By Robert Pease, VP of Product Marketing for Salesfusion

Often in marketing circles these two phrases are used interchangeably or even together as “lead/demand generation.”  They are, however, two very different things and must be viewed, approached, and measured differently.

Demand Creation is just that – creating demand for something where either none exists or you don’t know if it exists and need to test to find out.  This is often necessary if you are launching a new product or service, entering a new market where you don’t know if demand exists, or if there is no awareness of who you are as a brand so you must create the awareness to tap the demand that may or may not be there.

Sounds expensive, right?  It is.  And time consuming.  Demand creation as part of a go-to-market strategy requires patience and buy in among key executives who truly understand you are in a phase focused on stimulating demand vs. generating qualified sales leads.  The leads will come but you have to lay the foundation around “why” they need to do something about it.

You are essentially trying to stimulate a market to understand they need a product or service (and they need it from you) so marketing efforts are heavy on problem identification, education on what to do about that problem, thought leadership, and the return on investment from doing something about it.

Demand Creation measurements eventually line up with more traditional lead generation ones but need to initially include elements around media coverage, thought leadership, and subject matter expertise.  You know more about the problem than your prospects so be sure to include this thought leadership advantage in the success calculation and understand that Presence to Market is your objective.

Through demand creation you are trying to push your product or service into the market with an objective to eventually getting the market to pull it from you and moving from demand creation to lead generation.

Lead Generation is more about harvesting the demand that exists through marketing programs and campaigns.  In this case, demand for your product or service is part of the market dynamic and you are merely trying to reach and convert those who have the need.  The goal is to get people to raise their hand that they have a need and are interested in you addressing it – thus the sales cycle begins.  The primary objective in lead generation is Presence to Decision Makers meaning getting to the right person at the right time with the right message.

Measurements here are focused on cost per lead, cost of customer acquisition, and customer lifetime value.  You can’t take your foot off the accelerator of building market awareness and stimulating demand but demand is not an obstacle to lead generation in a “pull” scenario.  You can generate leads because there is demand.  If there is no demand, it will be very difficult to generate leads because you will be spending time on educating, informing, and demonstrating vs. selling and implementation.

Not properly understanding your market dynamic as a “push” or “pull” scenario can lead to frustration and mis-aligned expectations in the business, so knowing whether you are creating demand or generating leads as a foundational piece of your go-to-market thinking is critical.

  • Vicky

    I think you meant the title to read, “The difference between lead generation and demand creation.” That said, thanks for clarifying an important difference in an easy-to-understand way. Too many people muddle the two terms together.

  • Divya

    Great insights delivered in an easy to understand way, with good examples. Thanks!