Demand generation vs lead generation: Key ROI Insights

We’ll summarize this entire guide for you in two sentences: Lead generation is part of demand generation.

It only earns you a higher return in very specific situations or in a business where demand generation isn’t possible. Always start with demand generation. And if it makes sense, layer in some lead generation—like running raffles or syndicating ebooks to generate new names or buying signals.

As we’ll explain in this guide, "lead gen" is a tactic from a prior era when marketing was primarily about “the lead.” Go watch the classic sales film Glengarry Glen Ross where the characters shout, “The leads are weak!” for a reminder that lead generation long predates the internet. It tends to involve smashing and grabbing a list of names at the cost of quality. As we’ll explore, it’s often a bad idea. But not always. 

Read on to learn how lead generation can fit within demand generation, the scenarios where it may still be relevant—even in B2B marketing in 2026—and how to escape the trap of your CFO thinking that marketing is still about generating leads.

The people who contributed to this guide have been helping companies like Salesforce, Meta, and Thomson Reuters build sustainable demand generation programs. This guide shares the best of what we know.

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What is demand generation? 

Demand generation is the broad term for coordinating all your marketing activities to both create and capture demand from prospective buyers. Demand generation can include all the activities necessary to make that happen, and it really only works when you have a strategic plan—which is another topic.

For most B2B marketers, the reality is that demand gen is probably 90% capture and 10% creation. “Demand,” put simply, is a bunch of companies who want to buy what you sell, or something like it. For a buyer to be exhibiting “demand” means their company is feeling some sort of pain and they've had the conversations that led them to want to fix it—or to be receptive to messages that they need to.

It is exceedingly rare that marketers “generate” that pain and awareness. Buyers don’t often see an ad and spontaneously think, “We oughta rip our our entire ERP software system.” They think, “This has been painful for a long time, and we’re losing millions on running our supply chain in Google Sheets. So yes, it’s time to act.” 

However, as I explain next, it can happen. 

Generating new demand usually involves creating a category

Some demand marketers are skilled enough to actually generate demand—to create markets where none existed before, and get buyers worrying that they should act. For example, the subscription billing software company Zuora did this with the phrase “subscription economy.” The founder wrote a book in 2018 pointing out that lots of companies were launching subscription models—Birchbox, Blue Apron, Dollar Shave Club, even Coca-Cola. The implication was, if your business wasn’t trying this model, you’d fall behind. And to actually allow that “subscribe” option at checkout and manage the accounting, you’d of course need Zuora’s software. The Zuora team credits that phrase and all the campaigns that used it with helping them go public. (They were later acquired for $1.7 billion.)  

AWS did this on a far grander scale with cloud infrastructure. Intercom and Drift did this with “conversational sales.” Others do it more quietly, as with Coupa and “spend insights,” Procore with helping the construction industry start to ditch paperwork for iPads, and more. But even then, these companies are not creating that societal shift—merely naming it and becoming associated with it.

They then ran a tight demand generation process to stoke those feelings and capture the demand thus created: Talks, webinars, executive thought leadership, always on campaigns, account-based marketing, and so on—in a balance, constantly testing, to see what types of accounts close and renew.

In practice, demand generation can include:

Which is very different from lead generation. 

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What is lead generation?

Lead generation is when you gather a list of “leads” that may be interested in what your company sells, and pass them to the sales team to call. Some lead generation is ethical. Some is not. It all hinges on whether those leads know they are on the list. Seth Godin calls this “permission marketing,” and while lots of companies try to generate big lead lists through cloak and dagger means—buying data, stealing emails, and tricking people—in the long run, it doesn’t work. 

The success of your lead gen program is positively correlated to the trust it creates. The more you ask people’s permission, the higher quality the leads become. But also, the smaller the lists.

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Lead generation is incompatible with account-based marketing

You’ve probably already guessed, but by definition, lead generation is focused on building large lists of individuals you don’t yet know. Even if you were to build lists of accounts, it’s still not account-based marketing, which requires that you do your research and pick the companies.

Lead generation grows toxic if the marketers aren’t careful

Here’s a real-life example of what one of our team members experienced as a salesperson at AT&T. Each month, they’d log into their old, laggy Siebel CRM and find a list of 2,000 new “leads,” deposited by marketing. As a salesperson, they’ve never once seen or met anyone from marketing. All they knew was that there was absolutely no way they’d have time to call 2,000 people, and they had no further information than a name and a phone number. Many phone numbers were 800 numbers or incorrect. This salesperson would simply select all the leads, reassign them to his boss, who never logged into the CRM, and just dial phone numbers from the phone book instead. 

This is not to disparage lead generation! It can work and has worked for as long as marketing has existed. But you have to hold to an ethical code about it to ensure people don’t abuse the system: 

1. Practice permission marketing. People have a right to know they are on the list and should never be on that list against their will. 
2. Align marketing and sales. Without serious discussions about both measuring revenue, marketing teams will tend to get measured on lead volume—which is the opposite of what sales wants. 
3. Use it to solve a problem. A large list of names is useless unless you know what it is for. Good uses include complementing a content marketing program, using it to generate data and populate extra contacts on accounts, and to feed a higher-quality newsletter or other list.

Because once your organization is hooked on the wrong way of doing things—like AT&T was—it is very, very difficult to change. For more on that, read how to detox sales from leads by our Co-Founder, Kathy Macchi. 

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Demand generation versus lead generation: the key differences

To state it more plainly, demand generation is that overall holistic program of sensing and capturing demand in the market. It’s the container. Within demand generation, you might run a content marketing program of newsletters and podcasts, an events program for conferences and roadshows, an always-on campaign program. And also, perhaps a lead generation program.

If you had to compare demand generation and lead generation, the biggest difference is the buyer experience they create. With demand generation, your marketing team is working hard to create events, reports, calculators, and tools that help your buyer solve their challenge. Whereas lead gen goals are much shorter term: get the name, send some emails, pass them to sales. That ends up being a worse buyer experience, at least in practice. 

Demand generation also emanates from your overall Demand Continuum strategy, where you decide where you want your revenue to come from and decide on campaigns, channels, and tactics that support that allocation.

We think about it as pathfinding—you’re running educated experiments to figure out where the demand is, what those buying committees want to hear, and situationally, how you can create demand from nothing.

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Which strategy delivers a better return? 

This deeply depends on your business. Some businesses sell a product that’s a commodity, where the first person to call the lead typically wins—for example, auto dealerships, HVAC services, and cloud storage. In those cases, you have to ask, What am I trying to achieve, and on what timeline? 

MISSING

From that perspective, we’d always advocate that marketers invest in building a demand generation program. Consider hiring a fractional CMO to analyze your market and help you build the case for that long-term investment. They can look beyond the simple short-term revenue numbers to understand what problems buyers are trying to solve, on what timelines, and what that total addressable market is.

Or as Lindsay Cordell of GTM Partners puts it: 

How to align demand generation with lead generation for maximum ROI

Let’s say you did the smart thing and plan to do a bit of both—build demand generation, but use a little permission-based lead generation to offset tough quarters and have another “lever” to pull to support the business. To improve your ROI on that whole program:

1. Get your ideal buyer right first

The first thing to do is to study your ideal buyer intensely. You cannot build an effective demand generation program without understanding the source of that demand. 

2. Shift away from “growth at all costs

As we put it in our new marketing playbook, “The old way of doing marketing is ‘growth at all costs’ and look at where that got us. The new way is focusing on sustainable growth. The way you get there is through customer retention. You can’t grow if you don’t retain your existing customer base. But how do you find the right buyers who will be easy to retain?” 

Figure out your buyer’s journey to understand where they look for fixes to the problems you solve, and where stoking demand can benefit you—and where sometimes, simply capturing ready leads and getting them to sales is the right idea. 

3. Shift away from email to multichannel

There are more channels and information sources now than ever. People use ChatGPT to run searches, the buying group discusses in Slack, and perhaps they use Gartner’s secret negotiation service where ex-Salesforce and ex-Adobe reps give them all the dirt on each vendor. You must be communicating easily across LinkedIn, ABM ads, syndicated content, direct mail, and more.

4. Sort out your marketing operations

Also figure out your tech systems. Many marketers resort to lead generation because it’s what’s available—their data is inaccurate, they have to go through IT to change the CRM or marketing automation platform, and all they can really do is send email. When you invite your marketing operations team into these conversations early, they can help you set up demand programs, not just dressed up lead gen.

Common mistakes to avoid

This is true no matter the strategy: You need the right strategy, team, and tools in place. When Jennifer Jackson joined Actian in her first role as CMO, she conducted an assessment and decided she needed more of all three. The current marketing team wasn’t so much following a strategy as discoordinated list buys and emails, and taking direction from sales. That team was struggling because they didn’t have the right skills—demand marketers were, for example, creating their own designs. And finally, their CRM data was too messy for use. 

Jennifer called in Inverta for a three-year project that has helped them build a fully functional demand generation program that successfully targets enterprise buyers. Which was by no means easy.

To summarize, the common demand generation mistakes: 

• Not coordinating with sales.
• Calling it demand generation, but just generating leads.
• Underusing your existing technology while buying new tech.
• Asking every marketer to be a generalist, and not defining roles.
• Sticking with old, underperforming programs “because it’s what we’ve always done.”
• Not measuring the correct metrics: NRR, LTV, and CAC.

If you must choose, pick demand generation over lead generation

Ultimately, every marketer’s job is primarily to build trust with buyers. You aren’t about to go out there and coin a phrase that whips up a tidal wave of demand—rather, you need to help those buyers solve their problem. Help them move to the cloud, revise their quote-to-cash workflow, get their construction workers using iPads, and secure their servers against cybercriminals. To do that, you need to be thinking about demand generation: 

• Identifying demand
• Capturing demand
• Where possible, creating demand

And if as some modest part of that, lead generation helps you toward your goal, that’s great. But practice the permission marketing sort, where people actually know they’re on your list.

Frequently asked questions

What is the difference between demand generation and lead generation?

Demand generation is the overall strategy of identifying the pockets of demand in the market, where buyers have the pain you solve, and getting them acquainted with your offering and sales team. Lead generation is much narrower: It’s the process of buying or building a list of names that you plan to send to the sales team. Demand generation takes more effort, but has a more sustainable payoff. 

What is demand generation?

Demand generation is the overall strategy of 1) identifying, 2) capturing, and 3) creating demand for what your company sells. That’s a complex product. Always start with a strategy, such as crafting a Demand Continuum, then identify the campaigns, channels, and formats that help you get there. One of those strategies is lead generation—which is simply building lists of names to send to the sales team.