B2B Marketing Transformation: Demand Generation vs. Lead Generation

Demand generation and lead generation are two essential strategies in B2B marketing, but they serve different purposes and require different tactics.

This article will explore the differences between the two and examine why demand generation is a better long-term approach for sustainable B2B growth.

What is Demand Generation?

Demand generation is a strategic, long-term approach to building awareness and interest in your brand, products, or services.

The primary goal of demand generation is to create a need for what you offer among your target audience, driving them to seek out more information and engage with your brand.

Demand generation activities can include content marketing, SEO, social media marketing, influencer marketing, events, and webinars.

The goal of demand generation is to attract prospects who are interested in your industry or the challenges that your product or service can solve.

By building a relationship with them through your marketing, you can create trust and establish your brand as a thought leader in the space.

"Demand generation is about creating a long-term strategy for engaging your audience and building relationships with them over time. It's not a one-time campaign; it's an ongoing effort to create demand for your product or service and drive revenue growth." - Joe Hyland, Chief Marketing Officer at ON24. (Source: Forbes)

What is Lead Generation?

Lead generation is a more tactical approach to identifying and collecting contact information from potential customers.

The goal is to create a database of potential customers who have shown some level of interest in your product or service, so you can nurture them through targeted marketing campaigns and sales efforts.

Common lead generation tactics include email marketing, paid advertising, landing pages, and gated content.

Lead generation focuses on identifying prospects ready to buy or close to making a purchase decision.

This approach is more short-term than demand generation because it aims to move prospects quickly through the sales funnel.

Why Demand Generation is a Better Long-Term Approach

Builds a Stronger Brand

Demand generation activities focus on building awareness and establishing your brand as a thought leader in your industry.

By creating valuable content and engaging with your target audience, you can build trust and credibility, which can lead to more business in the long run.

A strong brand also makes attracting and retaining top talent easier, which is crucial for sustained growth.

According to a study by Edelman, consumers are more likely to buy from brands they trust, with 81% of consumers stating that they need to trust a brand before buying from them.

By prioritizing demand generation activities, you can create a strong brand that resonates with your target audience, leading to long-term customer loyalty and advocacy.

Creates a More Sustainable Pipeline

Demand generation activities create a sustainable pipeline of potential customers who are interested in your industry or the challenges that your product or service can solve.

By nurturing these relationships through ongoing engagement, you can create a steady flow of leads that are more likely to convert into customers over time.

According to research by Marketo, companies that excel at lead nurturing generate 50% more sales-ready leads at a 33% lower cost per lead.

This is because demand generation activities are focused on building relationships with your target audience, rather than just collecting contact information.

By nurturing these relationships, you can create a more sustainable pipeline of leads that are more likely to convert into customers over time.

Better Return on Investment

According to research by HubSpot, companies that prioritize demand generation efforts have a 45% higher ROI compared to those that focus solely on lead generation.

This is because demand generation activities are focused on building relationships and establishing your brand as a trusted authority, which leads to more loyal customers over time.

The same research by HubSpot also found that companies that prioritize lead generation activities experience a higher cost per lead and lower conversion rates than those that prioritize demand generation.

By focusing on demand generation activities, you can achieve a better return on investment, with more loyal customers and a more sustainable pipeline of leads.

Demand Generation Transformation In the Real World

There are many examples of B2B marketing teams that have successfully transitioned from a lead generation model to a demand generation model, achieving better long-term results. Here are a few data points, quotes, and success stories:

HubSpot's Shift to Demand Generation

HubSpot is a marketing and sales software company that has been highly successful in the B2B space.

In 2015, the company made a strategic shift from a lead generation model to a demand generation model.

As a result, HubSpot achieved a 21% increase in customer acquisition and a 54% increase in revenue growth.

According to Kipp Bodnar, HubSpot's CMO at the time, "Lead generation is an outdated model. Demand generation is a much more strategic and holistic approach that aligns marketing and sales around the entire customer journey."

Oracle's Emphasis on Content Marketing

Oracle, a multinational computer technology corporation, has also made a successful transition to demand generation in recent years.

The company shifted its focus from traditional lead generation tactics to content marketing and thought leadership.

According to Oracle's Senior Director of Content Marketing, Kimmy Paluch, "We shifted our focus from lead generation to demand generation, which involves creating content and experiences that drive engagement and build long-term relationships with our audience."

As a result of this shift, Oracle achieved a 20% increase in pipeline revenue, a 25% increase in web traffic, and a 20% increase in social engagement.

Cisco's Emphasis on Customer Education

Cisco, a multinational technology conglomerate, shifted its focus from lead generation to demand generation by emphasizing customer education.

The company created a wealth of educational content, such as online courses, webinars, and certification programs, that provided value to its target audience and established the company as a trusted advisor.

According to Cisco's Vice President of Marketing, Karen Walker, "Our demand generation approach is centered on educating our customers and providing value to them.

By creating educational resources and thought leadership content, we have been able to build long-term relationships with our customers and drive revenue growth."

As a result of this approach, Cisco achieved a 10% increase in customer acquisition and a 30% increase in revenue growth.

Time to Change

Demand generation and lead generation are two critical components of B2B marketing, but they serve different purposes and require different tactics.

While lead generation can be effective in driving short-term revenue, it is not a sustainable approach in the long term.

By prioritizing demand generation activities, you can build a stronger brand, create a more sustainable pipeline of potential customers, and achieve a better return on investment.

For B2B companies, demand generation is the way to go for sustained growth and long-term success.