Blog Post

Demand Generation

Growth

Demand Generation vs Lead Generation: What's the Difference?

It's normal to ask if there is a difference between demand generation vs. lead generation. On the surface, they sound like two sides of the same coin—like calling your pipeline the Buyer's Journey vs. a Sales Funnel.

But demand gen and lead gen are different concepts.

Understanding that difference transforms the effectiveness of B2B SaaS marketing strategies. It re-focuses your efforts on what matters at the end of the day—the quality of the lead.

At the same time, you'll avoid wasting your limited time, resources, and talent on leads who will never—I repeat "never"—become paying customers.

When you're finished here, you'll know the difference and how/when to use both to get more out of your SaaS marketing.

Demand Generation vs. Lead Generation: The Definition

Demand Generation is the act of deploying marketing campaigns to create demand for a product or service. It uses data to determine when, where, and how to accomplish this effectively.

Lead Generation is the act of leveraging marketing to collect contact information from people who may be interested in your product or service now or in the future.

The Purpose

With demand generation, you create buzz. Get the right people excited and talking about a problem your SaaS fixes. You want them to want you and see you as the solution to their business problems. As demand progresses, you become the missing link to meeting their goals, something they can't do without.

While demand gen does generate leads through landing pages, its purpose is to play the long game. You want awareness and positioning that can only happen over time.

By doing so, demand generation expands your reach and becomes a magnet for your ideal customers.

Lead generation, on the other hand, focuses on capturing identifying information, like an email. This allows you to personalize and continually improve the effectiveness of your nurturing.

Through it, you achieve a higher and faster MQL-to-SQL and Lead-to-Close Ratio in the shorter term. You increase your ability to deliver the most relevant marketing messages and content.

Additionally, that data reveals the precise moment a lead meets qualified lead criteria. This makes it possible to time the hand-off to sales and Speed the Lead expertly.

In the long term, you're gathering both quantitative and qualitative data. This helps you understand which leads are worth your time and energy. What are the signs that a lead is ripe for a conversation with sales?

Now, take this information back to the demand generation side. Through it, you improve your demand generation targeting precision.

And it comes full circle.

You have a clearer understanding of who to target. As a result, you generate demand from the right people, refining your top-of-funnel.

In doing so, you generate higher quality leads. And the cycle begins again, leading to exponential outcomes.

So it's no wonder 78% of marketers say they plan to commit a higher percentage of the marketing budget to demand gen, or at least keep it the same. While the top priority is generating leads, they recognize demand gen is critical to meeting that KPI.

Timing

Demand Generation vs. Lead Generation isn't an either/or proposition. You need both to grow your company effectively, but timing matters.

You have to create the buzz first. Any lead generation efforts will trickle if you're not implementing strategies to generate that demand first.

You can break this timing down into three stages of awareness:

  • Stage 1. Non-aware. They don't even know they have a problem. Top-of-funnel (ToF)
  • Stage 2. Problem-aware. They know about the problem but not how to fix it. Middle-of-funnel (MoF)
  • Stage 3. Solution aware. They know solutions exist but aren't sure which is right for them. Bottom-of-funnel (BoF)

This all comes down to the right message, the right time. One way to achieve this timing is through educational content.

This serves two primary purposes.

  1. It generates awareness. Of the problem, then the solution.
  2. It builds authority. Why should people listen to you in the first place? Content builds your authority and expertise. At the end of the day, they have a reason to choose your brand over another.

You'll focus on creating demand by ensuring the right people see the right content at the right time. To this end, specific content formats work well at each stage.

  • Stage 1. Non-aware. Make it easy and "low-risk" to start learning about their problem. Become present where they are but don't push them. Use long-form guides, blog posts, etc.
  • Stage 2. Problem-aware. Get them to take action toward learning more in-depth information. At the same time, you build trust and authority. Offer white papers, eBooks.
  • Stage 3. Solution aware. Help them finalize their decision. Share case studies, free trials, and demos.

Timing matters. Throwing problem-aware and solution-aware content at non-aware people will bounce right off. Sadly, a lot of B2B companies are doing just that.

Only 2% of B2B companies create non-aware content at ToF. This represents a tremendous opportunity for those who do.

At any given time, many more people don't know they have a problem.

Creating Demand

The gurus can argue all day long about whether demand is created or products merely fill a void already there. Both are true to some extent.

The problem exists. It's real, and it's impactful.

But with so many moving pieces in the typical business, it's not always easy for your future customers to name it, let alone find a fix.

If people aren't talking about the problem, few are aware of how impactful it is. They don't know others share the same frustrations. So it doesn't cross their minds that there could be a better way.

You need to create that buzz. That's where demand comes from.

By doing so, you start a chain reaction.

More leads. Better leads. More Leads. Better leads. Higher and higher revenues. Exponential growth.

Time to Create that Demand

It's all about timing. It's time to take your business to its next growth stage—generate demand, so high-quality leads come to you.

Curious about the power of demand gen? See how Dropbox increased targeting engagement by 6.5X.

Blog Post

Demand Generation

Growth

How to Track the ROI on Your Growth Marketing Campaign

The Next&Co Digital Media Wastage Report shows that 41% of the average company's marketing budget is wasted, with wastage being the highest among ecommerce, retail, and finance companies. 

Calculating your Return On Investment (ROI) is perhaps the most important thing you can do to keep your growth marketing spending on track. Knowing your ROI will help you:

  • Make value-conscious choices
  • Prove the value of your marketing to leadership
  • Justify your marketing budget for next year 
  • Choose which marketing channels to invest in 

This article will show you how to calculate your growth marketing ROI step-by-step.

Step #1. Set Up Ways To Track Your Marketing Success

You can't calculate marketing ROI without knowing what "return" you are getting. So the first step is to set up ways to track your marketing successes. 

Common ways to monitor your digital marketing campaigns include:

  • Google Search Console. Google Search Console helps you monitor your website's performance in search results. 
  • UTM links. You can use UTM codes to track how your website visitors browse on Google Analytics. 
  • Facebook Pixel. Facebook Pixel will help you track conversions from Facebook ads.
  • Social media marketing analytics platforms. Platforms like Buffer Analyze, Sprout Social, Hootsuite, and Zoho Social can help you analyze your social media marketing Key Performance Indicators (KPIs). 
  • Ecommerce analytics tools. Platforms like Hotjar, Kissmetrics, and Optimizely can help you analyze ecommerce KPIs. 
  • Customer Relationship Management (CRM) tools. CRM tools like HubSpot, Salesforce CRM, SAP CRM, and ZOHO CRM can help you analyze customer interactions.

It's best to set up these tools before you start publishing your marketing efforts.

Step #2. Gather Data

Next, sit back and start gathering data. It's best to monitor your marketing for several weeks or months if possible, as a longer data collection period will ensure your results aren't skewed by outliers.

Step #3. Calculate Your Marketing Costs

Then, calculate your costs. 

You'll need to take two types of costs into account:

  1. Direct costs

Direct costs are expenses that have a clear price tag and can be directly tied to your marketing and sales funnel. Marketing software, Paid-Per-Click (PPC) ad spending, equipment, marketing staff salaries, and freelancers are all direct costs. 

  1. Indirect costs

Indirect costs are expenses that aren't directly tied to your marketing but are still essential to make running the marketing department possible. Rent, electricity, and salaries from non-marketing staff (like receptionists or administrators) are all indirect costs. 

You may need to consult your accounting department to figure out your indirect costs. Once you have your figure, add it to your direct cost figure to get your total marketing spend. 

Step #4. Calculate Your Marking Returns

Now it's time to calculate your marketing returns, and there are several approaches you could take here. 

If you want to simplify things, you could take your entire net income figure for a given period and attribute 100% of it to marketing. 

Or, if you want to be more precise, you can go through your marketing channels one-by-one and calculate how much revenue your company earned as a result of it. This is easier with some channels than others. Some ad analytics, paid media, and referral marketing tools, for example, will help you calculate how much revenue your brand earned from ads. Sales from social media marketing and content marketing, on the other hand, are harder to attribute. 

Whatever method you choose, you should finish this stage with a clear figure.

Step #5. Execute the ROI Formula 

The final step in measuring digital marketing ROI is executing the following ROI formula:

ROI = (marketing revenue - cost of marketing) / cost of marketing

For example, if your total revenue figure was $45,400 and your total marketing costs were $12,300, your ROI would be 2.69.

If your ROI figure doesn't look right, make sure you have only included marketing returns and costs from a single, clearly defined period (like quarter one or 2022, for example). A common mistake marketers make is including a year's worth of an expense rather than just the cost in a set period. 

Other KPIs to Watch with Growth Marketing 

  • Customer Lifetime Value (CLV) = average order value x purchase frequency rate x average customer lifetime
  • Customer Acquisition Cost (CAC) = (cost of sales - cost of marketing) / number of new customers acquired
  • Conversion rate = (total conversions / total visitors) x 100
  • Cost-Per-Click (CPC) = total amount spent / total clicks
  • Open Rate  = (number of emails opened / number of messages sent) x 100
  • Average Transaction Value (ALV) = total sales / number of transactions

Tracking other KPIs and presenting them alongside your marketing ROI can give the ROI figure more context. It can also help you explain fluctuations in your ROI across multiple periods. 

Calculating Marketing ROI, Growth Marketing, and Matter Made

Measuring marketing ROI will help you quantify your growth marketing efforts, build a strong PLG funnel, and analyze your digital marketing campaign efficiently. Naturally, knowing your marketing ROI can help your growth marketing strategy succeed long-term.

Want to embrace growth marketing but don't know where to start? Let's talk. 

Ready to drive efficient demand?

LET’S TALK
© 2022
Sign up for our email newsletter to receive the latest marketing insights and news.