What Is Demand Generation? (With Definition And Components)

By Indeed Editorial Team

Published 25 October 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies use different marketing strategies to enhance brand awareness, improve sales and increase revenue. Demand generation is a strategy that focuses on every touchpoint in a customer journey. If you work in marketing or sales, you can benefit from learning how companies use it to improve their brand value. In this article, we discuss what demand generation is, highlight its importance, share its benefits and list various variables considered for this technique.

What Is Demand Generation?

Demand generation, also known as demand gen, is a data-driven approach to generating measurable demand for a company's products or services. It aims at nurturing key prospects over their lifetime using sales and marketing efforts across various points on multiple channels. This could mean creating demand for products or services, reaching new markets, engaging current customers or promoting new features. For instance, a company releases a new phone for its existing customers with an upgraded camera and new features to build long-term relationships and commitment.

A successful demand gen campaign aims at understanding the target audience, their pain points and their buying behaviours.

Related: Customer Satisfaction: How To Measure And Tips For Improvement

Importance Of Demand Gen

Here are some reasons demand gen is important for companies:

  • It helps build strong customer relationships. Demand gen focuses on the problems of the target audience, which helps build trust and business success.

  • It results in increased revenue. A strong demand gen campaign can result in positive and measurable revenue and overall longevity of businesses.

  • It generates more leads. Targeted demand gen activities can improve the quality of leads and result in improved sales. This requires an understanding of the ideal customer profile (ICP).

Related: Customer Satisfaction: How To Measure And Tips For Improvement

Demand Generation Vs Lead Generation

Demand gen is a more comprehensive process taking place over a longer timeframe than lead generation. It also involves close communication and direct collaboration between sales and marketing teams. Lead generation is a part of demand gen, which focuses more on lead nurturing and lead scoring. It helps convert the target audience into quality leads by collecting relevant information. A combination of demand gen and lead generation strategies is important for long-term business success.

Related: How To Generate Leads For A Business: A Comprehensive Guide

Components Of Demand Gen

The components of demand gen include:

Brand awareness

Brand awareness refers to maintaining a visible presence between a company and its customers. Companies require focusing on aligning their demand gen efforts with their brand awareness strategy by using the following metrics:

  • Revenue generated: This refers to the amount of revenue generated from a marketing action, such as a social media campaign. For instance, brand marketing teams can use social media channels to enhance brand image and nurture leads, while teams focusing on generating demand can use attribution to assign revenue to important touchpoints for conversion.

  • Leads generated: Branding efforts can drive revenue by getting new leads through campaigns and demand gen teams can use content creation and promotion to drive leads.

  • Website traffic: Branding and demand gen campaigns can be more successful when companies have a high-converting website. Brand awareness can work on understanding their target market and using strong call-to-action, while the demand gen teams can focus on content creation.

  • Return-on-investment: Brand awareness teams can use paid advertising tools to improve their return-to-investment, while demand gen teams can focus on conversion rate.

Related: Brand Awareness: How To Define, Measure And Improve It

Inbound marketing

It is a type of demand gen strategy which involves generating traffic and engaging website visitors and leads through relevant and engaging content. It uses a buyer-centric approach to align lead generation with demand gen with the help of an inbound marketing strategy and a website for a seamless customer journey. Marketers require focusing on generating high-quality content and optimising it and promoting content through paid advertising, marketing automation and emails.

Related: What Is Inbound Marketing (Strategies And Campaign Guide)

Marketing and sales

The cross-departmental alignment of marketing and sales helps in demand gen by sharing goals, key performance indicators (KPIs) and priorities. It is essential to maintain an open line of communication between both departments, share definitions and goals, establish service level agreements and consider details like on-site activities and budget ranges to unify the efforts. You can also conduct weekly joint meetings to generate more traction between the teams. The combined efforts can help provide a seamless experience for prospects and customers and increase conversion rates and revenue.

Related: What Is The Difference Between Sales And Marketing?

Customer retention

A demand gen strategy includes generating demand for long-term customer retention, which includes providing customers with a positive impression of the brand along with exceptional customer service. It is important for brands to improve customer retention through email marketing, social media campaigns, content creation and personalisation. They can also focus on acquiring new customers through search engine optimisation (SEO), pay-per-click (PPC) and lead nurturing programmes.

Related: How To Manage Customer Relationships: A Complete Guide

Demand Gen Tactics

Here are some tactics that companies can use to generate more demand for their products or services:

Use direct mail marketing

Direct mail marketing is a marketing strategy in which marketers send physical promotional items such as corporate swag, printed mailers, coupon envelopes, catalogues, postcards and packages to prospects, leads and customers. Demand gen teams, sales teams, marketing departments and recruiters in the business-to-business (B2B) and business-to-customer (B2C) space use it to leverage their efforts and make meaningful connections with their prospects, clients and leads. Direct mails can help in cross-selling related products, addressing customer pain points, introducing new product features and answering product-related questions.

Related: What Is Prospecting? (Methods And Steps To Reach Prospects)

Conduct social media campaigns

Businesses can reach a broader audience through social media, which fosters sales leads and brand awareness. The campaigns can focus on sharing valuable content, use lead generation ads and geo-targeted search and create engaging content, such as quizzes, contests and polls. Marketers can also run social media paid ads and referral campaigns, build communities, distribute content and use chatbots to automate lead generation. Campaigns that align both customer interests and company values and mission have higher chances of being successful and driving revenue and brand growth.

Related: 7 Best Social Media Management Tools (Plus How To Pick One)

Develop educational content

Online educational and informative content can appeal to a younger audience since they focus on engaging their learning capabilities and help them make more informed decisions. Brands can optimise their presence on existing platforms or launch new platforms to share quality information with their customers and prospects. Referral programmes and incentives, webinars, email marketing and lead magnets are some ways companies can share their educational materials.

Use influencer marketing

Influencer marketing involves brands partnering with influencers, typically individuals with an extensive social media following. It can help brands reach a wider audience and build brand awareness and communities. As part of the endorsement agreement, brands often compensate influencers, whose audience strongly aligns with their target audience, with a payment or perks such as free products. Customers often trust the recommendations of influencers, which can help companies leverage their influencer-driven marketing campaigns, increase sales and generate leads.

Use account-based marketing

Account-based marketing (ABM) is a marketing strategy designed to reach highly targeted accounts that are likely to benefit from the products and services offered by a company. By using a targeted strategy with ABM, sales teams can effectively shorten the sales cycle for potential customers through a personalised approach. ABM processes several inputs from various teams in the organisation to assess the proclivity to purchase and nurtures accounts to build long-term customer relationships.

Related: What Is Account-Based Marketing? (And How To Use It)

Create engaging podcasts

Brand podcasts can help amplify marketing strategies, improve brand awareness and brand favourability and drive website traffic. It is important to pick the right host for the podcast, use the right set of metrics to measure specific outcomes and choose sponsors carefully. The marketing team can transcribe the podcast episodes for website content and use clips from the podcast in email newsletters, social media posts and blogs.

Explore more articles