Demand Gen vs. Lead Gen: Which is ‘Best’ for Startups?

Not so long ago, many startups found it easy to attract significant venture capital investment. However, investors today expect to see sophisticated user-attraction models and established growth trajectories from even seed-stage startups, making lead generation mission-critical for businesses hoping to secure additional investment.

The good news? Lead generation has matured immensely as a marketing discipline over the past decade, with more tools and data available than ever before. But this abundance demands a focused, strategic approach to lead generation that minimizes wasted spending and drives meaningful results.

I spoke with Mitchell Hanson, ZoomInfo’s senior director of demand generation, to learn more about how startups can maximize the impact of their lead-generation initiatives and make every marketing dollar work harder.

Demand-Gen vs. Lead-Gen: The False Dichotomy

The debate between demand-gen and lead-gen has become quite polarized. 

There are essentially two competing schools of thought among B2B marketers. The first believes that demand-generation is superior, and that marketers should avoid gating content assets that can create friction in the marketing funnel. By making everything available to everyone, the argument goes, marketers are creating mindshare in their audience, and foster brand equity and goodwill by not restricting access to content.

The other side believes that lead-gen is a valuable strategy in its own right, and that failing to gate some assets is leaving money on the table. Giving everything away for free may build brand equity, lead-gen advocates argue, but doing so deprives a sales team of qualified leads that can drive revenue.

Nothing gets people riled up like a good old-school rivalry. But while the lead-gen-vs.-demand-gen argument makes for engaging social conversation, the reality of the situation isn’t so black-and-white. 

Finding your place in the market

Before worrying about whether to adopt a demand-gen or lead-gen approach, Hanson says startups need to figure out their place in the market, and then be able to articulate that position to the market in the form of a strategic narrative.   

“The first thing you have to look at is what category you’re in,” Hanson says. “Do you have a product everybody already knows, or are you in a new category that’s somewhat nascent? Is this a brand-new thing you’re creating with this product?”

Determining your company’s position in your market is crucial to identifying whether a demand-gen or lead-gen strategy is best for your growth goals. The level of competition in your industry or vertical, general awareness of your product category, and total addressable market (TAM) should all inform your go-to-market motions, and also dictate where you allocate your resources.

According to Forrester, there are four main types of programs marketers can use to create awareness of their brands, products, and services:

1. Reputation

  • Includes content assets such as blogs and press releases

2. Demand creation

  • Includes webinars, white papers, and product trials 

3. Sales enablement

  • Includes playbooks, ROI tools, and battle cards

4. Market intelligence

  • Includes internal surveys, external focus groups, and SWOT analyses

Why is this distinction important? Because your needs will change as your company grows. 

When you’re starting out, you may need to spend fairly equally across demand creation and sales enablement. But things may shift once you’ve reached an established market. You may want to burnish your reputation and enable the sales team with more lead generation, while letting market tailwinds reduce your demand gen efforts.

“If you’re a latecomer to a category, there’s already a lot of awareness around other products in the space,” Hanson says. “If you don’t have a lot of differentiation, you’re just trying to ride the coattails of the category, capture demand, and create awareness for your brand within that category. But if you come into an established vertical and have a huge point of differentiation — a new paradigm in that category — then you’re going to need a different ratio and may want to invest more resources in demand creation and sales enablement.”

Lead Gen: Maybe You’re Doing It Wrong

While understanding your place in the market is a vital first step, the problem is more complex than aligning marketing resources with product-market fit. 

Hanson says one of the key issues in the debate surrounding demand-gen versus lead-gen is that many demand-gen purists simply aren’t conducting effective lead-gen campaigns. This, combined with the conventional wisdom about inbound demand-generation pioneered by the likes of HubSpot as long ago as 2009, perpetuates ideas that no longer align with how companies do business.

“Instead of coming up with ways to gate content and conduct ROI-positive lead generation, they’re saying, ‘Let’s just give it all away and hope prospects come back to our website,’” Hanson says. “But the world has changed. When you move a little further down the funnel, you really need to have multiple complementary strategies working together.”

This flexibility is even more important for companies with diverse product portfolios, including ZoomInfo. 

Hanson says a product’s maturity should have a direct impact on how resources are allocated, and a strategy that may work well for a flagship product may not be appropriate for newer solutions.

“We have a lot of different products at ZoomInfo,” Hanson says. “We do not apply the same demand-gen or lead-gen growth strategies on every product line. For our core ZoomInfo Sales product, we typically go full-on demand capture all the time because we already have the awareness locked down. However, in the case of our ZoomInfo Operations product, we allocate around 50% of our resources and activities into awareness and brand-building of ZoomInfo as a data-as-a-service brand.”

Demand Gen & Lead Gen: Two Sides of the Same Coin

No two companies are exactly alike, and the needs of a fledgling pre-seed startup will be very different from those of a company hot on the heels of its Series C round.

Rather than seeing demand-gen vs. lead-gen as an either/or proposition, Hanson says marketers should see the two disciplines as complementary to one another. In addition, it’s vital to think about not only your startup’s place in the market, but your longer-term growth goals as well. What may work well initially might not be a sustainable approach in the long run.

“A purely demand-gen approach may work for some companies,” Hanson says. “But if you want to be a leader, if you want to have the growth we do, you have to do it all, with the right ratios. Don’t hang your whole ACV target on a couple of tactics or channels.”