Demand Generation vs Lead Generation: You Can’t Annoy Prospects into Buying from You
One of the biggest frustrations in B2B marketing is that lead generation doesn’t work as well as it used to.
We’re all kinda to blame for this.
There is a history in B2B marketing where someone figures out a new, better way of generating leads. It works well for them. They perfect it. Prospects take the bait, and they generate better and more leads than everyone else.
Competitors copy them. Marketers in other market categories copy them. Suddenly everyone is doing it. Technology startups figure out a way to automate and scale this approach. Someone writes a book on it. A whole cottage industry is formed around this new way of generating leads.
But prospects get wise and stop responding.
This happened with gated content, cold-calling, automated email sequences, and the latest tactic that’s being ruined for everyone, social selling.
Ask yourself these questions:
- How many cold emails do you ignore per day?
- How many unsolicited phone calls do you block per week?
- How many InMails are unread in your LinkedIn inbox?
- How many follow-up emails do you have to ignore after registering for a webinar or filling out a form on a website?
Annoying, isn’t it?
I have over 37,000 unopened emails. The vast majority are marketing emails or prospecting emails trying to sell me something that has nothing to do with what I do.
“No, I don’t need software testing. We don’t make software. That was my last company. Gaaaaaaaah!”
If you find it annoying, why would your prospects feel any different?
I am not saying we should all stop all lead-generation tactics. On the contrary, lead generation has its place as part of a bigger play that includes demand generation and demand capture.
To be clear, lead generation, demand generation, and demand capture are three different things and they can work together really well, but, as marketers, we sometimes get them mixed up.
OK, Mr. Smartypants, what is the difference?
Hey ChatGPT, what’s the difference between lead generation, demand generation, and demand capture?
Lead generation, demand generation, and demand capture are all related to the process of generating sales, but they differ in their approach and the stage of the customer journey that they target.
Lead generation is the process of identifying and collecting contact information from potential customers who have shown interest in a product or service. The goal of lead generation is to gather leads that can be nurtured and eventually converted into paying customers. Lead generation often involves tactics such as email marketing, social media advertising, and content marketing.
Demand generation is the process of creating interest and awareness in a product or service among a target audience. The goal of demand generation is to generate demand for a product or service, even among those who may not be actively looking to make a purchase. Demand generation often involves tactics such as social media marketing, content marketing, and events.
Demand capture is the process of capturing potential customers who are actively searching for a product or service. The goal of demand capture is to capture those customers who are already in the market for a product or service and looking to make a purchase. Demand capture typically involves tactics such as search engine marketing, pay-per-click advertising, and other forms of online advertising that target potential customers who are already searching for specific products or services.
In summary, lead generation focuses on identifying and collecting contact information from potential customers, demand generation focuses on creating interest and awareness in a product or service, and demand capture focuses on capturing existing demand from potential customers who are already looking for a product or service. All three strategies are important for a successful sales and marketing approach, and companies may use a combination of all three to maximize their sales and revenue.
The Silo Problem
Companies that understand the differences and do all three still need help executing this approach effectively.
They typically have one big obstacle: Demand generation, lead generation, and demand capture are treated as siloed activities.
In many firms, Marketing views brand building as their primary job, and lead generation is a separate activity to keep sales happy. And to many, demand generation and lead generation mean the same thing. To be clear, they are not the same.
Lead generation is often used as “Spray and Pray,” e.g., send out a ton of cold prospecting emails, run a webinar, and bombard the registrants with email sequences. Maybe they syndicate some content to get a bunch of leads.
Guess what? That doesn’t work. I know. I tried when I ran my own software company. Eventually, we figured it out.
The other silo problem is that demand capture is primarily left to the SDR/BDRs. And as the SDR/BDRs most often report to sales, they could be better connected to what marketing is doing. And cold outbound prospecting is their number 1 job (back to trying to annoy people into becoming customers).
What Does Good Look Like?
The demand gen/lead gen/demand capture model works well Sales and Marketing understand two things: 1) The differences between demand generation, lead generation, and demand capture; 2) They work together to create a tightly integrated program.
When this model is working effectively, Marketing and Sales are closely aligned and focused on generating demand through various awareness-building tactics to identify in-market prospects. This includes awareness advertising, ungated content, and using intent data to pinpoint accounts most likely to become prospects.
They can see who is engaging. They can see who is showing intent.
They use different types of content and tactics to move prospects along their journey. This might include an invitation to a small exclusive event or a personalized ad to view a demo that addresses their specific needs.
The SDRs focus on in-market prospects and target them with lead-generation tactics to get them to put their hand up. They might use a personalized landing page with content and offers curated to their needs.
(By the way, is Account-based marketing).
Creating ABM Motion
My friend Ben Person, a Martech entrepreneur and former CMO of the enterprise software firm Nuvolo gave me a great example of this working well at his former company.
In his past life at Nuvolo, this was the model they used for some of their product lines:
- Start with a clearly defined target account list and a well-understood buyer collective.
- Use intent data to determine which accounts might be in-market for their solution.
- Target the buyer collectives at these in-market accounts with awareness ads that address specific problems these buyers face.
- When accounts engaged with the ads, they were added to a campaign to capture demand. This included harder selling messages designed to get them interested in the Nuvolo solution.
- Their demand capture strategy included a 30-minute demo. Yes, 30 minutes. And this was the only gated content in the whole process.
- Throughout this process, marketing, SDRs, and sales would observe accounts moving through the buyer journey. And only when someone registered and watched most of the 30-minute demo would the SDR reach out to schedule a meeting.
- And when the SDRs reached out, the prospect was much more likely to take the appointment. Moreover, the prospect was more engaged and ready to be sold to.
This model had a very high sales conversion rate, and doesn’t this sound less annoying?