out of market’ buyers to active prospects as well as existing customers. This long-term tactic leverages a wide range of activities to remain top of mind amongst prospects and customers so when it comes time to purchase, your brand will be in the running.

GENERATING LEADS

B2B lead generation nurtures the interest you’ve generated into qualified leads by capturing contact information and engaging them with relevant messaging. Efforts tend to be short-term and focus on a targeted audience with a higher chance of converting. The aim is simple: To initiate sales conversations and turn prospects into customers. 

A DemandGen Report survey indicates marketers are shifting their focus towards acquisition strategies in 2024, a departure from the prioritization of retention-based strategies in 2023. This year, 53% are measuring based on new opportunities and 48% are leveraging MQLs/SALs as their top metric. These stats are up from 38% and 37% last year, respectively.

Demand Generation vs. Lead Generation Overview

Balancing the Two: Considerations

Finding the right balance between lead generation and demand generation is a nuanced process that depends on a variety of factors unique to your organization. What works for one business might not be effective for another and vice versa. When determining which tactic to prioritize, here are some considerations to keep in mind.

BUSINESS GOALS

Having a clear understanding of the goals you’re looking to achieve is perhaps the biggest indicator when it comes to determining which tactic to focus on.

If your main priority is any of 1) driving brand awareness, 2) building an audience, 3) remaining top of mind to target audiences, 4) establishing trust and credibility, demand generation is likely to take precedence.

Alternatively, if your goals are primarily focused around increasing sales, such net new logo acquisition or pipeline acceleration, lead generation will be the tactic you optimize for.

For many organizations, their goals are a combination of the above. In this case, it may be worth asking the following to decide whether creating demand or converting leads should take priority.

• Is your brand or solution new to the industry?

• • If yes to either, it would make sense to focus your efforts on drawing attention to and educating the broader audience about your new brand or solution. Thus, demand generation would be the more suitable option.

• How much pipeline is your team expected to influence or generate?

• • If the number is high, metrics related to SQLs and conversion rates will take priority and lead generation is likely to play a more prominent role in your strategy.

• Does your sales team have an effective outbound motion?

• • If yes, they’re likely to be less reliant on inbound marketing to source relevant contacts to engage with. In this case, prioritizing demand generation could boost sales efforts and generate qualified interest in the long run.
    
    

AVAILABLE RESOURCES

Knowing what resources you have on hand can help inform how much time and energy to allocate to each tactic. Common resources to consider include:

• Budget

• • The metrics you’re being goaled on can help you prioritize where to invest. For example, if most metrics are tied to opportunities influenced and return on investment (ROI), it may make sense to allocate more of your budget to lead generation efforts.

• • • Tip: Have a forecasted number of leads you’re expected to generate? Leverage historical data like campaign CPLs and conversion rates to reverse engineer the estimated budget you’ll need to spend to meet your target.

• • Gartner's advice? “To maximize your marketing budget, you need to strike a delicate balance between immediate results and long-term brand value.”

• Bandwidth

• • In addition to lead and demand generation efforts, sales and marketing teams have other projects to attend to. It’s important to factor in how much time other tasks will require before deciding how much to invest into either tactic.

• • Consider deliverables needed to execute each tactic. The more you need to create from scratch, the more time and money you’re likely to have to allocate to it.

• • • Tip: Have a piece of content that performed well in the past? Repurpose it into other formats and leverage it in different activities. For example, a webinar can be repurposed into a blog for demand generation or a syndicated ebook for lead generation.

• Tools

• • There is plenty of technology out there to aid in the planning and execution of your lead and demand generation efforts. What you already have in your tech stack versus what you’ll need to invest in is something to be aware of.

• • • Tip: Lean on bandwidth? Instead of managing a platform in-house, consider partnering with a vendor who can do the heavy lifting for you. For example, having access to intent data can help you to craft more personalized, engaging messaging, but managing a platform on your own can be time-consuming and costly. Instead, team up with an intent-driven partner like DemandSkill which leverages AI-enhanced intent data to run highly targeted campaigns with real-time personalization.

• Historical Data

• • You don’t have to reinvent the wheel every time you run a new campaign! Leverage data in your CRM and marketing automation platform to see what worked and what didn’t in the past. Use those insights to decide which activities to pursue moving forward.

• • • Tip: Cost per lead, conversion rates (ex: MQL to SAL or SAL to SQL), and engagement rates (ex: CTR, downloads, page visits) are a few common metrics to analyze when comparing past campaigns.

• • In addition to campaign analysis, you should also examine your customer base to see what you can glean from them. Knowing what they look like (company size, job titles, industry, etc.) and what activities they have engaged with can help you make informed decisions and gain stakeholder buy-in.
    
    

INDUSTRY LANDSCAPE

Considering the state of your industry is useful when deciding which tactic to focus on. Industries in different stages of maturity or facing varying levels of saturation will require different approaches. For instance, if you’re an emerging company entering an established industry with a wide array of competitors, you may want to prioritize demand generation to educate prospects about your brand and unique value proposition.  

When might lead generation be the focus? If you are releasing an innovative solution that others in your industry are not yet offering, you may want to take advantage of the sparse competition by converting interest into engaged prospects quickly.  

It’s also important to factor in other considerations such as industry trends, changes in compliance and regulation, and economic conditions. By tailoring your strategy to the industry landscape, you ensure your marketing efforts resonate with the right audience at the right time.  

Tip: Survey your current customer base, invest in market research, or keep tabs on industry surveys and reports to stay up to date on what’s trending in your space.

SALES CYCLE AND PRODUCT COMPLEXITY

The length of your sales cycle and the complexity of your product are intertwined factors to keep in mind as you consider which tactic to prioritize. For products with a long sales cycle or high complexity, demand generation is often necessary to educate prospects, differentiate your brand, establish trust, and remain top-of-mind throughout the decision-making process. Conversely, those with shorter sales cycles and a more straightforward product will more than likely be able to convert prospects faster. In this case, it makes sense to capitalize on the lower barrier to entry by investing in a streamlined lead generation motion.

Tip: If possible, consider investing in a product-led growth motion or self-service model. By offering a free trial or freemium option, you give prospects the opportunity to try the product first-hand. Doing so has the potential to foster trust and credibility, increase organic growth, and shorten the sales cycle.

At the end of the day, while your unique needs and circumstances might have you prioritizing one over the other, both lead generation and demand generation should always play a role in your overall strategy. When deciding which to focus on, it's crucial to consider key factors like business goals, available resources, the state of your industry, and the length and complexity of your sales cycle. Ignoring these factors can lead to inefficient use of resources, missed opportunities, and a misalignment between your marketing efforts and business objectives. Ultimately, a customized approach that reflects your business's specific needs and circumstances will enhance both lead and demand generation, driving sustainable growth and long-term success.

Remember, business is a dynamic journey, and your goals will evolve. As your priorities shift, so too can the balance between lead gen and demand gen. By continuously adapting your strategy, you ensure your marketing efforts remain a powerful engine propelling your business forward.

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DemandSkill helps B2B organizations achieve their lead and demand generation goals by running campaigns tailored to your Ideal Customer Profile (ICP) and needs. Our custom-built campaigns benefit from the perfect blend of AI innovation and human expertise. Whether you need targeted lead acquisition, full-funnel demand, or ABM, we're here to help! Explore our AI-powered, intent-driven offerings here.