Revenue Marketing Vs. Demand Generation: Which one to focus on as a marketer?

Some businesses assume that they’ll start making more money if they just get more leads. 

Sadly, that’s not true.

Leads should be qualified. They should be potential buyers. However, only 56% of B2B organizations check leads before sending them off to sales.

If you do some research, revenue marketing and demand generation are both strategies that focus on bringing in qualified leads.

But which should your marketing team focus on?

Let’s start by defining the terms.

What is demand generation?

Demand generation (also called demand gen) is a marketing approach that helps people recognize their pains, so they become aware of your product or services as the best solution. Your goal is to create interest in the audience, so they check your brand and become interested enough that they provide you with their contact details.

One of the popular methods of demand generation is content marketing.  It’s where you produce traffic-generating content that the audience will find valuable. Some examples include:

• YouTube videos
• Podcasts
• Explainers
• Graphics
• Infomercials

These content pieces aren’t for sales. 

Rather it’s for positioning your brand as an authority in your space. So, in a nutshell, demand generation is about trust and authority building in your niche. It doesn’t necessarily aim to drive revenue growth. 

Here’s why demand gen is important.

• Creating demand is necessary to increase sales and grow your business.
• It helps put you in a strong branding position that will differentiate you from the competition.
• It can accelerate the sales process by attracting already qualified leads.

What is revenue marketing?

Revenue marketing is a marketing strategy focused on increasing sales by directly targeting customers who are likely to make a purchase. So that means dropping sales-ready leads into the funnel.  It’s a repeatable, predictable, scalable (RPS) system that puts marketers in the revenue picture — a definition from the Rise of the Revenue Marketer book.

This means that revenue marketing aims to generate a sales-qualified lead every time. It also helps you forecast a return from your marketing efforts. A system capable of measuring success using the attributed data on marketing. 

Revenue marketing will change the way companies look at marketing. Finally, they’ll see how marketing directly contributes to the pipeline.

Simply put, revenue marketing puts marketers responsible for generating revenue through their marketing efforts ― rather than simply raising awareness or generating leads. 

Similar to the inbound methods of demand gen, revenue marketing also leverages content marketing and all sorts of marketing activities. Revenue marketers take a results-driven approach. 

They use data and analytics to identify opportunities. And then craft targeted messages that will resonate with their target audience. 

Here are other good reasons why it matters.

• By focusing on revenue, you’re able to track your return on investment and see which marketing strategies work best for your business.
• By aligning your marketing efforts with your revenue goals, you’ll make confident decisions on how to allocate your resources.
• Revenue marketing provides a clear ROI, which is essential for decision-makers within a company.

How are the two strategies alike?

1. They both understand the customer journey.

At their center, revenue marketing and demand generation both require a deep understanding of the customer journey. 

The customer journey refers to the steps a consumer takes to become a customer. It starts with attracting potential customers by identifying a problem that has a solution. Until you convert them into paying customers.

The strategies work to identify customers’ needs and pain points and then craft solutions that address those needs. 

An example is an article targeted at SaaS startup founders in their awareness stage.

See how targeted the blog is? 

Surely, it attracts the intended audience. So by understanding the steps that a customer takes on their way to purchase, businesses can more effectively market to them at each stage. 

2. They use inbound strategies that marketing and sales can mutually benefit from.

It’s essential to use inbound methods that both marketing and sales can mutually leverage. That way, the team can work efficiently by filtering out tire-kickers in the early stage of the funnel.

It’s important for marketing to put a process to explain how, when, and which leads would be passed to sales.

Let’s refer to this wheel. 

The demand gen stage covers the attract stage and what you draw is the TOFU (top of the funnel) audience.

However, another marketing phase happens after you attract the leads. That’s what marketers call lead generation ― enter the engage stage. 

So what is lead generation?

To put it simply, this is when you capture the contact data of those you attract, so they become a part of the lead nurturing process. 

Here’s an example website form. 

This form has no key info that will help segment the leads like industry or company size. 

Sure, they’re asking for country and phone, but this process is somewhat inefficient. It might capture leads that the sales team will not find qualified. 

Revenue marketing, on the other hand, gets data that will help them nurture the leads even more. It might ask for data like Payment Volume, Industry, and Company Size to know whether the lead is qualified.

3. They both use automation tools.

As anyone in the marketing world knows, automation is essential to efficient working. By using tools to automate repetitive tasks, marketers can free up their time to focus on strategic planning and creative work.

When it comes to revenue marketing and demand generation, both teams use automation tools to help manage their workflows. These tools can include everything from email marketing platforms to CRMs. 

An automation tool like Encharge lets you create flows to visualize your customer journey and send out targeted emails. You can also use it to capture the qualified leads you’ve attracted through your website forms. 

Tools like this also integrate with your CRM for closed-loop reporting. This way, marketing can track its revenue metrics.

Revenue marketing vs. demand generation: What’s the best approach?

Despite the similarities, there are key differences to keep in mind. 

Let’s take a close look below:

1. Marketing focus

Demand generation is focused on creating awareness and interest in a company’s products or services. 

One channel to maximize, for example, is social media platforms like LinkedIn, Instagram, and Facebook. Regularly posting content or graphics will build a social presence. A study shows how effective these social media platforms are.

On the other hand, revenue marketing is focused on creating and executing marketing campaigns that directly generate revenue. What happens is that the marketing team now carries a quota. 

An example is when marketers agree to deliver $100,000 in lead value to the sales team.

2. Lead definition

We can generalize their lead definition as this…

Demand generation targets people who are not yet familiar with your product or service, whereas revenue marketing concentrates on those who are already aware of it.

Let’s be more specific.

Building awareness can convert icy cold users to warm. But there has to be lead nurturing to turn them into hot prospects or opportunities eventually. This means that leads from demand gen are qualified leads if you evaluate them against marketing metrics. In essence, they’re marketing qualified leads. 

Now, revenue marketing is different because we are talking about sales accepted leads. This means these leads are generally more likely to purchase.

Revenue marketers use a lead qualification matrix like the one below to differentiate a good fit from a bad fit customer. 

3. Metrics they measure

Marketers are obsessed with results. Metrics are essential for measuring their success. But when it comes to revenue marketing and demand generation, the metrics can vary.

For instance, website traffic is a top-of-the-funnel metric that measures how many people are exposed to your brand. But it doesn’t guarantee the lead qualification unless your demand gen is effective.

Conversion rate, on the other hand, is a bottom-of-the-funnel metric that measures how many people take the desired action like purchasing. So in revenue marketing, your success metrics are now expressed in terms of revenue and financials.

Here’s a summary of the tracked metrics of the 2 phases:

Demand generation metrics:

• Customer Lifetime Value (CLV) – measures the value of a customer to a business over the course of their relationship. It shows you how much money a customer is likely to spend with a company over the course of their lifetime. 
• Marketing Qualified Lead (MQL) – is a potential customer who has been identified as having a higher likelihood of becoming a paying customer. MQLs are typically generated through marketing activity.
• Cost Per Acquisition (CPA) – indicates how much it costs you to acquire a new customer. This can include things like advertising, marketing, or even the cost of developing your product or service.
• Conversion rate from MQL to SQL– the percentage of MQLs who become SQLs.

Revenue Marketing metrics:

• Funnel Velocity – the rate at which leads move through your sales funnel. The faster the velocity, the more quickly you’ll be able to convert leads into customers.
• Sales Qualified Lead (SQL) – is a lead that has been vetted by sales and determined to be a good fit for the company’s products or services. 
• Marketing programs ROI – is a metric that measures the return on investment for marketing initiatives. It takes into account both the costs of the program and the revenue generated from it. 
• Forecasting revenue – the process of estimating future revenue based on past performance. Businesses use forecasting to make informed decisions about where to allocate resources and how to plan for future growth.

So, which marketing strategy is best? 

Neither. Because they’re both equally important. You see, demand gen (and lead gen) is a part of the overall revenue marketing strategy. 

Demand gen will help you attract qualified leads, while lead gen will capture the contact details of potential customers. Both are essential for revenue marketing success. 

So we can conclude that revenue marketing is a holistic approach to marketing. This means that all marketing activities should be aligned with business objectives and contribute to the bottom line. 

Without demand, there would be no leads to capture and no market to reach. So there would be no revenue. By aligning all marketing efforts with revenue objectives, businesses can ensure that they are maximizing their chances for success.

But here’s a situation to consider. 

If a company is selling a product that is already in high demand, it makes sense to jump into the revenue marketing phase.

However, for early-stage businesses and companies selling novel products, demand generation may be necessary to create awareness and generate interest first. 

How should my marketing team proceed then?

The idea of revenue marketing vs. demand generation is rather faulted.

For many successful companies, revenue marketing is an umbrella term where demand gen and lead gen are two stages of the overall revenue marketing process.

One important concept that these marketing strategies point out is this: leverage the use of marketing automation tools. And a platform integrated with CRM helps companies stay ahead — and become more profitable quicker.

Encharge is your best bet. It integrates with your CRM and can automate all your marketing workflows, so you can nurture and convert more leads. We offer comprehensive marketing automation services that will take care of all your marketing needs. Get in touch today.