Wednesday, August 3, 2011

Demand Generation Necessary For Lead Generation!

by Merlin Francis, LeadFormix

Demand Generation and Lead Generation, can be easily voted as the most used words in the B2B Marketing space. I think marketers have an affinity for these words because they tend to sound more complicated and sophisticated than your regular marketing buzz words.

Many a times I have seen marketers use the above words interchangeably often leaving the listener/reader confused on the real purpose of each of these activities.

I am often asked by clients on what is the difference between Demand Generation and Lead Generation when the end goal for both activities is to increase sales and revenue for a company. A valid observation.

In this post, I make an attempt to explain the various factors that differentiate Demand Generation from Lead Generation, and why one is important for the other to succeed.

A Google search for Demand Generation Vs Lead Generation, will lead you to some really interesting posts which explain in detail how Demand Generation covers all marketing activities a company undertakes to generate leads and interest in its offerings. While Lead Generation is a subset of Demand Generation where those interested in the offering are then converted into customers.

The above is a valid explanation, but I would like to put this a little differently or rather look at it from a different perspective.

Marketing Vs Sales

I see Demand Generation as marketing centric and Lead Generation as sales centric activity. It is marketing's job to go out in the market, create a buzz and get the target audience interested in the company's offerings, while it is for sales to find the people who are interested in the offerings, pursue (read nurture) them till they take the final plunge and convert into a customer.

But this distinction has undergone a sea change in the last couple of years with the advent of Marketing Automation and it's increased adoption in the B2B space.
Today marketing is responsible for both Demand Generation and Lead Generation. So not only does it run targeted campaigns to attract prospects, but it also sifts through dozens of these prospects to find the hot/promising leads which it can pass over to sales for conversion. In fact today even nurturing a prospect who is not sale-ready is marketing's responsibility. So simply put sales just covers the last mile of Lead Generation, the rest of the journey is initiated and managed by marketing.

Industry Vs Company

Another way of looking at it is that Demand Generation is the need of an industry and Lead Generation more the need of a company.

Let me explain by giving an example. When the first marketing automation platform was launched in the 90s, it failed to cause the disruption it would have liked to create. But there was a need and there was a market for such a platform to succeed. As more and more players entered the market, the marketing automation industry as whole realized the need to educate B2B companies about the benefits of having a marketing automation platform. All players put a concerted effort in creating a demand for marketing automation platforms. They wrote content, held events, joined forums and slowly created an eco system of marketers, marketing agencies, experts and analysts, which advocated the need for marketing automation for increased revenue generation.

The result - At the end of 2010 there were more than 1500 B2B companies using marketing automation platforms and the marketing automation industry had generated a total revenue of $1Billion.

It took more than a decade and a lot of man-hours and marketing investment on part of all the early players for the marketing automation industry to become mainstream. They together worked hard on Demand Generation, educating their prospects and creating a market for their offerings.

While generating demand for marketing automation platforms, each of these vendors also focussed on distinctively establishing their individual value propositions, thereby generating leads for their individual offerings and acquiring customers.

We live in competitive times and most companies are concentrated in their efforts to market their products, often forgetting the value of educating their prospects so that they realize the value they are offered.

Also, today's customers know how to fish for the information they are looking for, they want to read independent and neutral views that help them take informed and unbiased decisions. In such a scenario its important that companies spend their marketing budgets for both Demand Generation activities like thought leadership, industry seminars etc. and Lead Generation activities like webinars, SEO, SEM, SMO, advertisements and PR etc.

In short Demand Generation is the role companies play in building their market and industry space, while getting themselves noticed as a serious player who is respected in the industry. Lead Generation on the other hand is the effort every company puts into keeping its sales funnel buzzing. Both activities are equally important in boosting the revenues of a company and build its market presence.

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