031. Lead Generation vs. Demand Generation

Hello, everyone. This is your host, Emilio Garcia. Welcome to another episode of Demand Generation Studio. Today we are going to have a conversation about a topic that comes very frequently in my conversation with prospects and clients. And that one is the difference between lead generation and demand generation. Very similar concepts or related one at least, but there are nuances in the strategies and the tactics behind them that are very important to understand. As always, if you have any questions, please put it on the chat and I will be answering them after the show. That will be there for us to review. And without further ado, let us dive right away into the topic. So the first one, obviously the first question is exactly what is lead generation? That will be the first question. And so my best definition of lead generation is that it's a group of tactics and strategies that focus on capturing existing demand. That's pretty much, for me, the definition is lead generation makes a lot of sense when you are trying to capture something that is already there and that demand is not necessarily for your product or service in particular, it can be, at least for the category, there's something there. And the other big important thing is that because you are focused on capturing that existing demand, then the metrics and the taxes are geared toward the bottom of the funnel when people is ready to at least start having sales conversations or that is interesting enough to share some information about them. So it's not at the very top of the funnel when you are in the awareness, even consideration stage, but when people is ready to take some kind of action. So that makes the bottom of the funnel, there's a lot of conversion rate optimization behind it. You have your CTAs, is in the past used to be, or is this still today driven by gated content? Right, Content that you put behind a form and therefore there's landing pages. And usually what you're trying to do is to build, maintain or manage a database. Right. So those will be kind of like the examples of what is or the idea behind what is lead generation. Now, obviously some of you might ask, well, can you give me some examples of how lead generation looks like? And for sure, anytime that you create campaigns or tactics that are around solving people's problems, and that in the case of that you want to capture information, you're probably behind a lead generation tactic or campaign. So, for example, in the case of paid media, which is a popular channel to use for lead generation, campaigns geared toward conversions are the ones that are usually behind lead generation efforts. So you want to get forms filled, you want to get phone calls, you want to get chat conversations started. Those are example of pay media campaigns where the focus is lead generation. If you go more for content than for example, efforts to build a newsletter subscription are usually behind lead generation efforts. Every kind of content, for example webinars or video that you gate that to give access, you request at least the name and maybe the the email address for sure. Those are examples of campaigns or tactics that are behind lead iteration. And obviously all your lead magnetics magnets like free trials, product demos, referral efforts, quizzes or courses, usually those kinds of activities or events that require people to share some information are examples of lead generation efforts. Now that will be for lead generation. What about demand generation? What is the definition of or what we mean by demand generation? And so while for me demand generation includes lead generation, right? For me demand generation is a series of tactics and strategies that allows you to both capture demand and generate or create new demand. So demand generation encompassing both. But usually when people do demand generation efforts and distinguish them from lead generation, what they're really trying to say is that they are more focused on the creation of demand rather than the capture or harvesting of existing demand. So every time that you are in efforts behind brand awareness building, positioning around a brand, even consideration, then you have usually demand generation efforts. That's one part of it, right? You go up in, in the funnel versus lead generation that is super focused on bottom of the funnel. But the other big difference is that lead generation usually ends with the lead, meaning once you get it, it's out of the lead generation, especially scope of effort to see what happens with that lead, right? So they focus on optimization, they focus on conversion, but after that someone else managed that. And, and for a demand generation specialist, the whole path is important, right? So what happens before asking that visitor their information, but also what happens after they share the information? So if that person fills the form, then on the demand generation perspective, now it becomes important to understand what happened after. So we want to understand the whole funnel. We want to follow opportunity metrics, we want to follow revenue metrics. So we want to see the final impact of those efforts. And that's something that's crucial in their difference. And that's the reason I say that demand generation includes lead generation. While they are not the same, right, One has a very narrow focus being lead generation and the other one has a broader focus in terms of extent or scope and breadth, of course. Now some examples of demand generation tactics and campaign. And obviously here I'm going to mention pretty much everything that is outside of the scope of Lead generation, but you have your content marketing efforts, especially the ones that are geared toward brand awareness. So here you go in tandem with SEO efforts, because you want to create content, content that caters to a broader group of people and that you educate them and necessarily want their information right now. So you want to expose the brand efforts on video that are not gated, like for example YouTube channels, that will be an example of video content that is geared more toward generating or creating demand rather than capturing it. You have podcasts, for example, that are usually not gated, most of them. So very heavy on brand awareness, very heavy on, on, on being in front of people that have never heard of you, of you, and you are not inclined to get information out of them. And traditional webinars and videos after you set up the events and make them available on your website without requesting any information. PR efforts and events in general, in the physical world, they can be a combination of both. But usually the goal is just create brand or build brand. And obviously for pay media, you in theory can include conversions, but mostly if you are creating or creating demand, usually you will have more brand awareness consideration campaigns for sure. And finally social media in general, because that audience that you're building, you are not certainly extracting those emails or that information directly from the social media platform. You could in theory, but usually that's not the goal. The goal is to build a community to expose more people to your brand. So that will be also something that you can consider of the demand generation domain. Now something really, really important is what are some of the ways that you can measure lead generation results. So because in lead generation you focus on that conversion, you focus on those leads. Your usual metrics are lead volume, growth, right? You want to know if you are getting more and more leads than in the past. But obviously because you're going to have different channels, you, you want to also make sure that you are acquiring them at the right cost or the most effective cost. So cost of lead acquisition is a metric that becomes important. Part of that cost is driven by your conversion rates, in this case lead conversion rate. So the ratio between the amount of people or visitors that you have on your website versus the amount of people that actually share the information. So that's a valuable metric. And, and obviously to some extent, while the lead generation specialists or campaigns not necessarily focus on what happens after you get the lead, you still want to know if the lead to your bringing to the organization are of quality. And so you have a lead to qualify. Lead ratio that sometimes is important to measure. So you incentivize the right behaviors on your lead generation efforts and you just don't have things that or efforts that are just increasing volume but without almost no impact on the business. Now, very similarly, if you are doing demand generation efforts, you will want to track results. And while the lead generation metrics are part of them, because demand generation is broader in scope, you will have metrics that matter before the conversion, right up in the funnel and after the conversion to work qualification and conversion into clients. So for the upper or the higher part of the funnel, or what happens before conversions, you will have website engagement, which usually translates into the time that people spend on the site, the pages that they visit, the content that they consume. And there are different ways that you can measure, right? Time that you watch videos or that you scroll pages are ways that you can measure in general engagement on the web page. If you are doing social media efforts, that's where you use your engagement metrics to understand how much of an impact are you having on those social networks, right? So you want to evaluate reach, you want to evaluate how many followers are you having or increasing and the general engagement of those followers on your pages, right? If they are really not commenting and sharing and saving the post that you are putting there, probably they are not that interesting what you are showing up. In the case of content efforts that you distribute or are interested on promoting through search engines, then you will have your ranking for those blog pieces or pieces of content and the CTR to some extent, right? How many people actually click on the results and the traffic that usually you get out of the being on the on the first page of some of those results. And finally, after the conversion, the metrics that you want to measure that are related to demand generation are related to sales in general, the ratio between opportunities and sales or revenue that you close. So. So your demand generation efforts usually should impact the volume of opportunities that you have for the business. And very similar to what we're saying on demand generation or lead generation, sorry, the volume is important, but it's not the only metric because you can have a lot of supposedly opportunities that lead to no business and that wouldn't be helpful. You will have your sales rep just wasting time. So you want to have a good ratio of opportunities to close and you also want them to not be so expensive. If you have multiple channels, you want to understand which ones are the most effective or the general effort, how effective it is into getting quality quality opportunities and quality business. And finally, in theory, demand generation efforts improve the brand's reputation and therefore should impact sales velocity, meaning that not only you want to close more revenue, but you want to do it faster with a better ratio of conversion and larger deals. So the combination of those three facets or aspects usually is defined as sales velocity and the something that you can also measure for for those cases now. So those will be some of the metrics that you will use for demand generation. And usually after comparing both some prospects and clients, ask me, well, what should a B2B brand focus on? Demand generation or lead generation? And while obviously the recommendation will be that you do both in theory, because if you are doing demand generation, usually that also includes lead generation efforts as part of the tactics or the strategies, there are situations where one aspect is better recommended than the other. And one quick example that I have is for B2B brands that are newer or that just launched, either the company just launched or, or the product category that they're getting into is newer, or there's not a lot of recognition about the product itself. If it's established company that is going into a new market, then usually in those cases, demand generation, the creating demand aspect of demand generation makes more sense because if you start lead generation efforts and, and there's no audience that is actually searching for your solution already, then you will have a very low volume of actual leads. So in those cases, you want to start with demand generation, you want to build brand awareness for both the company, the product, the kind of solutions that you have, the kind of problems that you solve, and even broadly the kind of problems that your buyer might encounter is even if some of them you are not able to solve at all, or your solution is not the best. So in those cases, you want to educate, educate your prospective buyer first rather than trying to capture something that is not there. So for Those cases, for B2B brands that have a new marketing effort, new product, or the company is just brand new, demand generation makes more sense. If you are a more established company with a recognizable brand and the product or service that you have is well known and, or the category itself is well known, then it makes more sense to focus on lead generation. Or at least if you do that first, you will, you will drive more results initially than if you put those efforts behind demand generation, where probably you already have some impact. So usually when you do a specific lead generation effort, you are trying to optimize or increase the impact that your current brand has already on the results of the business. And in those cases, focusing on lead generation makes more sense. Now, as you might guess, however, definitely they can work together. You can have specific tactics for lead generation to optimize the traffic that you already have, to take advantage of the community that you have already built on social media or even to go on pay media after very bottom of the funnel keywords that are competitive to you because you have a strong brand. And on top of that, of course you can have efforts to to maintain or even increase the presence of your brand overall. So they can work together for sure. And usually if you're going to do that, then you break out or break out the demand generation effort into some specific areas like brand awareness, lead generation, lead nurturing, and obviously customer acquisition. And even in some cases you can have a specific efforts into customer retention as it is that can be part of a demand generation effort for sure. So they can work together. There's nothing wrong with that. And with that I will finish this conversation today. So in general, as kind of like a highlight of the conversation or the topic that we covered today, as we can see, lead generation and demand generation can work together. And the biggest thing that you can take away is that if you already have a recognizable brand for a product category where you already have some traffic or demand that exists, then starting with lead generation might make more sense to you if you want to have quicker results. But you can't postpone forever the fact that that you need to increase the size of the pool. And the only way to do that is through demand generation. So with that I will finish and please stay tuned for our next episode. If you don't want to miss it or you want to get notified, visit our website at boundify ioemandgenstudio and it will be my pleasure to talk to you. And in the next episode, have a great day. Bye bye.