What is Demand Generation? The Ultimate FAQ Guide for 2024

As a B2B marketer or sales leader, you‘ve undoubtedly heard the term "demand generation" tossed around for years now. But what does it really mean? How is it different from lead generation? And most importantly, what does a high-performing demand generation strategy look like heading into 2024?

In this comprehensive guide, we‘ll answer all of those questions and more. I‘ll share my firsthand insights from over a decade of experience building demand generation programs for B2B companies across industries. You‘ll learn the core components of a modern demand gen strategy, see examples and case studies of companies doing it well, and get a blueprint for aligning your marketing and sales teams to predictably fill your pipeline.

Demand Generation vs. Lead Generation: What‘s the Difference?

One of the biggest misconceptions about demand generation is that it‘s just a trendy new name for lead generation. While they are related, demand gen and lead gen actually have very different goals and approaches:

Lead Generation:

• Tactical approach focused on capturing contact information
• Optimized for quantity (# of leads) over quality
• Often relies on gated content and outbound outreach
• Prioritizes short-term wins and quick handoff to sales
• Treats all leads the same regardless of buying stage

Demand Generation:

• Strategic approach focused on building awareness and trust
• Optimized for quality (readiness to buy) over quantity
• Leverages ungated content, SEO, influencers, and events
• Prioritizes long-term pipeline and revenue impact
• Engages buyers differently based on their unique journey

Essentially, lead generation is about harvesting existing demand, while demand generation is about creating net new demand. Lead gen is a piece of the demand gen puzzle, but true demand generation requires a much more holistic approach.

The key is to balance filling the funnel with new top-of-funnel leads while also nurturing and converting existing leads into sales-qualified opportunities and closed-won deals. Marketers must think beyond lead volume and ask themselves:

• Are our leads actually turning into pipeline and revenue?
• Do we have the right mix of tactics to engage buyers at every stage?
• Is marketing sourcing and influencing enough pipeline and revenue to hit company growth targets?

Why Most Lead Generation Programs Underperform

Many B2B companies struggle to get a good return on their lead generation investments. Here are some of the most common reasons I‘ve seen lead gen programs fall short:

Quantity Over Quality

When marketing is goaled on generating a certain volume of leads each month, it‘s tempting to cast a wide net and capture anyone who shows a pulse. But in reality, only a small percentage of those leads will be active buyers. Dumping a bunch of unqualified leads on your sales team wastes their time and breeds resentment.

Focusing on the Wrong Metrics

Vanity metrics like # of leads, open rates, and click-through rates can be misleading. What really matters is how many of those leads are actually converting into sales pipeline and closed business. According to a study by Implisit, only 13% of leads ever convert to opportunities. Marketers must go beyond lead metrics and measure the down-funnel impact.

Lack of Sales Alignment

If marketing and sales aren‘t on the same page about what makes a qualified lead and how to best engage and convert prospects, your demand gen efforts will fall flat. Marketing might generate leads that sales doesn‘t want, while sales may drop the ball on following up with marketing-sourced leads. Communication and SLAs between the two teams are critical.

Operating in a Silo

Demand gen can‘t just be a marketing thing. To be effective, it needs to be a company-wide initiative with buy-in and participation from sales, product, customer success, and executive leadership. Siloed efforts lead to inconsistent messaging, missed hand-offs, and lost opportunities.

Relying on Automation

Don‘t get me wrong, marketing automation is an important part of scaling demand generation. But too many companies think they can just "set it and forget it". In reality, automated lead nurturing journeys need to be constantly monitored, tested, and optimized based on engagement data and feedback from sales. Over-automating can make your brand feel impersonal and spammy.

Building a Modern Demand Generation Strategy

Now that we‘ve covered the pitfalls to avoid, let‘s talk about what an effective demand generation strategy looks like. Having the right marketing and sales motions at each stage of the buyer‘s journey is essential.

Top of Funnel – Attraction

At the top of the funnel, your goal is to attract your target audience and make them aware of your brand and solutions. This is less about gated content and lead capture, and more about providing relevant and valuable information to get on their radar.

Tactics for this stage include:

• Search engine optimized blogs and landing pages
• Organic social media (LinkedIn, Twitter)
• Paid social ads targeted at buyer personas
• Guest blogging and PR to build domain authority
• Partnering with influencers in your industry/niche
• Hosting or sponsoring virtual events and webinars

According to Intentsify, in-market buyers conduct 27 searches before engaging with a vendor‘s website, so showing up in those searches is critical. Resist the urge to put everything behind a lead capture form. You want to remove friction and make it easy for prospects to learn.

Middle of Funnel – Engagement

Once a prospect is problem-aware and interested in learning more about potential solutions, they enter the middle of the funnel (aka the consideration stage). Here, your goal is to establish your brand as a trusted advisor and help the buyer make sense of all the information they are gathering.

Tactics for this stage include:

• Lead nurturing email campaigns segmented by persona or industry
• Retargeting ads with more product/service-specific content
• Hosting live demos and product tours
• Inviting prospects to interactive workshops or lunch & learns
• Sales development reps (SDRs) reaching out to high-intent leads
• Publishing comparison guides, case studies, and testimonials

Middle of funnel content should focus on helping buyers understand use cases, evaluate different solutions, and build the business case for change.

Bottom of Funnel – Conversion

By the time a buyer gets to the decision stage at the bottom of the funnel, they are actively assessing vendors and are much closer to being ready for a sales conversation. The goal for both marketing and sales is to make it as easy as possible for the buyer to choose you.

Tactics for this stage include:

• Personalized outreach from sales reps to qualified leads
• Conducting demos and trials customized to the buyer‘s specific needs
• Sharing relevant customer proof points and ROI calculators
• Offering a free migration or onboarding consultation
• Engaging in pricing discussions and contract negotiations
• Coordinating references and referrals from happy customers

The key at this stage is to be responsive and flexible to the buyer‘s timeline and purchasing process. Just because someone downloads a pricing sheet or requests a demo doesn‘t necessarily mean they are ready to buy that week. Lead scoring models can help you determine which bottom of funnel leads are most likely to close.

Post-Sale – Expansion & Advocacy

Demand generation doesn‘t stop once a deal closes. To maximize customer lifetime value and net revenue retention, you need to continue reinforcing the relationship. Tactics for the post-sale stage include:

• Hosting onboarding and training sessions to drive product adoption
• Conducting quarterly business reviews to uncover expansion opportunities
• Sending customer satisfaction surveys and NPS surveys to solicit feedback
• Featuring customers in case studies and asking for referrals
• Inviting customers to speak at events or on webinars
• Offering incentives for upgrades, add-ons, and annual contract renewals

The goal is to turn customers into raving fans and advocates who will help generate referral business and positive word-of-mouth. In fact, 84% of B2B decision makers start the buying process with a referral (source: Edelman).

Enabling Sales to Be an Extension of Marketing

For a demand generation strategy to be successful, you can‘t just hand leads off to sales and hope for the best. Marketing needs to enable and empower sales reps to continue the conversation and tailor their outreach to the buyer‘s unique needs and stage.

When I led demand gen at my previous company, we implemented an extensive sales enablement program with input from sales leaders. Some of the key things we focused on:

Lead Hand-Off & Follow-Up SLAs
We created a service level agreement between marketing and sales outlining how leads would be assigned, what the follow-up process and timeline should be, and how reps should use marketing collateral in their outreach. We also set clear criteria for what made a sales-qualified lead (SQL) and how marketing would continue to nurture leads that weren‘t yet ready for sales.

Content for Every Selling Scenario
We mapped our content to each stage of the buyer‘s journey and made it easy for sales to access the right content at the right time. This included email templates, call scripts, battlecards, objection handling guides, product demos, customer stories, and more. We regularly gathered feedback from sales on what content was working and where there were gaps.

Integrated Sales & Marketing Tech Stack
We connected our CRM (Salesforce), marketing automation platform (Marketo), conversational marketing tool (Drift), sales engagement platform (Outreach), and content management system so that data could flow seamlessly between them. This gave sales reps visibility into each lead‘s digital body language and enabled them to trigger personalized marketing touches.

Ongoing Training & Enablement
We ran regular training sessions for sales on how to effectively use content, personalize their outreach, and tailor their pitch to different personas and industries. We also kept them up to date on campaign results, A/B test findings, and new marketing collateral. Consistent knowledge sharing between marketing and sales is a must.

Over time, we were able to build a tightly integrated demand generation engine with sales and marketing working together in lockstep toward shared goals. It wasn‘t always perfect, but by keeping the lines of communication open, we were able to quickly identify and solve issues before they festered.

Measuring Demand Generation Success: 5 Essential KPIs

To know if your demand generation strategy is working, you need to track the right metrics. Here are five KPIs that I believe every demand gen leader should have on their dashboard:

1. Marketing Qualified Lead (MQL) to Sales Qualified Lead (SQL) Conversion Rate
This measures how well marketing is vetting leads before passing them to sales, and how effective sales is at following up with those MQLs to determine whether they are actually good fits. A low MQL to SQL rate suggests there‘s a disconnect between marketing and sales on what constitutes a quality lead.

2. Lead to Opportunity Conversion Rate
Also known as lead-to-opp or LTO, this metric shows the percentage of leads that end up converting into sales opportunities (i.e. pipeline). It‘s a good indicator of lead quality and sales follow-up effectiveness. According to a TOPO benchmark study, best-in-class companies convert 13%+ of leads to opportunities.

3. Opportunity to Close Rate
This measures the percentage of sales opportunities that ultimately result in closed-won business. While the average opp-to-close rate varies by industry and deal size, a low rate could indicate issues with sales skills, product fit, or competitive positioning. It‘s important to track this by lead source to see which channels drive the highest close rates.

4. Pipeline Velocity
Pipeline velocity measures how quickly leads and opportunities move through your marketing and sales funnels. The faster the velocity, the more revenue you can generate in a given time period. To calculate pipeline velocity, use this formula: (# of opportunities x deal size x win rate) / sales cycle length in days. Factors that impact velocity include lead quality, buyer urgency, and sales efficiency.

5. Marketing Contribution to Pipeline & Revenue
Perhaps the most important demand gen KPI is marketing‘s contribution to pipeline and revenue. What percentage of total pipeline and closed-won business is sourced or influenced by marketing efforts? Best-in-class B2B companies have 25-30%+ of revenue attributable to marketing, according to a study by Bizible. To get these metrics, you need proper UTM parameters and attribution modeling.

Keep in mind that demand generation is a long game. It can take months or even years to see the full impact of your efforts, especially for companies with long sales cycles. Don‘t get caught up in chasing short-term wins at the expense of building a sustainable pipeline. Measure leading indicators like MQL growth and opportunity creation, but always tie them back to down-funnel revenue impact.

The Secrets to Unlocking Demand Generation ROI

As I‘ve shared in this guide, demand generation is a complex and multifaceted discipline. There‘s no silver bullet or hack to achieving overnight success. But from my experience, there are a few key things that separate the most effective demand gen programs from the rest:

1. Deep audience insights:
The better you understand your target buyer‘s needs, preferences, and behaviors at each stage of their journey, the more relevant and resonant your demand gen efforts will be. Conduct regular research and gather feedback from customers and sales to keep your buyer personas fresh.

2. Cross-functional alignment:
Demand generation can‘t just live within the marketing team. It needs to be a collaborative effort across marketing, sales, product, and customer success. Each team plays a critical role in shaping the buyer experience. Invest in enablement, communication, and shared goals to keep everyone rowing in the same direction.

3. Full-funnel content strategy:
Content is the fuel that powers demand generation. But it‘s not just about churning out blog posts and ebooks. You need the right mix of content formats and topics mapped to each stage of the buyer‘s journey, and mechanisms for getting that content in front of the right people at the right time. A balanced content strategy includes both gated and ungated assets, sales enablement collateral, and thought leadership.

4. Martech infrastructure:
The modern demand gen engine runs on data. You need systems in place to capture buyer intent signals, track engagement, measure attribution, and optimize performance. But your martech stack is only as good as the data you feed into it and the processes you wrap around it. Choose tools that integrate well and can scale with you, but don‘t neglect the human element.

5. Continuous optimization:
Demand generation is not a "set it and forget it" endeavor. The most successful programs are constantly testing, iterating, and adapting based on results and feedback. A/B test your content and messaging, experiment with new channels and tactics, and always be looking for ways to improve conversion rates and pipeline velocity. Complacency is the enemy of growth.

Ultimately, demand generation is about playing the long game. It‘s about planting seeds of awareness, nurturing them over time, and being there when the buyer is ready to have a sales conversation. Done right, it can be a tremendous source of predictable pipeline and revenue growth. But it requires patience, persistence, and a willingness to always be learning.

If you take away one thing from this guide, let it be this: put your audience first. The companies that win at demand generation are the ones that relentlessly focus on understanding and solving their buyer‘s problems. Everything else – the tactics, the technology, the metrics – should flow from that foundation.

Now go out there and start generating some demand!