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Demand generation versus lead generation – the terms are often used interchangeably to describe the process of acquiring new customers with marketing activity.
But despite their similarities, the two strategies feature key distinctions that every modern marketer should know. Namely, lead generation focuses on capturing prospect contact information (leads), while demand generation targets earlier stages of the buyer journey by educating, building trust and recognition, then driving in-market engagement to your business (marketing qualified leads aka ‘MQLs’).
In this post, we’ll dive into their differences and explore how the evolution of pure lead gen to a demand-based approach is transforming the ROI of marketers globally – with 44% of UK marketers planning to increase their demand generation budgets through 2021 (The State of Demand Generation 2021, durhamlane).
For so long, marketers have been taught to generate leads, leads and more leads – often regardless of quality. The more leads generated the better they performed in the eyes of the business, even if MQL-to-SQL (sales qualified lead) conversion rates were low.
Because that’s a sales problem, right?
Wrong. Marketing in 2021 is becoming a more revenue-centric function, since it has a direct impact on your organisation’s bottom line. Measuring marketing success without any link to the end goal – revenue – simply isn’t enough anymore.
Yet many business leaders are hesitant to leave the confines of the MQL hamster wheel, even if they can feel it slowing down.
Creating marketing KPIs with high-volume lead targets incentivises ‘quantity over quality’ outcomes and behaviours, meaning sales teams can waste their time chasing marketing-generated leads that won’t convert to sales qualified opportunities.
This misalignment can lead to friction between the two functions; sales become increasingly frustrated at being fed low-quality MQLs and marketing perceive low conversion rates as lack of skill or worse, effort.
So, how are modern B2B marketers better aligning themselves with their sales counterparts to drive consistent, high-quality leads through the door?
Demand generation, of course.
Demand generation is the process of creating and capturing in-market demand for your products or services.
It focuses on building awareness much earlier on in the buying journey; identifying customer challenges and educating your target market on how to solve their pains.
By helping your audience to build an affinity with your brand (well before the problem has reared its ugly head), you can sleep soundly knowing that when they are ready to buy, they’ll likely come to you for guidance.
Capturing prospects with high intent to buy will help your MQL-to-SQO (sales qualified opportunity) conversion rates soar and the average length of your sales cycle shorten. You’ll spend less time generating and chasing leads that aren’t ready to convert to customers.
Sounds simple? Committing to a demand gen strategy is a long-term play.
The hardest part is arguably understanding that transitioning from a lead to demand generation approach won’t produce results overnight. It takes time to reach, educate and engage an audience that may be weeks, months or years from beginning their buying journey.
The best part? Knowing that if you can make a demand generation strategy work for your business, you’ll be closing more marketing-influenced sales than ever before with ROI at an all-time high.
Some might argue that it’s been a long time coming, but the way marketing and sales capture and convert in-market B2B buyers is evolving. Going beyond traditional lead generation to a highly aligned demand generation model, see below.
The diagram illustrates how the roles of marketing and sales have become more aligned to effectively reach your audience at multiple touchpoints throughout the buyer journey – well before they’re actively in-market and even after they have become customers.
Lead Generation Model vs. Demand Generation Model, durhamlane, 2021
Reaching your target audience with relevant, thought-provoking content and brand marketing before they are in buying mode gives you the advantage of brand familiarity. Once the buyer becomes aware of their problems or pain points, they are more likely to look to your business to educate them on the implications of their challenges.
Building this recognition and trust early on is a sure-fire way to strengthen the quality of your inbound marketing leads as buyers enter the interest stage.
In fact, 71% of our 2021 State of Demand Generation respondents plan to execute even more content marketing as part of their overarching demand generation strategy this year.
Similarly, increasing your reach into the earlier buying stages will uncover more buyer signals, telling both marketing and sales teams when it’s the right time to engage with a prospect and what messaging to serve them.
Instead of clutching at straws for weak, low-intent leads to force down your funnel, you can focus your resources on generating highly qualified marketing leads (that your sales team will thank you for).
Wondering how to make demand generation work for your business? There are four key buyer stages in the demand generation process for net-new customer acquisition:
Demand Generation Model, durhamlane, 2021
It all starts with building brand awareness. Help your target audience discover who you are and what you do, even if they don’t need your products/services yet. We’re talking content marketing and thought leadership across multiple channels e.g. industry reports, podcasts, video, social media and blogging.
And don’t just focus on turning up your company voice; maximise the digital presence of your marketing and sales teams by empowering them to build their personal brands across platforms like LinkedIn.
Ready to capture their interest? Ask high-impact questions that help the buyer to identify their problems. Many will already be aware of them, but perhaps they aren’t yet feeling enough pain to take action. Educate your target market around the nuances and implications of their challenges, showing that you understand them better than anyone.
Our recent B2B Buyer Insights Report research showed that 71% of buyers believe the key to great marketing is a brand’s ability to “identify and understand the pains and challenges related to my job”. Demonstrate that you are truly aware of their day-to-day struggles and how to overcome them in the form of eBooks, guides, tip sheets, tools and frameworks.
Your buyer knows they have a problem and is now actively looking for help and guidance. Want to stand out from the crowd? Offer the remedies up on a plate, or rather, in the form of digital playbooks, whitepapers, webinars and case studies.
Demonstrate a wealth of knowledge and experience in managing these challenges for other businesses, so they look to you for the answers.
In the traditional lead gen model, this is where marketing hand off qualified leads to sales. But in the demand gen model, marketing will continue to help nurture sales qualified opportunities through to close.
Deploy tactics like programmatic advertising to help keep your brand front of mind for all stakeholders in the decision-making unit and equip your business development reps with powerful sales enablement content (like scenario modelling, customer stories and testimonials) to further establish your capabilities, reinforce your credibility during the decision-making process, and accelerate them through the later stages of the buyer journey.
Whilst the above should provide a structure and framework on how to think about the buying journey, it’s important to remember that every buyer is different. We often encourage our clients to ‘think about the individual behind the MQL.’
Every individual has different preferences and pressures, and may not progress the above framework in a timely nor linear manner. Buyers may well enter the journey at later stage of the process, perhaps off the back of another vendor’s brand discovery and problem education efforts (and vice versa).
The key point here is to make sure you have a structure in place for thinking about how the buying journey typically works from start to finish, whilst understanding and appreciating the nuances of the process.
Once you’ve got your process nailed, you’ll need to think about how to execute your overarching strategy. Here’s some tips to help you get the basics right:
The key to executing an effective demand generation strategy is knowing your customers inside out. Start with a clear plan, aligned goals and work your way through the process.
And remember, what works for one won’t necessarily work for another. Test everything, be innovative, and stay focused on the end goal (revenue).
When implementing any new marketing strategy or process, it’s important to lay strong foundations by getting the basics right.
If you’re unsure how to approach this within your organisation, why not let someone else manage it for you? Outsourcing is a great option if you want to generate more high quality MQL-to-SQLs whilst keeping the wheels of your business turning.
Ready to drive more commercial outcomes for your business? Reach out to our B2B demand generation experts today!