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Mike Lieberman, CEO and Chief Revenue ScientistFri, Oct 5, 2018 12 min read

How Is Demand Generation Different From Inbound Marketing?

Updated based on original post from January 13, 2017

What Is Demand Generation? How Is It Different From Inbound Marketing? And Why Should You Care?

Demand Generation vs. Inbound Marketing

Wikipedia defines demand generation as "the focus of targeted marketing programs to drive awareness and interest in a company’s products and/or services."

HubSpot defines demand generation as programs to "help your organization reach new markets, promote new product features, build consumer buzz, generate PR and re-engage existing customers."

The company notes that demand generation "is more than just a branding concept or early buyer journey marketing tactic. Demand generation programs are touch points throughout the conversion optimization and sales cycles."

HubSpot's website goes on to say that "the goal of demand generation is to build and nurture key prospect and customer relationships for the long term. To do this effectively, marketers need to do things like respond to customer questions on Twitter, promote blog posts through Facebook, host webinars and run email marketing campaigns."

A post from the MarTech blog further complicates the discussion by defining demand generation as "awareness and interest in a company’s products and services." This is similar to Wikipedia’s definition, but MarTech adds that "the goal is to drive closed business with minimal interaction with the consumer or business you’re attracting."

MarTech goes on to define lead generation as the effort to drive "interest or inquiry into products or services" with the goal being to collect "qualified connections to build relationships with and nurture until closed as a customer."

Why would anyone execute demand generation tactics without a goal to close new business and drive revenue?

In all transparency, I’m not sure any of these definitions and differences make sense to me. Why would anyone execute demand generation tactics without a goal to close new business and drive revenue? What difference would it make whether the company needs to interact with its prospects or not to close the business?

In my mind, B2B demand generation is the process by which leads are generated. Inbound marketing helps deploy the tactics required to create demand, generate leads, nurture those leads and turn those leads into new customers. This simpler, more practical approach positions demand generation as an outcome of inbound marketing, just like lead and revenue generation.

To help further define these now ambiguous terms, here’s how inbound marketing would facilitate demand, lead and revenue generation.

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How Inbound Marketing Helps Generate Demand

Inbound generates demand by making sure you’re visible when people start expressing interest in what you do. Some would argue that this type of demand is better than the kind of outbound, interruptive demand that traditional marketing creates.

Inbound also helps you make sure you’re optimizing demand from all the appropriate sources. Interest from people searching on search engines is great, but you also need interest from people on social sites and on other website properties, as well as from email marketing and from people who visit your site directly.

Optimizing interest from all of these channels simultaneously is a critical demand generation best practice and a key earning prospect interest via inbound tactics.

This type of demand generation technique is inherently more efficient. You’re spending your marketing money to target people who have demonstrated via their actions that they’re in an active buyer journey. It’s not about targeting or profiles, but rather about actions taken by the prospect. This is big; don’t underestimate the difference here.

How Inbound Marketing Helps Generate Leads

If awareness is the first step, then turning that awareness into a fresh, new contact is the second step. Again, inbound marketing is key to producing highly qualified leads. The methodology starts with the website. Why? Because right now everyone is coming to your site before they call or click through.

Data shows that over 90% of the people who ultimately reach out to you visited your website prior to that outreach.

If you look at the average website visitor numbers for the average-sized business, it’s around 1,000 a month, yet the number of leads generated from site traffic at that level is usually in the low single digits. This means the website experience is subpar, causing people to bounce off and leave.

Inbound marketing helps you look at the website experience holistically. What are you saying on your site? How are you saying it? What pages do you have for what types of people, and at what stages of their buyer journey?

But perhaps most importantly, what are you offering them to get them to convert from a visitor into a lead. Are you only offering a free consultation? This is going to only appeal to the bottom 10% of all your visitors, which means you’re ignoring 90% of your visitors.

By understanding the buyer journey and mapping your marketing to fit the buyer journey, you create offers that appeal to everyone. People who visit your site and request your educational content are telling you, “I’m interested in what you do.”

That makes them a lead in my book. They might be early in their buyer journey, possibly in the awareness stage, but they’re a lead nonetheless. Anyone downloading your related content should be considered a lead.

How Inbound Marketing Helps Generate Revenue

We all know generating leads isn’t the end game here. If I have 10,000 leads and no customers, I’m a crappy marketer. I have to also turn those leads into new customers. Yes, sales has a role in this process, but it’s still marketing’s job to tee those leads up and nurture those leads down through the buying process so that when they’re ready to buy, they present themselves to the sales team as a full-fledged sales opportunity.

This is where lead nurturing, sales process improvement and ongoing prospect experience creation come into play. Everyone’s buyer journey is different. Some are long and drawn out, while some are quick and painless. Some are analytical, while some are relationship based.

Everyone is different. You need to create a nurturing program and a sales process that supports every single type of buyer journey. It should be flexible enough to adapt but defined enough to ensure everyone gets a remarkable experience.

Once this experience is in practice and refined, you’ll start to see leads flowing through the buyer journey, from awareness to consideration to decision-making. It’s going to take time to refine the nurturing process, to test different elements and to make adjustments.

We’ve been working on our process for 13 years and refine it almost every single month. You should consider a similar approach.

Only when all three of these marketing principles (awareness, leads and revenue) come together will your company take off. But the good news is the tools, techniques and methodologies to deliver this machine are now readily available and being deployed at progressive companies all over the planet.

If you’ve heard of inbound marketing but think it’s only for small companies, only for B2B companies or that your marketing might be too sophisticated for inbound marketing, I’d encourage you to think again.

Inbound marketing is not about you, your company or the products or services you sell. Inbound marketing is about how your prospects want to buy.

The reason it generates demand, creates leads and helps you turn those leads into revenue is because it’s perfectly aligned to the way people buy today and will buy in the future.

If you believe that people will continue to use the web as a research tool for the acquisition of new products and services, if you believe that your website will be the first stop for anyone considering your business, and if you believe that converting anonymous visitors into leads and then nurturing those leads to create a remarkable buying experience is important, then you need to be practicing inbound marketing. End of story.

Put all the fancy definitions and long-winded articles aside. Marketing has only one mission: to generate leads for your business and facilitate the conversion of those leads into revenue. That’s it.

Marketing is not about getting your name out there, creating awareness or worrying about whether you have to talk to your prospective customers. Get the lead and then turn the lead into revenue.

The hard part is creating the scalable, repeatable, predictable system for generating the lead, nurturing the lead and converting the lead into a new customer, and that’s where inbound marketing provides the methodology, tools and analytics to do exactly what needs to be done. The better you are at it, the faster your company is going to grow.

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Mike Lieberman, CEO and Chief Revenue Scientist

Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.