What is Demand Generation?

Updated: 7 days ago

Marketers love their buzzwords. Lead Generation, Inbound Marketing, Growth Marketing, CRO… or whatever the trending topic of the day is. The hottest marketing buzzword right now is demand generation.


Demand generation is meant to boost sales and increase revenue—but does it live up to the hype? What is demand generation all about? And how does it differ from lead generation?


This in-depth guide reviews what demand generation is, why companies should care, and what strategy/tactics they can implement today to get started with demand generation.


demand generation guide

What is Demand Generation?

Demand generation is, simply, increasing overall demand of a product, service, or brand in a way that results in higher sales and increased revenue. It’s about brand awareness and attracting the right type of customer: those that fit your target audience and are ready to buy the solutions you are offering.


Demand generation is related to lead generation and other traditional marketing strategies but has a unique approach. We believe that it’s the single most important thing marketers can do today to hit revenue goals.


Demand Generation vs Lead Generation

Demand generation is a broad term for a marketing strategy that focuses on revenue but how does it differ to more traditional strategies? Take lead generation, for example. Lead generation refers to how a company attract, convert and hand leads over to sales. Lead generation typically relies on high-volume tactics like paid social media using gated content and volume keyword searches on Google (e.g., “free CRM”) to create high volumes of potential leads.


And lead generation is important—without potential clients or leads, you’ll never make a sale!


But demand generation goes beyond simply finding leads. It’s a strategy to optimize revenue. To do so, the quality of the lead becomes important, and the leads need to correlate as much as possible with revenue. In the image below you see this difference visualized in a sales funnel 👇


demand generation vs lead generation

Demand generation vs. lead generation can be summed up as follows:

- Lead Generation: Higher volume of leads, low intent to buy, and little correlation to revenue.

- Demand Generation: Lower volume of leads, higher intent to buy, and high correlation to revenue.


How to make the transition to Demand Generation

Increased revenue through demand generation sounds pretty good to a lot of companies. So how can you begin to transition away from lead generation and embrace a new framework?


You need to start by getting buy-in from the leaders and executives in your company. This is because a demand generation strategy will initially decrease the number of leads, and even revenue, as you start the transition. It’s important that the decision-makers and leaders know the potential of demand generation so they are willing to go through a transition period.


Here are three ways to transition your company to a demand generation strategy:

- Get on the same page: No one in your company should have to ask, what is demand generation? Make the case for demand generation as a revenue-focused marketing strategy.

- Split the funnel: Instead of putting all leads in the same sales funnel, split it between the high-intent prospects—those who are likely to buy soon—and the low-intent prospects—those who are not. With high-intent prospects we usually refer to demos/contact requests and low-intent is everything else. By tracking metrics for both within these funnels you can show leadership how valuable it will be to invest in the high-intent funnel.

- Start small: It doesn’t have to be a radical change right away. Instead, start by slowly increasing the efforts within your high-intent funnel (e.g., boosting paid social ads focusing on engagement). Capture metrics, see how it does, and then continue to make incremental changes as you get more trust by leadership. And, to be fair - most companies is somewhere in the middle between demand gen and lead gen. Below, you'll find a small survey we ran with 124 B2B SaaS marketers and 53% of these are still using a mix between these two options 👇


demand generation survey

Demand Generation Metrics: What’s Important to measure?

To get the buy-in from leadership, you’ll need to show results and data. This will show how effective it can be to devote marketing efforts towards the high-intent segment in the long-run.


One of the strengths of lead generation is the ease of collecting data and attributing leads to a specific channel. Collecting data for demand generation is a bit harder as some of the activities include podcasting, events, communities or time spent relationship-building. But these strategies all have a significant impact on revenue overall, even if it’s tough to directly quantify their impact on revenue.


Here are three important areas to measure within demand generation:

- Revenue: How is the overall marketing sourced revenue trending?

- Pipeline: How much pipeline is being created from marketing and how much is needed to meet revenue targets down the line?

- High-intent prospects: How many people are coming in that are ready to buy?


How to Create a Demand Generation Framework

Once there’s buy in from leadership, it’s time to create a demand generation framework. It’s important to be systematic and measured while implementing demand generation to see what is working and what is not.


To build a successful framework, you need to first pull together a team, and then develop and use playbooks for different tactics, such as paid search and paid social.


Building a Demand Generation Team

Each company’s demand team will look a little different depending on size, goals, and resources. Some companies may not be able to dedicate a team solely to demand generation and instead view it as everyone’s responsibility.


However, if your company can dedicate a team exclusively to demand generation, you can better set things up for success. Here’s a suggested team structure:

- Performance marketers: These are people responsible for creating and evaluating campaigns, collaborating with content/design marketers to optimize these campaigns.

- Content marketers: messaging and our story is (and should be) a central part of our entire demand generation strategy. To have someone responsible to develop this is crucial. - Designers: when we have a great story and message to tell, we need someone to be able to visually make it it stand out and engage with our target audience. - Field marketers: one of the strongest (yes, it still is) channels for brand awareness is events, both external and internal. Having someone responsible for driving this area is key.


Demand Generation Strategy

The actual marketing strategy your company uses to generate demand can be broken down into two categories:

- Awareness channels: This encompasses tactics like events, communities, paid social and podcasting—all with the purpose of driving brand awareness and engagement.

- Intent channels: This is where prospects show they are interested and can act on their intent to buy. It includes tactics like paid search, organic search and review sites.


demand generation framework

Separating these two categories helps focus your tactics and better measure the outcomes. Since awareness channels are generally harder to measure we recommend implementing a field on your forms that asks, "How did you hear about us?". This helps you collect qualitative data about your awareness tactics that are harder to quantify.


There is a natural collaboration between the two channels. By increasing awareness, you increase demand. Once the demand is there, the intent channel can turn intent into revenue.


There are a million different demand generation tactics but generally we recommend starting small and scaling what works. Our top picks to start with is paid social and paid search - these are also the easiest ones to get started with.


Demand Generation Tactics


1. Demand playbook for paid search

One of the most effective and common marketing tactics is paid search. The first step to creating and effective demand playbook is to separate keywords into three categories:

- Low intent: Keywords like “free CRM” which create a high volume of leads with a low intent to purchase.

- Medium intent: Mid-range volume; hard to know if their intent is to buy or they’re just casually browsing. e.g "CRM".

- High intent: Lower volume, often ready to buy, e.g "competitor alternative"


By splitting it up, you can start tracking how much you spend for each category and how much revenue they are actually driving. The data you collect back will help determine which are the most effective keywords for increasing what actually matters, revenue. These are also great insights to later use in your organic efforts.


2. Demand playbook for paid social

Paid social is an effective tactic because it makes sure you are seen by your target audience. It also helps you focus on people who are not getting to your website. Since you never know what stage of the sales journey someone is in, focus on creating content that meets them at any stage. Then, you can see what they engage the most with.


Two key things in your paid social playbook:

- Don’t just focus on the decision-maker: Instead of only targeting those executives or managers who decide something, make sure to also target the end-user. This is a way to create organic growth and word-of-mouth demand.

- Stand out in the feed: Don’t let people scroll by your ads! Use effective, attractive, and catchy paid social ads so that you make it possible to build brand and engage your audience.


The goal of paid social here is to support our intent channels. By getting out in front of your target audience and providing valuable content, you are building brand awareness. Next time they need a solution to a problem—they’ll go looking for you!


demand generation tactics

Conclusion

Demand generation is more than a buzzword—it’s a marketing strategy that will revolutionize your business! Demand generation marketing is revenue-focused, with every tactic aimed at converting high-quality leads into paying customers. Take time to learn and understand demand generation, work with others on your team to implement strategies, and start seeing your company hitting its revenue goals!