What’s the difference between lead and demand gen?

If there’s one thing us marketers love, it’s a bit of jargon – but we’ll happily admit that this can sometimes get in the way of clarity. So, when you’ve heard the terms ‘lead generation’ and ‘demand generation’ bandied about, you may well have wondered if the difference is just semantics or something more.  

There’s a reason the two terms get confused (and it’s not just the word ‘generation’). Lead gen and demand gen often use the same or similar tactics. For example, both demand gen and lead gen profit from great content – albeit in different ways, with the content designed for different purposes.

But there are other, more significant differences. Before you generate leads (more to come on defining a lead later), you need to create demand. Clients often ask that we generate leads for them – which we’re certainly able to do. However, depending on the business and its marketing capabilities, what they may actually need is demand gen.

A large, international software company with majority market penetration may well be in the position to drive leads among its identified target audience. However, a tech start-up with low brand awareness is likely not ready for a lead gen campaign. First, it needs to generate awareness and to create demand for its product or service.

By my definition, brand awareness – including marketing activities such as PR, events and advertising – can all be grouped under the demand gen umbrella. On the other hand, lead gen is that bottom-of-funnel piece whereby you acquire sales-ready prospects (though the exact definition of leads, MQLs and SQLs varies from client to client).

How do you define a lead?

I could write an entire blog on defining a lead. But I don’t need to: Marketo wrote a whole eBook. The important thing is to make sure you have a definition of what a lead is to you that is agreed upon by everyone in marketing and sales.

Example:

  • A lead is someone who downloaded something on your website
  • A Marketing Qualified Lead (MQL) is a person you have a name, job title and company details for, who has consumed enough content of yours to hit a set core threshold in your marketing automation system
  • A Sales Qualified Lead (SQL) is person with job title X, who works in an organisation of Y size, and has consumed all the content on workflow Z. Along the way, they’ve answered some pre-programmed questions in your marketing automation system

And so on. But I digress – let’s get back to the point. Besides size and market penetration, there are several other factors that could influence whether a demand or lead gen campaign would be most appropriate. If the company doesn’t yet have an audience, data or an effective sales function, they may benefit from demand gen. Before creating a lead capture form, they should first consider how they might build an audience and establish trust.

Real-world example:

When we speak with OG clients, we help them to understand where their business is in the cycle. Then we decide upon the best course of action, with the end result of driving high quality leads. With B2B payments provider Optal, for example, we created a full-service strategy that included planning, content, marketing automation, lead nurture (including workflows and lead scoring) and generating MQLs for the Optal sales team.

You can certainly do one without the other – but there’s little point creating demand and then not acting upon that interest. That approach makes demand gen activities a very expensive spray and pray tactic. When you follow up a great demand gen campaign with a solid lead gen strategy, you’ll get much better ROI, and in lead gen terms that could be a lower cost per lead (CPL). Win, win, win.

Ultimately, it’s the combination of demand and lead gen within a marketing strategy that creates a complete funnel or user journey, and a consistent experience for prospective clients. And that’s what we’re all after from our marketing efforts – so the value of understanding and utilising both demand and lead gen is clear.