There are two key approaches when you think about driving more business and new leads: demand generation and revenue marketing. These terms are not mere buzzwords but they represent distinct philosophies that guide how businesses attract, engage, and retain customers.
Understanding the nuances between demand generation and revenue marketing is crucial for businesses looking to align their organizational goals and maximize the impact of their efforts.
Demand generation (also called demand gen) primarily focuses on creating awareness and interest in your product or service. It involves activities aimed at generating leads and filling the sales pipeline. It happens before hand-raising, and even before people know of your product. The goal is to create a broad audience that may show interest in what you offer.
Here’s what demand generation looks like for B2B companies:
Lead generation goes a step further. It’s the process of attracting and converting prospects into someone who has indicated interest in your company's products or services. It often involves collecting a potential customer's information through various strategies and channels to nurture them into making a purchase.
On the other hand, revenue marketing encompasses a broader spectrum. While it includes demand generation, it goes beyond the initial stages of the buyer's journey. Revenue marketing aligns marketing efforts with the entire customer lifecycle, from awareness and acquisition to retention and expansion.
Here’s what revenue marketing looks like for B2B companies:
While both are geared towards achieving business growth, they differ in their fundamental orientations and objectives.
In demand generation, the spotlight shines on immediacy and lead generation. The primary objective revolves around sparking instant interest and creating a substantial volume of leads. The emphasis here is on casting a wide net, capturing potential customers in the initial stages of their journey, with the ultimate aim of nurturing them into valuable conversions.
Your goals for the quarter may look like:
Revenue marketing is inherently goal-oriented with a laser focus on driving revenue. Beyond the scope of lead generation, it tracks and influences the entire customer journey. The goal is not merely to accumulate leads but to create a strategy that guides prospects seamlessly from awareness to conversion. Every marketing initiative is a calculated step contributing directly to the overarching goal of revenue generation.
In contrast to the goals of demand generation, revenue marketing becomes concrete and has clear impact on revenue goals:
Metrics for demand generation often include lead quantity, conversion rates, and cost per lead. The success of demand generation is typically measured by the number of leads generated within a specific period.
Some of your metrics for demand generation may be focused on top-of-funnel emphasis:
While revenue marketing metrics extend beyond lead generation. Success is measured by the impact on revenue, customer lifetime value, and the overall contribution of marketing activities to the company's bottom line.
Metrics for revenue marketing focus on:
While both metrics give insights into your marketing efforts. Demand generation metrics primarily focus on short-term goals, emphasizing lead quantity, website traffic, and engagement, serving the marketing team's immediate needs.
In contrast, marketing revenue metrics take a more extended time horizon, aligning closely with sales objectives to track lead quality, conversion rates, and the actual revenue generated over time. Demand generation metrics may not always provide clear insights into revenue impact, marketing revenue metrics are designed to measure and attribute marketing activities directly to revenue outcomes.
In a demand generation scenario, the marketing team's primary objective is to attract a large volume of leads and pass them along to the sales team. This interaction is somewhat transactional, resembling a relay race where marketing swiftly hands over the baton (leads) to sales for further pursuit. For instance, a business running a social media campaign to drive sign-ups for a free trial might capture a broad audience, generating numerous leads for the sales team to follow up with.
Resources used for demand generation may be more general and include:
Conversely, in a revenue marketing approach, the collaboration between marketing and sales is more like a synchronized dance than a relay. Marketing doesn't merely hand off leads; instead, it actively participates in guiding prospects through the entire customer lifecycle.
For instance, marketing might deploy targeted content at various stages, nurture leads through personalized email campaigns, and equip sales with valuable insights garnered from customer interactions. This continuous collaboration ensures that marketing's role extends far beyond the initial lead generation, contributing to the overall revenue-generating efforts of the organization.
Resources used for revenue marketing:
Demand generation may be more product-centric, emphasizing features and benefits to capture the attention of a wide audience. While revenue marketing adopts a customer-centric approach, understanding the needs and preferences of individual customers. It tailors marketing strategies to address specific pain points and challenges throughout the customer journey.
Both demand generation and revenue marketing play vital roles in a comprehensive marketing strategy. The choice between the two depends on organizational goals, the nature of your product or service, and your desired depth of engagement with customers.
While demand generation focuses on creating demand and generating leads, revenue marketing takes a holistic view, aligning marketing activities with revenue goals and fostering long-term customer relationships.
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