Demand Generation vs. Lead Generation: Understanding the Key Differences and Why Both Matter

“Is demand generation or lead generation more important to B2B marketing? That’s like asking whether the pedals or the tires are more important to biking. Each one has its distinct purpose to keep you moving.” Jane Deehan, Award-winning Senior Content Marketing Manager @ LinkedIn

Many marketers use lead generation and demand generation interchangeably, thinking they mean the same thing. Some companies even lack separate strategies for each, treating them as one. But knowing the differences – and how they complement each other – can help you build better strategies, connect with the right customers, and get the best results from your team.

Knowing the difference between them already keeps you one step ahead. According to Deehan, “mixing up demand generation and lead generation can mean missing out on leads and paying far more for leads than you need to.”

Let’s understand why that is and why these two strategies should be anything but apart from each other.

What is Demand Generation?

It’s not a coincidence that demand generation comes first in this article. It should also come first as a practice. 

That’s because demand generation focuses on creating awareness and interest in your brand and its offerings on a broader scale. It generates excitement, educates your audience, and builds a recognizable brand that people trust without necessarily expecting an immediate action or conversion.

Does that sound like what your team has been calling “lead gen” so far? Now, you can let them know this isn’t the case. While lead gen expects an email address and a name, demand gen does not. Its sole purpose is to nurture confidence, trust, and likability. 

However, much like lead generation, demand generation is a long game. You’ll help prospects become qualified leads by guiding them from their initial point of interest. 

How Much Should You Spend on Demand Generation?

According to data from The MX Group, B2B marketing leaders spend 20% of their marketing activity budget on demand gen – 38% spend more on demand gen than last year and only 10% spend less than last year. You’ll notice that this is much less than what many marketers spend on lead gen alone. 

If we were to encapsulate demand generation into a few points, here’s what those would be:

Creating valuable content like blog posts, infographics, videos, and social media content that educates your audience, establishes authority, and builds trust. Ideally, this content should address common questions or pain points (e.g., “How-to” guides and industry reports). It should also be ungated – for example, articles or podcasts that anyone can access without giving you their contact information. Focus on content that raises awareness and builds trust without asking for anything.​​​​​​​​​​​​​​

Actively engaging with your audience on social channels, using intentional, targeted messaging to spark conversations, answer questions, and build community.

Honing in on cross-team collaboration to run campaigns and produce content aimed at reaching as many people in your target market as possible, even if they aren’t ready to buy right away.

What is Lead Generation?

Think of lead generation as a more minor part of demand generation. It involves specific skills like targeting audience segments, crafting compelling calls to action, and using tools to capture contact information. Its tactics might include creating enticing offers, running targeted ads, or designing high-converting landing pages.

The main goal of lead gen is to find and connect with potential customers actively seeking a solution like yours. It’s not about general awareness but drawing in those ready to engage.

Similarly, if we were to whittle lead generation down into a few points, here’s what those would be:

Targeted outreach involves identifying your ideal customer profiles and reaching out to them directly via email campaigns, social media, or emails. 

Content gating means offering valuable content behind a form where interested users must submit their contact information. This could be whitepapers, eBooks, or case studies to gather contact details from interested prospects.

Constantly refining the customer journey to maximize conversions at each step. For lead gen, this could mean tweaking landing pages for better engagement, simplifying forms to reduce friction, or personalizing follow-up emails to increase response rates.

Lead Generation In Action: How RevBoss Helped Spacejunk Streamline Growth

When Spacejunk, a creative studio, struggled to juggle outbound marketing with their daily tasks, traditional lead generation tools proved too time-consuming and complex. 

Kelly Sells, their business development lead, needed a more straightforward way to maintain lead quality. RevBoss stepped in by letting Kelly “start with a lead” without the usual setup headaches. By combining smart tech with personalized support, RevBoss found high-quality leads that matched Spacejunk’s target audience, automated outreach, and smooth communication. This allowed the team to focus on their creative work, leading to seven successful pitches in three weeks.

A Brief Word on Content

We’ve given content examples such as blogs, white papers, and webinars. That said, avoid choosing a content type because it’s popular, even if there are statistics behind your decision. Instead, use your customer data to focus on what works best for your specific audience. If you don’t have enough data, don’t be afraid to experiment with different formats — like interactive quizzes, video series, or webinars – and track their performance. Then, use the data to refine your strategy, emphasizing the formats that drive the most engagement and conversions for your case.​​​​​​​

Key Differences Between Lead Generation and Demand Generation

Now that you’ve got a basic idea of what each strategy involves let’s take a side-by-side look at their differences:

Why Do You Need Both?

If lead generation is the needle that stitches your customer base together, demand generation is the thread that ties everything up. You need both strategies to maintain a healthy balance between attracting new leads and nurturing them until they’re ready to buy.

So, by creating demand, you generate awareness and spark interest. When people start to recognize and trust your brand, they’re more likely to engage with your lead generation efforts.

That said, data from BrightTALK suggests that 53% of marketers spend half or more of their entire budget on lead gen efforts. Only 34% of marketers spend less than half their budget on lead generation. While it’s important to spend a great chunk of the budget on lead gen, the question is: how much of that budget is being well-spent – and how much of it could go towards effective demand generation instead? 

Performance Measurement: How to Know Your Strategies Are Working

What to Measure for Demand Generation?

Start by getting an overview of brand awareness, engagement metrics, and website traffic. You can also focus on the big-picture metrics directly impacting your revenue and growth goals. For example:

• Customer Lifetime Value (CLV)
• Return on Investment (ROI)
• Close Rate per Channel
• Marketing Qualified Leads (MQLs)
• Sales Qualified Leads (SQLs)
• Cost Per Lead (CPL)
• Cost Per Acquisition (CPA)
• Marketing Cycle Length
• Brand Awareness Metrics (Impressions, Reach, Share of Voice)
• Engagement Metrics (Click-Through Rate, Social Media Engagement, Time on Page)
• Website Traffic (Total Visits, Unique Visitors, Bounce Rate)

What to Measure for Lead Generation?

The key here is to focus on the metrics that give you a clear picture of your process in driving qualified leads and guiding them toward conversion.

• Number of Leads Generated
• Marketing Qualified Leads (MQLs)
• Sales Qualified Leads (SQLs)
• Conversion Rates (e.g., MQL to SQL, SQL to Opportunity)
• Lead Source Effectiveness (which channels or campaigns are generating the highest-quality leads)
• Email Open Rates
• Click-Through Rates (CTR)
• Content Engagement
• Leads to Pipeline Ratio
• Lead Velocity Rate

Here’s a tip for better prioritizing your metrics: try to focus on the ones that align with your immediate goals, whether it’s attracting more qualified leads, lowering costs, or speeding up conversions.

By the way: it’s normal for lead and demand generation metrics to overlap because they work together in the marketing and sales funnel. Overlap helps keep everything aligned and gives you a clearer view of the customer journey from awareness to conversion.

What Tools Should You Use for Each?

Demand Generation

At the awareness and consideration stages (the most prominent stages in demand gen), you need tools that help attract and engage your target audience. You’ll need the staple CRM tools we assume you already use.

For content marketing and social media management, tools like Marketo and Mailchimp help by automating communication and personalizing content. 

When it comes to content creation, the right tool depends on what you’re creating. For writing and blogging, tools like WordPress or HubSpot are great. For graphics and videos, try Canva or Adobe Creative Cloud.

For content gating – where you make users give their information to access said content – Marketo also handles creating and managing gated content. If you’re using other platforms like HubSpot or Leadpages, they also offer gating features to help capture leads.

Lead Generation

LinkedIn Sales Navigator is a widely used AI-powered tool to find potential leads, and it can be a great start.

Other tools, like RevBoss, take lead generation to the next level by handling the grunt work of prospecting. It delivers high-quality leads from the start and automates outreach with personalized templates and smart follow-ups. What sets it apart is its blend of AI and the personal touch of its expert account managers. 

Integrating Your Tools Makes Work Easier for Everyone

Integrating marketing and sales tools helps smooth lead handoffs. By connecting your CRM system with marketing automation platforms, you create a “slippery” pipeline where marketing actions flow directly into sales processes. This connection automatically updates lead status, engagement history, and other key details so you get a full picture of each lead’s journey.

Lead Gen and Demand Gen Work Together – So Should Your Teams

Align your sales and marketing teams. This is a hill most lead gen experts will die on, and for good reason: 45% of B2B marketers said promoting better sales and marketing alignment around go-to-market initiatives was their top demand generation priority for last year.

It’s not easy and sometimes not feasible. According to RevBoss founder and CEO Eric Boggs, “It’s easy to lump top-of-the-funnel prospects into marketing’s bucket and consider qualified leads the responsibility of your sales team.”

The problem with this approach is that it needs to be more balanced with the lead management process, which can lead to missed opportunities. TOFU leads are beginning the journey and need nurturing and engagement to move them down the funnel. If marketing passes these leads off without further follow-up and sales only focus on the already-qualified leads, they might drop off or fail to progress through the funnel correctly.

Over to You

Now that you’ve got a grip on how lead generation and demand generation differ and where they overlap, it’s time to put them into action. We’d love to hear how mixing these strategies is helping you land more deals and close more business!

Want to learn more about how RevBoss can help you grow your pipeline and win more customers? Schedule a free consultation with one of our specialists today!