What is the Difference between Demand Generation and Lead Generation

Insights from a Marketing Leader and SaaS CEO

What is the Difference between Demand Generation and Lead Generation

The main difference is that Lead Generation is focused on getting ‘leads‘ in (an email address) while Demand Generation is focused on creating demand and getting prospects to want to have a conversation with sales.

Below, we share updates from our CEO where he addresses issues he’s seeing in the lead gen – demand gen environment.

Be sure to head over to the LinkedIn post and engage or ask any question.

He’s more than willing to help you achieve your goals.

We understand it’s difficult to switch from lead gen (short term) to demand gen (long term) strategies.

You have targets to achieve, the CEO, CMO, or Sales Leader often don’t believe in Ungating marketing assets, cutting lead scoring out, focusing on meaningful conversations rather than only demo requests, etc.

Also.

Be sure to bookmark this page or to follow Brian as this is just the start of our journey and we’ll be sharing updates regularly.

Change doesn’t happen overnight but it begins overnight.

How can you begin to shift from lead generation to demand generation?

How can you create more conversations for your organization?

Reverse engineer from revenue to understand where your success lies. Double down on those things.

Share inefficiencies with executives and sales to get buy in on what needs to change. They want to get to their goals and aren’t beholden to any particular way of getting there but you have to show them that there is a better way. They want more qualified conversations not more downloads.

It doesn’t need to be all demand creation, find ways to get your audience to want to talk to you. It’s not always with purchase intent but conversational intent is a great way to get your foot in the door.

You can begin the transition while sustaining the metrics that are currently being used. Whether that leads, lead scoring, MQLs, keep those things running while you find opportunities to build quality conversations, pipeline, and revenue.

What can you do to get your audience excited about talking to your team?

Be the change regardless of how slow. It will never come if you wait for it.

Let’s get into it

Lead Gen vs Deman Gen

❌ It’s not long term vs short term or revenue now vs revenue later.

✅ It’s sustainable vs unsustainable.

❌ You can’t sustain a demand capture only strategy.

❌ You can’t sustain an inefficient lead Gen strategy where you MQL hundreds or thousands of leads per that don’t want to talk to you.

How will your strategy shift?

< 1% is the percentage at which most company’s Lead Gen program “Leads” convert to Opportunity.

We can’t accept this as the best we can do?

We can start to change the narrative from leads and lead scored MQLs to conversational intent.

Why would someone want to talk to your company other than already having purchase intent?

Figure that out and make it your schtick.

Support and educate your audience from 0 to Hero!

Trim the fat to reduce CAC in marketing!

Most of us aren’t operating with random channels and campaigns that are wasting spend.

Focusing on efficiency within the few channels where we are operating is important.

In general, CAC reduction is a bigger area of opportunity than “trimming the fat” because marketing efficiency boils down to progression through the funnel.

Each step through the funnel is an opportunity to improve conversion rates and decrease CAC.

Are the right activities being implemented to increase conversations with sales?

How are you decreasing CAC?

Demand Generation isn’t Lead Gen.

Demand Generation isn’t Demand Creation.

It’s both Demand Creation and Capture along with everything in between.

We don’t need to be perfect.

We don’t need to completely change what we do today.

We do need to align to our sales motion while finding ways to better engage our audience.

Build your story!!

People doing lead generation aren’t wrong.

Well, not all of them anyway.

There is this notion that demand capture is bad!! It’s not!!!

We need demand capture, the problem is that we should be creating demand as well.

Educating and supporting our audience.

Often times the problem stems from the executive team thinking it’s 2007 and lead Gen is the answer.

Change management is hard and even harder when you don’t have the authority to impact change.

We need to encourage people to push gradual change while managing expectations for existing volume and lead Gen numbers.

Why manage expectations?

1. Demand creation takes time so there will not be an immediate impact.

2. This job is someone’s livelihood and if they switch of volume, they could lose their job.

3. Many startup executives don’t care that things aren’t running efficiently, they don’t like change, they just want MORE of the same.

4. Capture/Creation is not a 0/1 situation. Each marketer needs to find the mix that best fits their org.

How do we help marketers gradually make the shift to educating and supporting their audience?

ICP or Ideal Customer Profile are not the only people to whom we sell.

They aren’t even the only people we should target with our content.

The firmographics used to determine ICP should not be used to determine whether or not you talk to someone or sell to them, i.e. MQL or Opportunity.

We should be building a community of like-minded people with our content, educating and supporting them.

FYI, they won’t always be ICP.

Why wouldn’t you sell to someone that wants to buy your product just because they don’t meet, ICP, arbitrary requirements that should always be evolving??

There are way too many definitions for the 4 basic lifecycle stages:

Lead, MQL, SQL, and Opportunity.

Everyone has a different interpretation of these terms and that creates misalignment internally with sales and marketing.

Then getting support externally becomes more difficult because the definitions need to be explained or feedback won’t fit the context.

Can we evolve and align the current terms or should we go back to the drawing board?

Lead Gen isn’t effective nor is chasing Demo requests only?

I don’t just want sales conversations, I want conversations before someone is in a sales motion.

Why?

Of course Demo’s convert the best but that is a small audience.

Supporting the prospect before a sales motion is key to guiding the direction and influencing the outcome.

How do you create conversations earlier in the process??

You’ve already lost if you think your team can’t do better than lead Gen as a marketing strategy.

Sending prospects to sales that aren’t ready to buy is old news.

Not educating your audience will force them to learn from others.

Educate people to the point that they want to talk to you, but from you, and rave about you.

All MQLs are not created equal.

A TOFU content asset download that “lead scored” its way to MQL is not the same as a Demo Request.

Do you segment your conversion and win rates by activity?

You will find that Demo/Pricing requests convert the best, then other conversational intents, and at the bottom, sub 1%, you have content assets.

Education Intent activities are not ready to go to sales, regardless of what your lead scoring says.

It’s time to change the game.

How well do your activities convert?

Marketing activities need to align with sales motions and abilities.

If your sales team is built to be ‘order takers’ you can deliver content offer downloads as MQLs and expect progression and wins.

If you are losing in a vertical because the sales team can overcome industry specific objections, it doesn’t make sense to target that vertical until your team can be trained up.

If you are focused on enterprise accounts, it doesn’t make sense to play the volume game.

If you sell a $5000 ARR product, large expensive outbound teams don’t make sense.

What else?

Unpopular opinion:

Most companies aren’t… spending enough time and money, on enough channels, that focusing on attribution is even necessary.

You are wasting your time when you can be learning about your customers and audience then understanding how you can educate and support them.

Typical Lead Generation tactics generally convert to revenue at well below 1%.

So why are we fighting so hard to keep this mindset??

Demand Generation and Lead Gen are not mutually exclusive.

Lead Gen is a low-performing marketing activity when defined as the action of gating content offers and then immediately sending them to BDRs or MQLing via lead scoring.

These prospects in general don’t have purchase or conversational intent. Switching the Lead Gen narrative from getting contact information to creating conversations is the key to long-term lead gen or conversation generation.

Here you want the people that have purchase intent or conversational intent.

Meaning people that want to talk to you with a minimum acknowledgment of a problem that you can solve.

(With this method I have been able to increase pipeline and revenue, several Xs over, while still increasing the volume of MQLs. but in general, MQLs will go down but pipe and revenue should still climb.)

Then combine that with demand creation by educating and supporting your audience with valuable information.

Deliver educational information to your audience on the channels they prefer in the formats they prefer to help them consume it easier and faster.

Combine these actions and you have a Demand Generation strategy.

Many people think you should add all contact info into your CRM.

If a contact hasn’t requested and conversation nor requested more education for you, i.e. ‘no intent’, you shouldn’t.

I know CRM companies have taught us all to nurture but they get paid by the volume of contacts in your CRM and even HubSpot promotes accepting opt-ins only.

There are only two reasons you would add someone to your CRM that hasn’t requested more from you:

1. Spam: You intend to start spamming and trying to sell these people. We shouldn’t be doing this in 2022.

2. Hope: You hope that at some later stage this person will convert so you can track them back to this action.

What value would this bring?

If they don’t want to interact with you now, why would this information be valuable?

No value add in storing every contact in your CRM.

Have standards for what goes in!

A lead nor MQL should be defined by firmographics and job titles.

That’s Ideal Customer Profile and Buyer Persona.

If someone wants to have a conversation with you or about your business, you should speak to them.

If they don’t want to talk to you, you shouldn’t bother them.

What is the Saas Prospect Intent Pyramid?

I shared the prospect intent pyramid with you all yesterday but didn’t specify what it is and how it could be helpful.

This was created to align teams that are struggling with defining which activities we should be doing and what defines someone that is ready to speak to sales.

This is not a full sales process but directionally, what is the intent of the person that gave us their information.

Why did they give us their information and how should we treat the request.

I received some great feedback. There were some questions so I think an explanation is needed.

1. This pyramid is meant to be a worksheet where you can specify the intent of your audience based on the way you collect their information.

If they submit a demo request, we deem that to be purchase intent.

If they are only a badge scan from an event, we deem that no intent, etc.

2. The lifecycle stage descriptors can be rewritten to fit your company structure.

We use MQL as a contact that marketing has qualified to go to sales and we only accept hand-raisers for that.

Folks that request to have some sort of conversation with us.

No leads scoring to MQL, only a yes or no on requesting a conversation.

We break MQLs into two categories: purchase intent which goes straight to AEs and conversational intent which goes to our “BDRs” to be supported and educated.

Lead is for someone that has engaged with your content and requested to receive more education from you via email.

Strangers are people that don’t know who you are but you collected their information anyway and are prepared to spam them… don’t.

We talk a lot about customer experience and employee experience but we neglect audience experience.

We don’t care how we intrude on their lives as long as we get to pitch our wares.

For our audience we are ok with:

  • Gated Educational Content
  • Adding that extra form field
  • Spamming
  • Forcing them into Conversations

Let’s change this and treat everyone with a great experience. Make them remember you positively.

I talked to a CMO whose team sent all content syndication leads to BDRs as MQLs.

The people they were able to reach didn’t remember consuming the content nor did they recognize the company name and the other 97% never responded.

This creates several problems for an organization.

1. You’ve paid for this contact information and these people are no more ready to have a conversation with your team than a typical cold call.

2. They don’t progress so you aren’t supporting the business in generating revenue.

3. Marketing becomes a sales support mechanism because it isn’t providing strategic value and loses or isn’t offered a seat at the table.

4. You lose the trust of the BDR/Sales team because there is no value in what you are calling “marketing qualified”

5. You lose alignment with sales because you “met your MQL target” but few opportunities and little revenue has been generated so sales misses their targets by a lot.

6. This creates a bad experience for the people your BDRs contact. Bad for your brand.

Consume educational content > get cold outreach to book a meeting > make a purchase.

I know I don’t buy like this, do you??

Unpopular Marketing takes:

Not everyone is ready for a conversation with your sales team.

Not everyone should be added to you CRM.

Activities have different prospect intent levels.

Align your process and metrics to the intent level of your prospect.

Demand Gen isn’t just demand creation and demo requests.

Marketing, Yay! we got xxx MQLs.

Execs and sales…

Hey Marketing, none of these MQLs are converting and most don’t want to talk to us or don’t remember interacting with our content.

It’s extremely important to internally define your lifecycle stages.

Even more important that marketing only progress people to sales if they want to talk to your team.

My MQL definition: MQL = requested conversation or requested to speak to sales.

Depending on CTA intent + Fit that is either AE or BDR. “Conversational intent” or “purchase intent

Lead Gen vs Demand Gen – Part 3 It’s not a zero sum game. 3.

No gates means giving away the opt-in email channel to competitors.

Absolutely not…

No gates means allowing prospects to educate themselves while consuming your content.

Allowing people to consume your content freely allows you to control the narrative and build affinity for your brand and for your company as the leader in your category.

We can still support our audience with opt-in e-mail without forcing them to fill out forms and hide our thought leadership behind gates.

Giving away our content will give us the competitive advantage while people flock to consume our ungated and valuable content vs a gated unknown.

Our competitors that continue to gate content will end up with the same thing you are experiencing now, hundreds or thousands of “leads” that convert to Opportunity at sub 3% and win at sub 0.6% Most people including us don’t buy like this.

Download some educational piece of content, get cold called, purchase product. Those that continue to think outward vs. inward will lose.

Lead Gen vs Demand Gen – Part 2 It’s not a zero sum game. 2.

Limiting prospects to a single high intent inquiry form – e.g. demo request or chat – might result in most lost prospects because the self guided tour was confusing.

While a single high intent form might be a step too far as you expect to deliver enough quality conversations to your team simply by getting more demo requests.

Aiming a “more demo requests” is difficult because you are expecting to increase the volume of people that have “purchase intent” or are ready to speak to sales.

How are you going to manage this? You will probably need a strong demand creation plan and with still probably not be enough for 50%, 100%, 200% sustainable growth.

People don’t get lost, they reach out when they are ready to have a conversation.

If your one contact is demo then you might be limiting yourself and your team.

The biggest point here is that it is a rebuttal to demand creation and creating “conversational intent” CTAs for folks that aren’t sales ready.

How do you educate the market and provide enough value that they are willing to have a conversation with your team before they are sales ready?

💰 Demo only isn’t the best solution for everyone but that doesn’t mean contact info collection is either.

👩‍🎨 Be creative and find ways to generate conversations beyond demo/pricing.

Lead Gen vs Demand Gen – Part 1

It’s not a zero-sum game.

Demand Generation is broken down into two parts.

Demand Creation is about educating the marketing and bringing awareness to the problem, category, and your brand.

Demand Capture is where we try to collect the information of prospects that are currently in the market.

Lead Generation is a subset of this.

Now that we have cleared the air. I received several objections to a demand generation strategy that I would like to discuss over the coming days.

1. Prospects have expectations for gated content. They know what they are getting into. Sales and marketing orgs that fail with gates are misunderstanding these expectations.

No No No. Why does it have to be that prospects know that we will harass them because they were forced to exchange their contact information for a piece of educational material?

These people are looking to educate themselves or have “educational intent” when downloading most assets.

They are not looking to be bombarded by BDRs because they wanted to read the “2022 B2B Buyers Guide”.

Assuming this is ok because people expect it is just wrong.

Instead, focus on how you can provide value to these people and educate them to such time as they request to have a conversation with you.

This will:

📉 reduce the amount of “MQLs” needed to reach targets.

🚀 Increase qualified conversations for BDRs

💰 Reduce cost per opportunity and CAC.

📈 Marketing generated revenue.

Everything in Marketing shouldn’t be measured.

Zooming out and looking at the big picture and journey is much more important than granular tracking.

My team doesn’t measure/analyze everything rather I ask them what would be the impact of measuring this thing.

Why?

We measured poor performance in our nurture sequence so we wanted to revamp the nurtures.

After discussing and analyzing potential lift, we decided that it wasn’t going to move the needle and shifted to focusing our time and energy in items with a bigger impact.

As B2B marketing and sales people, we’ve always been taught the prospects would rather solve a pain than take advantage of an opportunity to grow.

This has led us to focus on problems/pains.

What would be the impact of changing our narrative from negative to positive?

What if we got people excited about where they could be?

Could we close more deals because prospects see the potential upside of work life due to the wins your solution can bring?

Your marketing efforts don’t matter if you can’t track them back to revenue.

Not by channel, campaign or asset but sourced from your website or field team not partners or outbound.

Regardless of how strategic and brand focused we want to be, we will be fired if our work doesn’t show that it’s growing the business.

What does it mean to have buying motion alignment?

Does what you’re doing make sense?

Are you focusing on channels and actions that aren’t generating conversations and revenue?

No, someone read an article related to your category on a random website is not reason to cold call them.

Their intent was not to start a conversation or sales motion. It was to educate themselves on a topic.

I continue to hear marketing and sales talk about intent as if there is only on type, purchase intent.

There are multiple types of intent,

purchase intent, conversational intent, educational intent, and no intent at all.

How are you aligning your activities with buyer intent levels?

Do you buy the same way you perform marketing/sales?

Would you buy from you?

Do you start a buying motion after cold outreach?

Do you start a buying cycle after BDR outreach from a content offer?

I download a content offer to educate myself on a topic, not to purchase a product.

I don’t want to be contacted because of that download.

I don’t want to be cold called. Of my 100+ saas purchases, 1 has been through cold outreach.

Buyers know what to do when they are ready to buy.

How do you buy?

What if every “MQL” could become an opportunity?

What would that mean for your business?

What would that mean for the quality of your sales interactions? For your revenue?

Speed to lead is not the most important factor in winning or losing if you are spamming a person that doesn’t want to talk to you.

Has this person requested a conversation or are you spamming based on a list or lead scoring?

Intent isn’t only purchase intent.

Intent is why someone took an action. There are various actions that align with various intents.

Purchase Intent 

  • Demo
  • Pricing

Conversational Intent

  • Product Showcase
  • Workshop

Create 👆🏼not 👇🏼

Educational Intent

  • Ebook
  • Blog
  • Whitepapers

Zero/Cookie/Pen Intent

  • Cold event leads
  • Cold Calling
  • List Purchasing

Lead Scoring is Dead.

If you are using lead scoring to MQL prospects and send them to sales, you are contributing to the misalignment between sales and marketing.

Most of those MQLs, you are asking your sales team to action, are people that are not yet “conversation-ready” Why? Leads that haven’t requested to have a conversation with you convert at a much lower rate than those that do. This creates a disconnect between you and sales because they don’t want to waste their time and resources on these contacts.

People without conversational intent are not qualified.

Generate conversations not leads.

Its fine to use lead scoring to prioritize outreach but anything beyond that is useless.

Note to CEO’s that have been focused on Demand Capture.

Don’t pound your marketing team for more volume when demand is declining and costs are climbing.

Reset expectations and find ways to balance the load across your GTM team.

Start focusing on creating demand. Improve efficiency throughout the journey.

Incremental improvements at each stage will lead to huge impact.

Become the go to educator in your space and build an audience that will then come to you when they are ready to buy!

Q2 (2022) was an interesting time as we navigate a potential recession and everything else.

While things may be slowing down, this is not the time to revert back to ineffective and inefficient lead generation tactics.

Take this time to build a better demand generation strategy and start creating demand.

The “conversation-ready” lead is the new standard for effective lead generation. – Drift

How do we create conversations not leads?

Would you rather have 100 useless “leads” or 20 people that want to have a conversation with you?

Do you blindly trust your attribution software?

Attribution software is faulty and quantitative data is not the truth.

We need qualitative data to support our decision making. Whether or not a conversion was attributed to a specific channel doesn’t tell the full story.

Why are B2B marketing teams still using Lead Scoring in 2022?

How does this align with buying intent?

How is this any different than cold calling?

Does sales teams appreciate these MQLs?

What is the conversion rate to Opp and Closed Won?

“This person read three of our blog posts, now send them to sales as sales-ready.” Conversation Generation > Lead Gen

There is only one intent that matters and that’s “conversational intent”, make people want to talk to you!

Generate conversations not leads.

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